A leading Canadian investor advocacy organization is calling on Canadian securities regulators to urgently adopt mandatory climate reporting – a move that would bring corporate climate transparency rules in Canada in line with its major trading partners.
“As Canada looks to shift its trade relationships and attract more international investment – and develop closer ties with Europe – the time is right to implement a mandatory climate disclosures regime,” said Kevin Thomas, CEO of the Shareholder Association for Research and Education (SHARE) in an email statement to Corporate Knights. “Canada can’t afford to fall further behind.
Thomas is referring to a pause in April, 2025 on development of climate disclosure rules by the Canadian Securities Administrators (CSA), the umbrella organization for provincial securities commissions. At the time, CSA chair Stan Magidson, who also serves as CEO of the Alberta Securities Commission, cited changes to the “economic and geopolitical landscape” as the reason why regulators stopped work on climate disclosure.
Canada followed Washington into the pause. It should follow its new partners out of it.
– Kevin Thomas, CEO, SHARE
It was widely understood that these changes referred to attacks in early 2025 on environmental, social and governance (ESG) investing by the second administration of Donald Trump. The CSA decision came just a month after Trump’s newly appointed Securities and Exchange Commission announced it would stop enforcing the SEC’s climate disclosure rules put in place under the Biden administration.
In the meantime, most of Canada’s largest trading partners have moved ahead with mandatory corporate climate disclosure, said Thomas. According to SHARE, 13 of Canada’s 15 largest trading partners require companies to disclose climate data. This has put Canada at a disadvantage in attracting investment since Canadian companies are not required to produce similar critical information. Compulsory climate reporting would align Canadian disclosure rules with our trading partners, removing one of the most important barriers to attracting international capital, said Thomas. “Mandatory disclosure would give investors the information they want and need.”
SHARE’s call to action carries significant weight. SHARE works with a network of 120 foundations, asset managers, Indigenous trusts, universities and religious investors. It has also helped to found two important projects on climate and investment: Climate Engagement Canada with 64 institutions holding over $16 trillion in assets, and the University Network for Investor Engagement, a coalition of endowments and pensions from 17 Canadian universities and pension managers.
Charles Assaf, CEO at the sustainability reporting firm Novisto in Montreal, attests that voluntary disclosures have already demonstrated the demand for transparency by institutional investors. In public markets, sustainability disclosures can attract investors whose own clients require them to incorporate that information into investment decisions, Assaf says.
The price of poor transparency
Climate disclosure has been widely adopted throughout the world because it is seen as a way of standardizing data on the risks that climate change pose for publicly listed companies. Recent research by SHARE suggests that Canada’s public companies are undervalued by $44 billion by sustainable investment funds around the world. Lack of standardized data about climate risks is one factor causing the undervaluation. Researchers at the Institute for Sustainable Finance at Queen’s University have also found that lack of climate disclosure has resulted in underinvestment in Canadian companies by foreign investors.
“That’s capital that should be invested in our high-performing public companies,” Thomas wrote in a commentary in Le Devoir in advance of the recent Canada-European summit in Montreal. “Mandatory climate disclosure standards will remove an obstacle to greater international investments in those firms.”
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As Canada moves closer to Europe with a campaign to become an associate member of the European Union, Canada will be called upon to show just how “European” it is. This includes demonstrating a willingness to adopt a European approach to transparency on issues such as climate-related risks.
The Democratic Party’s recent big wins in midterm elections in the United States may also temper the barrage of Republican party attacks on ESG investing during Trump’s second term. Republican-sponsored anti-ESG legislation in Texas that was struck down by the courts will almost certainly be targeted for repeal by the new Texas governor, Democrat Gina Hinojosa. Anti ESG-legislation under consideration or already approved in other states is expected to have a similar fate. And Congress, now controlled by the Democrats, will doubtlessly put an end to anti-ESG hearings and legislation popular with Republican lawmakers.
The real competitive risk
This all paints a new international political environment to navigate for the CSA. In his Le Devoir commentary, Thomas wrote that regulators should get back to work on mandatory climate disclosure. “Canada followed Washington into the pause. It should follow its new partners out of it.”
Implementing mandatory corporate disclosure rules would not be an onerous task for the CSA since the Canadian Sustainability Standards Board (CSSB) adopted a series of voluntary standards in 2025 for Canadian companies based on international climate reporting guidelines.
In its recent research report, SHARE recommended that Canadian regulators require companies incorporated in Canada or listed on Canadian stock exchanges to report in line with the CSSB standards. “The competitive risk is no longer in moving forward; it is in standing still,” said the report.
Eugene Ellmen writes on sustainable business and finance. He is a former executive in the Canadian responsible investment industry.
With files by Mark Mann.
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