BACKGROUND OF THE CSDS
The Canadian Sustainability Disclosure Standards (CSDS) were developed in response to increasing demands for transparency and comparability in sustainability reporting. The Canadian Sustainability Standards Board (CSSB) created CSDS to enhance the quality of sustainability-related disclosures among Canadian organizations. CSDS aligns with global standards, particularly the IFRS Sustainability Disclosure Standards (IFRS S1 & S2) set by the International Sustainability Standards Board (ISSB).
Key Features of CSDS
Alignment with Global Standards
– CSDS integrates frameworks such as the Sustainability Accounting Standards Board (SASB) and Global Reporting Initiative (GRI), ensuring compatibilitywith international reporting.
– It maintains Canadian-specific elements to address national priorities and industry-specific concerns, such as oil & gas, mining, forestry, and Indigenousrights.
Voluntary Framework with Future Mandatory Potential
– Currently, CSDS 1 and CSDS 2 are voluntary but may become mandatory under Canadian Securities Administrators (CSA) regulations.
– CSA is evaluating potential integration into securities legislation.
Structure of CSDS
– CSDS 1: Covers general sustainability risks & opportunities, requiring disclosure of material risks affecting financial performance.
– CSDS 2: Focuses on climate-related risks & opportunities, requiring reporting on GHG emissions (Scope 1, 2, and 3) and climate resilience.
Disclosure Requirements
– Based on the Task Force on Climate-Related Financial Disclosures (TCFD) framework.
– Companies must report sustainability risks, governance, strategy, risk management, and performance metrics.
– Materiality is defined by the company itself, ensuring relevance to financial decision-making.
Implementation & Transition Period
– The standards apply from January 1, 2025, with a three-year transition relief for certain disclosures like Scope 3 emissions and quantitative climatescenario analysis.
– The relief allows companies to gradually align with reporting requirements.
Impact of CSDS
Governance
Companies’ board and executive governance of material sustainability-related risks.
Strategy
Companies’ material sustainability-related risks and their actual or likely material
impacts in the short term (next 12 months) and long term (more than 12 months)
on their strategy, business model, financial conditions, and outlook, alongside
material expenditure associated with sustainability-related risks.
Risk Management
Relevant processes used to identify, assess, and manage sustainability-related
risks, alongside any activities undertaken to mitigate or adapt to them.
Metrics and Targets
Larger companies’ direct sustainability-related KPIs, which would be subject to proportionate independent assurance requirements, as well as any targets or goals which likely or inactuality materiality affect those companies’ strategy, business model, financial condition, and outlook.
How Will the CSDS Impact Various Stakeholders?
The CSDSenhances transparency and streamlines reporting by aligning with ISSB global standards, enabling investors to assess Canadian companies on par with international peers, improving capital access. It drives decarbonization by mandating Scope 1, 2, and 3 GHG emissions disclosures, helping companies identify and reduce carbon footprints. Additionally, CSDS simplifies compliance with evolving regulations like the EU CSRD and Canada’s upcoming policies, mitigating legal risks and boosting corporate reputation. Policymakers benefit from standardized data to track climate commitments and shape policies for net-zero emissions by 2050. Overall, CSDS fosters standardized sustainability reporting, attracts investment, and supports global regenerative practices.
Implementation Timelines
The CSDS standards, finalized for voluntary adoption from January 1, 2025, are not yet mandatory, but the CSA may integrate them into future regulations. Companies can proactively adopt CSDS to prepare for potential compliance.
CSDS 2 includes a three-year transition relief, allowing companies to delay Scope 3 GHG emissions disclosures while still claiming full alignment—longer than the ISSB’s one-year relief. Additional two- and three-year transition periods apply to other sustainability risks and comparative disclosures, with entities required to disclose their use of these reliefs.
Uniqus POV
CSDS: DIFFERENCES WITH ISSB STANDARDS
The CSDS, a Canadian adaptation of IFRS S1 and S2, addresses domestic priorities while aligning with global standards. Governed by the Canadian Sustainability Standards Board (CSSB), it integrates Canada’s regulatory framework and reflects input from businesses, investors, policymakers, and Indigenous groups.
CSDS provides industry-specific guidance for key sectors like oil & gas, mining, and forestry, alongside a focus on Indigenous rights, land use, and biodiversity. It ensures compatibility with Canadian securities laws, making it more relevant for publicly listed companies, especially if CSA mandates adoption in the future. While currently voluntary, CSDS may align with future mandatory disclosure regulations.
ASSURANCE READINESS AND REPORTING RIGOR: THE UNIQUS WAY
The CSDS reflects the global shift from voluntary sustainability reporting to regulation, as jurisdictions like the EU and California introduce mandatory oversight aligned with ISSB and TCFD frameworks. This trend increases board and management accountability, making sustainability reporting essential for businesses.
Unlike financial data, sustainability metrics vary widely, covering GHG emissions, social issues, and supply chain impacts, often requiring third-party assurance for accuracy. Many companies, especially SMEs, lack the infrastructure to collect, verify, and report non-financial data effectively, often relying on outdated methods.
Strong internal controls are crucial for reliable sustainability reporting, ensuring data integrity, regulatory compliance, and long-term resilience. Frameworks like COSO’s Internal Control over Sustainability Reporting (ICSR) help companies establish structured approaches, but successful implementation requires active engagement from boards, management, and cross-functional teams.
Third-party expertise is increasingly necessary to streamline data collection, reporting, and assurance processes. Uniqus Consultech provides specialized ESG consulting, helping organizations build internal controls, improve reporting accuracy, and align with regulatory expectations
Contributing Authors
Nandini Upadhyay, Manager – ESG, Canada
Tiphaine Delepine, Manager – ESG, USA
Ryan Kim, Consultant – ESG, USA
Alexandra Matalon, Consultant – ESG, USA
