Canada Pauses Work on Climate and Diversity Disclosure Rules Amid Global Realignments

In light of rising economic uncertainty, geopolitical shifts, and evolving regulatory dynamics, Canadian securities regulators are recalibrating their approach. The Canadian Securities Administrators' (CSA) latest announcement sheds light on their interim strategy for climate-related and diversity-related disclosure initiatives.

Canada

On 23 April 2025, the Canadian Securities Administrators (CSA) announced a temporary pause on its projects to introduce new mandatory climate-related disclosure requirements and amend existing diversity-related reporting obligations. The decision was attributed to heightened economic uncertainty and shifts in global regulatory momentum, particularly in the United States and Europe.

Climate-related and Diversity-related Disclosure Projects on Hold

The CSA's statement indicates that the suspension is intended to support Canadian markets and issuers as they adjust to recent international developments. According to CSA Chair Stan Magidson, evolving global conditions have led the CSA to focus on measures aimed at enhancing competitiveness, efficiency, and market resilience.

In terms of climate-related disclosure, existing securities legislation in Canada already mandates the reporting of material climate risks in the same way as other financial risks. The CSA reaffirmed this obligation, while encouraging issuers to voluntarily align with the sustainability disclosure standards published by the Canadian Sustainability Standards Board (CSSB) in December 2024. The CSSB standards are largely harmonised with the ISSB's global baseline.

With respect to diversity, current requirements under National Instrument 58-101 Disclosure of Corporate Governance Practices remain in force. Non-venture issuers must continue to disclose the representation of women on boards and in executive roles.

International Regulatory Landscape

The CSA’s announcement comes amid broader shifts in the global sustainability reporting landscape:

  • United States: In March 2025, the U.S. Securities and Exchange Commission (SEC) decided to cease its legal defence of climate disclosure rules adopted in 2024. The rules remain in effect but face uncertain enforcement prospects.
  • European Union: The European Parliament has postponed implementation timelines for both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), extending deadlines as part of the Omnibus Simplification Package.
  • Germany: The coalition government has announced its intention to repeal the national Supply Chain Due Diligence Act (LkSG) and replace it with legislation aligned to the CSDDD, aimed at reducing administrative burden.

In this evolving global context, Canada has opted for a more deliberate pace in advancing climate and diversity disclosure reforms.

CSA’s Forward Strategy

While the current climate-related and diversity-related disclosure projects are paused, the CSA emphasised its continued commitment to monitoring both domestic and international developments. The regulator will reassess these initiatives in the coming years, providing issuers with adequate notice ahead of any future changes.

The CSA will also maintain oversight of existing disclosure practices, address misleading or inadequate reporting – including greenwashing – and provide additional guidance where appropriate. The move signals a strategic recalibration rather than a withdrawal from sustainability regulation.

For reporting professionals, the CSA’s announcement underscores the need for ongoing attention to voluntary standards and evolving regulatory expectations. Canadian issuers may benefit from continuing to enhance their disclosure practices in anticipation of potential future regulatory developments.