Institutional investors, regulators and financial standard organizations are calling on Canadian corporations to adopt transparent climate-risk reporting, according to a new report from the C.D. Howe Institute.

The report noted corporate directors have the legal and fiduciary duty to act in the best interests of their companies in developing strategies to address climate-related financial risks to their business. It also pointed out clarifying and adopting mandatory uniform reporting on climate metrics and finance would benefit both corporate officers and investors alike.

Indeed, Janis Sarra, professor of law with the University of British Columbia and principal co-investigator at the Canada Climate Law Initiative, explained in the report clearer reporting would enable corporate officers and directors to offer investors information that’s transparent, as well as comparable year-over-year and between companies in a sector.

Sarra also suggested directors could benefit from a common taxonomy — a set of metrics and definitions, according to the report. She added that a green-and-transition taxonomy would allow financial institutions to communicate their investment priorities clearly to stakeholders, as well as how they’re managing climate-related financial risks.

Canada’s largest banks, insurance companies and pension funds are funding development of a made-in-Canada transition and sustainable finance taxonomy to reconcile the country’s heavy dependence on natural resources and other high-carbon-emitting sectors with the federal government’s plan to moving to net-zero carbon emissions by 2050. Sarra noted it’s critical the nation’s transition taxonomy aligns, as much as possible, with existing international standards and best practices in the European Union, U.K., U.S. and China.

Currently, there’s mounting pressure from investors globally for companies to reduce carbon-emitting activities, noted the report. And recent climate actions announced by the Bank of Canada, the U.K. government and U.S. President Joe Biden on significant climate action signals international movement on climate-related issues, the report added.