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Publicly traded companies could have been forced to disclose how climate change would disrupt their business plans, but those efforts were recently brought to a halt by Canadian financial regulators.
This means that, for the foreseeable future, investors and the public will be armed with less information when determining whether these companies have a real plan to deal with the climate crisis — or are relying on environmentally disastrous business-as-usual scenarios.
The move is a win for some of Canada’s largest oil and gas companies that are listed on the Toronto Stock Exchange and have spent years fighting some of the transparency proposals financial regulators have put forward.
But critics say the regulators are walking away from their responsibility to contribute to financial system stability. Both Canada’s central bank and its superintendent of financial institutions have warned that climate change will disrupt the Canadian economy in several ways.
One way is through the physical destruction wrought by climate-driven extreme weather: at almost $8 billion in insured damage, 2024 was “by far the worst year” in Canadian history, according to the Insurance Bureau of Canada. Another is the risk of a “fire sale” of assets if new technologies like, say, battery storage or consumer preferences for heat pumps lead to fossil fuels being rapidly tossed aside.
Climate risks also come in the form of legal liability. There has been US$28 trillion in climate damages caused by 111 companies globally, a recent study showed, more than half of which can be attributed to just 10 fossil fuel providers — two of which have large Canadian subsidiaries. Oil companies increasingly find themselves in court fending off accusations they misled the public about climate change.
While Canadian banks and financial institutions are now subject to a climate transparency rule, publicly traded companies have so far avoided the same obligations.
The Canadian Securities Administrators, the group representing provincial financial regulators, said April 23 it was “pausing its work on the development of a new mandatory climate-related disclosure rule.” It said it would also stop work on another requirement related to diversity.
“This is being done to support Canadian markets and issuers as they adapt to the recent developments in the U.S. and globally,” the group said in a statement.
The decision comes on the heels of a vote by the U.S. Securities and Exchange Commission, operating under an acting chair appointed by the Donald Trump administration, to end its defence in court of its own climate transparency rule.
The Canadian regulators’ decision to halt work on a similar rule came after a shift in “recent months” of the “global economic and geopolitical landscape,” Alberta Securities Commission chair Stan Magidson said in the group’s statement.
The provincial regulators first consulted on climate transparency standards in 2021, but never made the policy mandatory for companies wishing to participate in stock markets.
Instead, they decided to wait until a voluntary Canadian version was developed, which took until December 2024. By then, Trump had been elected president for a second time, and regulators said they would be “carefully considering developments in the United States.”
The decision came six days before Canada’s federal election on April 28.
The frontrunner in the polls, Liberal Leader Mark Carney, is known for his prior work as head of the central banks of Canada and England. He helped set up an organization that led to voluntary global climate financial disclosure rules.
In 2023, before he became Liberal leader, Carney gave a speech at a summit in Montreal where he accused both corporations and governments of failing to recognize the importance of transparency around climate risks.
The Liberals’ election platform commits to establishing “broad coverage of climate risk disclosure for companies across Canada,” and says a Liberal government would “prioritize working with provincial, territorial and international partners” on climate financial transparency.
The platform does not specify if this would target publicly traded companies or private ones. Businesses can choose to incorporate federally or provincially in Canada; the government is already planning rules to require climate transparency for federally incorporated large private companies. The Liberal Party did not respond to a request for comment.
Carney’s main opponent, Conservative Leader Pierre Poilievre, has not explicitly committed to mandating climate-related disclosures for corporations, but his party’s election platform does propose financial disclosure requirements for politicians.
Liberal, Conservative and other MPs have collectively disclosed tens of thousands of dollars in oil and gas investments under current rules. The Conservatives did not respond to a request for comment.
Green Party Co-Leader Elizabeth May called the decision “bizarre” and “remarkably badly timed,” coming weeks after the U.S. decision and during a Canadian federal election campaign.
“It lacks any kind of awareness of where we are in terms of tipping points, of carbon budgets, of how much time remains to make a difference,” she told The Narwhal.
“We talk about climate as if it’s some sort of luxury item we can get to later when we’re rich. That disconnect is ever-present and worse in this election than anything I’ve ever seen.”
The NDP says it will “stop big banks and industries from greenwashing their fossil fuel investments.” It did not respond to a request for comment.
On Wednesday, the regulators left the door open to restarting climate and diversity efforts “in future years.”
They also noted Canadian companies now have the option of using the voluntary made-in-Canada standards — and argued public companies already have to reveal some climate-related material risks as part of regular financial reporting.
Julien Beaulieu, a law lecturer at the Université de Sherbrooke and researcher at the Quebec Environmental Law Centre, said without a mandatory rule, information about the markets will be less useful because there will only be a patchwork of companies that volunteer climate disclosures.
Research suggests the majority of Canadian firms are not measuring their climate risks in dollar figures. In 2020, eight pension plan investment managers, representing $1.6 trillion in assets under management, called on companies to place “sustainability at the centre of their planning, operations and reporting” and use climate disclosure standards. Europe introduced climate transparency rules in 2023 that some analysts consider to be more ambitious than the Canadian version.
“This is sad news,” Beaulieu said of the regulators’ decision to pause its climate work.
“Overall, it’s a waste of so much time and resources. They consulted for so long, and so many people invested time and effort into this process, just to see it abandoned like that.”
Editor’s note: This story was updated at 10:35 a.m. ET on April 25 to include comments from Elizabeth May.
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