Canada's ESG Reporting waterWhat Canadian Organizations Need to Know About CSSB Sustainability Disclosure

Understand the latest reporting requirements, compliance expectations, and how to stay ahead in 2025.

The Canadian Sustainability Standards Board (CSSB) sustainability disclosure standards took effect on January 1, 2025. As businesses navigate the first months of implementation, here’s what they need to know about compliance and best practices.

Sustainability reporting is now a key focus for Canadian businesses as they work to align with the Canadian Sustainability Standards Board (CSSB) guidelines, which officially took effect on January 1, 2025.

The final versions of the General Requirements for Disclosure of Sustainability-related Financial Information (CSDS 1) and Climate-related Disclosure Standards (CSDS 2) were released on December 18, 2024, following public consultation. These standards align closely with the International Sustainability Standards Board (ISSB) framework, with slight modifications for the Canadian market (read Advancing Sustainability Leadership: The Critical Role of ISSB Reporting Standards for Your Organization blog post).

While the CSSB standards remain voluntary, discussions continue regarding their adoption by the Canadian Securities Administrators (CSA), which could lead to mandatory reporting requirements. With companies now in the first reporting cycle under these new guidelines, it’s crucial to understand compliance expectations, transition reliefs, and evolving regulatory developments.

This blog explores the current landscape of CSSB compliance, its implications for Canadian businesses, and how organizations should navigate sustainability disclosure in 2025.

What’s Happening Now with CSSB Standards?

The First Reporting Period Has Begun

Since January 1, 2025, businesses have begun aligning their reporting structures with CSDS 1 and CSDS 2. However, key transition relief measures provide flexibility for early adopters.

Key updates:

  • Scope 3 Emissions: The relief period for Scope 3 emissions disclosure has been extended from two years to three years.
  • Climate Scenario Analysis: Companies have a three-year relief period for quantitative climate scenario analysis but must still provide qualitative disclosures.
  • Sustainability Disclosure Timing: In the first year, companies may publish sustainability-related financial disclosures at the same time as their second-quarter financial report. By years two and three, sustainability disclosures must be published within six months of the annual reporting period.

Toward Mandatory Climate Disclosure?

The Canadian Securities Administrators (CSA) have confirmed they are actively working on a mandatory climate disclosure rule, which will likely incorporate CSSB standards. The CSA has indicated that:

  • Public consultations are expected to begin later in 2025 to determine potential modifications to the CSSB framework.
  • A key focus will be liability considerations for companies under mandatory disclosure requirements.

Climate Action is Key

While the CSDS encompass a broad range of ESG factors, climate-related disclosures are a central focus. CSDS 2 (as IFRS 2) requires detailed reporting on greenhouse gas (GHG) emissions, climate-related risks and opportunities, and strategies for managing climate impacts.

For organizations, this means prioritizing the development of robust climate strategies and carbon accounting processes. Key steps include understanding your organization’s carbon footprint, identifying climate risks and opportunities, and setting emissions reduction targets. These actions also open doors for identifying areas of operational improvement and potential cost savings.

Why This Matters for Canadian Businesses

Regulatory Compliance and Market Expectations

The CSSB standards are voluntary for now, but businesses should begin integrating them into their sustainability reporting. As CSA works toward a mandatory climate disclosure rule, companies that proactively align with CSSB standards will be better prepared for future compliance requirements.

Competitive Advantage

Transparent ESG reporting builds trust with investors, customers, and other stakeholders. Organizations that proactively disclose climate risks and opportunities can gain a competitive edge and demonstrate leadership in sustainable business practices.

Cost Savings and Financial Risk Reduction

Companies that proactively implement sustainability reporting can avoid future compliance costs when mandatory regulations come into effect. Early adoption allows businesses to:

  • Develop internal expertise and systems before compliance is required.
  • Avoid rushed implementation costs, which can be higher due to last-minute investments in ESG tracking.
  • Reduce the risk of non-compliance and reputational damage by staying ahead of evolving regulations.

This means that by managing sustainability proactively, companies can transform ESG reporting from a compliance burden into a strategic advantage.

How Businesses Should Navigate CSSB Compliance in 2025

  1. Ensure Internal Readiness for Sustainability Reporting
    • Conduct a gap analysis between existing ESG reports or ESG performance status and CSDS 1 and CSDS 2.
    • Identify areas requiring data improvements and process enhancements.
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  2. Strengthen Governance and Internal Controls
    • Appoint sustainability leads or task forces to oversee disclosure processes.
    • Implement internal validation procedures for ESG data integrity.
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  3. Prepare for Scope 1, 2, and 3 Emissions Disclosure
    • Establish methodologies for Scope 1 and Scope 2 emissions tracking.
    • Plan for collecting Scope 3 emissions data ahead of the reporting deadline.
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  4. Measure and Improve ESG Data Collection
    • Implement actions to track GHG emissions and sustainability metrics.
    • Ensure data accuracy and consistency in reporting to align with CSSB standards.
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  5. Monitor CSA Developments and Engage in Public Consultations
    • Stay informed about CSA’s upcoming climate disclosure regulations.
    • Participate in consultations to ensure industry perspectives are considered.

Frequently Asked Questions (FAQ)

What is CSDS 1?

CSDS 1 refers to the General Requirements for Disclosure of Sustainability-related Financial Information. This standard lays out the overarching framework for how companies should prepare and present their sustainability-related financial disclosures. It covers key areas like governance, strategy, risk management, and the use of relevant metrics and targets.

What is CSDS 2?

CSDS 1 refers to Climate-related Disclosures. This standard focuses specifically on climate-related information. It requires companies to report on their climate resilience, greenhouse gas emissions (including Scope 1, 2, and 3), and any climate-related targets they have set.

Are the CSSB standards currently mandatory?

No, CSSB standards remain voluntary as of 2025. However, the CSA is developing a climate disclosure rule that may lead to mandatory reporting requirements.

What are the key transition relief periods in the CSSB standards?

The CSSB has granted:

  • Three years of relief for Scope 3 GHG emissions disclosure.
  • Three years of relief for quantitative climate scenario analysis (qualitative analysis is still required).
  • Flexible timing for sustainability disclosures in the first year, allowing publication alongside second-quarter financial reports.

Blackstone Energy Can Help You

For over 20 years, Blackstone Energy has helped numerous companies and organizations manage, conserve, and report on their carbon emissions to ensure they comply with current regulations.

Our experts are ready to guide you through CSDS compliance, climate strategy development, and carbon accounting to achieve your sustainability goals. Contact us to learn more: policyandregulatory@blackstoneenergy.com