A decision by the Canadian Securities Administrators to step back from the development of a mandatory climate-related disclosure mandate could impact decision-making at one of the largest pension funds in Canada.
Jennifer Coulson, senior managing director and global head of environmental, social and governance at the British Columbia Investment Management Corp., says the regulator’s decision last month to pause its work in developing new climate guidelines and updating existing diversity-related disclosure requirements is disappointing.
“We’ve always supported the consistency and comparability of ESG data and this pause feels like it takes us further away from that scenario.”
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In a press release, Stan Magidson, chair of the CSA and chair and chief executive officer at the Alberta Securities Commission, said significant changes to the global economic and geopolitical landscape have resulted in “rising competitiveness concerns” for Canadian firms. In response, he added, the CSA will target initiatives that make Canadian markets more competitive.
These measures include three blanket orders designed to “reduce regulatory burden and provide greater flexibility” for reporting companies including a multi-faceted prospectus and disclosure mandate and a prospectus exemption for companies going public or that have recently reached the open markets through an underwritten initial public offering. The third measure will increase the investment limit in the offering memorandum exemption for certain eligible investors.
In its statement, the CSA referred to the Canadian Sustainability Standards Board’s recently launched sustainability standards, which are voluntary for companies, as an available disclosure tool. It also noted disclosure around how climate-related risks impact operations is already a requirement for issuers.
Coulson says when companies rely on different reporting methodologies, it creates a complicated mix of data points for investors to review, adding the BCI has encouraged mandatory reporting over the years. “It’s really about that consistency and making it much more efficient to factor into our investment process.”