CANADA Law and Practice Contributed by: Thomas McInerney, Selina Lee-Andersen, Sonia J. Struthers and Elyse Bouey, McCarthy Tétrault LLP
4. Liability for Climate Change and ESG Reporting 4.1 Liability for Climate Change and ESG Reporting Canada is moving toward a more structured sustaina - bility-reporting regime. Building on IFRS S1 and IFRS S2, which built on the recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD), the Canadian Sustainability Standards Board (CSSB) issued the Canadian Sustainability Disclosure Standards – CSDS 1 (General Requirements for Dis - closure of Sustainability-related Financial Information) and CSDS 2 (Climate-related Disclosures) in Decem - ber 2024, effective for reporting periods beginning after 1 January 2025. These as-yet-voluntary stand - ards for Canadian issuers other than financial institu - tions are closely modelled on the IFRS standards, so companies reporting under them meet substantially similar requirements in the Canadian context. The Office of the Superintendent of Financial Institu - tions (OSFI), Canada’s federal solvency and prudential regulator for banks, insurers and trust companies, has published Guideline B-15: Climate Risk Management (OSFI Guideline), which outlines OSFI’s expectations for federally regulated financial institutions (FRFIs) in managing climate-related risks. The Guideline expects each FRFI to achieve three core outcomes: • understand and mitigate the potential impacts of climate-related risks on its business model and strategy; • maintain governance and risk-management prac - tices to manage climate-related risks; and • remain financially resilient through severe but plausible climate-risk scenarios and operationally resilient in the face of climate-related disasters. The Guideline requires FRFIs to publish climate-relat - ed risk-management reports with prescribed disclo - sure, including information aligned with the CSSB’s final sustainability and climate-related disclosure standards. Canada’s largest financial institutions began reporting under the OSFI Guideline for their 2025 fiscal years.
The Autorité des marchés financiers (AMF), Quebec’s financial-sector regulator, has adopted a climate-risk- management guideline substantially similar to the OSFI Guideline, applying to Quebec financial institu - tions for which the AMF is the principal solvency and prudential regulator. For Canadian listed companies (reporting issuers) generally, the Canadian Securities Administrators paused its proposed mandatory climate-related disclosure rule (NI 51-107) on 23 April 2025, citing recent US and global developments and competitive - ness concerns; issuers nonetheless remain subject to existing continuous-disclosure obligations to dis - close material climate-related risks (CSA Staff Notices 51-333 and 51-358), and are encouraged to use the CSSB standards voluntarily. 4.2 Directors’ Climate Change Liability Directors may face liability for failing to properly manage climate-related risks, principally through their duties to the corporation. Under the CanadaBusiness Corpora- tions Act (RSC 1985, c. C-44), directors must act with a view to the best interests of the corporation, and the statute expressly provides that, in considering those interests, directors may consider the environment. A director who fails to take the environment into account may, in appropriate circumstances, be exposed to a claim that they have not met their duty of care. Liability can also arise under environmental statutes. Under CEPA, a director who directed, authorised, assented to, acquiesced in or participated in the commission of an offence under the Act is liable for that offence. Directors who ignore climate-related and nature-related risks could face personal liability – for example, where they fail to prevent environmental harm, fail to ensure the corporation meets its regula - tory obligations, or fail to act when they know or ought to know of environmental risks. In R v Mossman ,2026 BCCA 75, the British Columbia Court of Appeal confirmed that a director’s knowledge is not required to establish liability for an offence under BC environmental legislation. Directors may therefore be held liable for the climate change impacts of their companies even where they have no knowledge of the offence.
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