CANADA Law and Practice Contributed by: Sarah Gingrich, Sean Stevens, Tracy Hooey and Marie-Josée Neveu, Fasken
to make Canadian capital markets more competitive, efficient and resilient. This pause by the CSA was in line with a similar policy reversal by the United States SEC. However, the CSA reminded reporting issuers that climate-related risks are a “mainstream business issue and securities leg - islation already requires issuers to disclose material climate-related risks affecting their business in the same way that issuers are required to disclose other types of material information”. A related notable development was the passage of significant changes to Canada’s Competition Act requiring companies to substantiate representations regarding the environmental or climate benefits of their products, services or business activities. This included the introduction (beginning in June 2025) of a private right of action regarding greenwashing claims. Some Canadian companies responded to this legisla - tive development by reducing or withdrawing related voluntary ESG disclosure. However, in late 2025, Can - ada’s federal government further revised the Act to, among other things, narrow the private right of action for greenwashing claims. Canadian corporate law does not currently impose any AI-specific oversight obligations on the directors of Canadian companies. That said, directors in Can - ada are indirectly obliged to manage and mitigate AI- related risks through their duty of care to the company. Directors in Canada must also carefully consider other legal regimes that may present AI-related risk, such as privacy laws and intellectual property law. 8.2 AI Use-Related Risks 8. Artificial Intelligence 8.1 Board Oversight of AI Canada does not currently have an AI-specific gov - ernance framework addressing AI use and related risks. In 2023, a voluntary code of conduct on the Responsible Development and Management of
Advanced Generative AI Systems was published by Innovation, Science and Economic Development Canada. In 2022, Canada’s federal government pro - posed passage of The Artificial Intelligence and Data Act. However, the Act faced considerable scrutiny by stakeholders and was abandoned in early 2025. The stated policy objective of Canada’s current fed - eral government (elected in 2025) is to develop an AI strategy that balances promoting innovation with risk mitigation. 8.3 Liability Exposures Arising From AI Use As mentioned, directors in Canada are obliged to manage and mitigate AI-related risks through their duty of care to the company. Directors in Canada must also carefully consider how the company could attract liability under legal regimes indirectly related to AI use and risk. For example, Canada’s Personal Information Protection and Electronic Documents Act, while not directly referring to AI, applies to the use of personal information in AI systems. In Ontario, companies with more that 25 employees must disclose in their job postings if AI is used to screen, assess or select appli - cants. Similarly, in Quebec, companies must disclose if they use AI and algorithms in decision-making pro - cesses based on personal information. 8.4 Key Disclosure Requirements for AI Use Canadian securities law does not currently directly impose any AI-specific disclosure requirements. That said, general principles of securities law require that Canadian public companies disclose AI-related risks impacting the company’s business in the same way that issuers are required to disclose other types of material information. Canadian public companies are increasingly including discussion of AI-related issues in their public disclo - sure. This includes discussion of AI-related risk. This also includes discussion of steps they are taking to mitigate AI-related risks, including AI education for directors, the appointment of directors with AI exper - tise, and the designation of specific senior officers to oversee AI-related matters and initiatives.
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