Canada: Climate-related disclosure mandatory for FIs in 2024

Climate-related disclosure will soon be a must for financial institutions in Canada, as climate risk management requirements will go into effect for major banking and insurance companies in 2024.

The guidelines from the Office of the Superintendent of Financial Institutions (OSFI), which will first impact large, federally-regulated institutions, closely follow the TCFD framework: disclosure areas will include governance, strategy, risk management, along with metrics and targets. Financial institutions will thus need to determine their climate risks, opportunities, and impacts; establish risk management and governance policies; and develop a climate transition plan. Furthermore, these institutions must disclose scope 1, 2, and 3 emissions and commit to aligning with net-zero targets.

The Canadian Securities Administrators (CSA) in 2021 proposed similar rules for non-financial private institutions in the country. Even without the CSA’s rules yet being official, with the inclusion of scope 3 (value chain) emissions disclosure within OSFI’s own guidelines, the impetus for financial institutions to disclose is likely to carry over and create similar momentum for any companies that work with these institutions.