Canada sets out mandatory climate disclosure plans in 2022 Budget

April 15, 2022

Financial institutions will be required to publish climate disclosures aligned with the TCFD framework.

Canada is set to introduce mandatory climate disclosures for banks and insurance companies in a phased-in approach from 2024, according to Canada’s 2022 Budget ‘A Plan to Grow Our Economy and Make Life More Affordable’.

The mandatory reporting of climate-related financial risks will run across a broad spectrum of the Canadian economy, based on the International Task Force on Climate-related Financial Disclosures (TCFD) framework.

The TCFD framework aims to help public companies and other organisations disclose climate-related risks and opportunities.

The Office of the Superintendent of Financial Institutions (OSFI) will consult federally-regulated financial institutions on climate disclosure guidelines in 2022.

The OSFI will require financial institutions to publish climate disclosures, aligned with the TCFD framework, and will expect financial institutions to collect and assess information on climate risks and emissions from their clients.

As federally-regulated banks and insurers play a prominent role in shaping Canada’s economy, OSFI guidance will have a significant impact on how Canadian businesses manage and report on climate-related risks and exposures, the Budget highlighted.

Meanwhile, the government will move forward with requirements for disclosure of ESG considerations, including climate-related risks, for federally-regulated pension plans.

The Budget also outlined plans for more than $9 billion in proposed climate-related funding, in line with Canada’s 2030 climate plan, which forms the first main step in the country’s pledge to reach net-zero emissions by 2050.

As part of this investment, more than $3 billion will be used to support zero-emissions vehicles (ZEV), while more than $1 billion will be dedicated to the Canada Green Buildings Strategy.

The Budget document stated: “With these investments, the government is taking a significant step towards reducing pollution on our roads, and is on track to meet its commitment to add 50,000 new ZEV chargers and hydrogen stations across Canada.”

Although Canada's budget sets ambitious goals for the future, it follows the recent delay in the creation of its sustainability standards board reported by Minerva.