Canada is moving steadily toward formal sustainability disclosure requirements, reflecting a broader global shift toward transparent environmental and social reporting. Recent proposals introduce two new sustainability disclosure standards that are expected to shape how Canadian organizations report sustainability and climate related information in the coming years.
If adopted, these proposals would place Canada alongside other major jurisdictions that already require structured climate and sustainability disclosures. This development highlights the growing importance of sustainability reporting as a tool for improving corporate transparency, strengthening investor confidence and aligning national practices with international expectations.
A closer look at the proposed sustainability standards
The new sustainability disclosure framework has been designed to support consistent and decision useful reporting for investors, lenders and other stakeholders. The standards are aligned with internationally recognized sustainability principles and aim to create a shared foundation for reporting across markets.
Together, the two standards establish a baseline for disclosing sustainability related financial information and climate related financial information. They also bring together widely used reporting approaches into a single cohesive structure, making it easier for organizations to understand what is expected and how to comply.
CSDS 1 and sustainability related financial disclosures
CSDS 1 sets out general requirements for reporting sustainability related financial information. It focuses on how sustainability factors affect an organization’s financial position, performance and future outlook. While adoption is currently voluntary, CSDS 1 is expected to influence future regulatory requirements and serve as a reference point for policymakers.
The standard has been adapted to reflect the Canadian business environment, ensuring that sustainability disclosures remain practical while still meeting global reporting expectations. For many organizations, CSDS 1 provides a valuable starting point for building structured sustainability reporting processes.
CSDS 2 and climate related disclosures
CSDS 2 concentrates specifically on climate related risks and opportunities. It requires organizations to explain how climate factors may influence cash flows, access to financing and cost of capital over the short, medium and long term. These disclosures are designed to help stakeholders better understand financial exposure to climate change.
Feedback on CSDS 2 is expected to play a key role in shaping future climate disclosure requirements. While the current focus is on climate issues, the broader sustainability perspective reflected in the standard may influence how reporting obligations evolve over time.
Preparing for mandatory sustainability disclosure in Canada
Early preparation is essential for organizations that want to stay ahead of regulatory change. Aligning with proposed sustainability standards can enhance corporate reputation, support access to responsible investment capital and reduce exposure to climate related and sustainability risks.
Businesses should begin by developing a clear understanding of sustainability reporting frameworks and by improving their ability to measure and manage greenhouse gas emissions accurately. Digital tools for carbon accounting can simplify data collection, improve audit readiness and provide consistent reporting across the organization.
Boards also play a critical role in overseeing climate and sustainability matters. Strong governance frameworks help directors connect sustainability risks to financial outcomes and ensure that disclosure practices meet both regulatory expectations and stakeholder needs. Companies such as Dess Digital often emphasize the importance of integrating sustainability considerations into broader governance and reporting strategies.
Looking ahead
CSDS 1 and CSDS 2 represent an important step toward standardized sustainability reporting in Canada. Voluntary adoption now can help organizations build capability, reduce future compliance pressure and align with global best practices. As sustainability reporting continues to evolve, proactive engagement with these standards will position Canadian businesses for long term resilience and transparency.
