Companies must have to disclose all GHGs from their operations

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OPINION:'Ottawa might have to set a higher bar than provinces are willing to accept, and force federally regulated financial institutions — and, by extension, their corporate customers — to meet it,' Shawn McCarthy writes.

Canadian corporations are coming under increasing pressure to disclose their climate-related business risks as part of a global effort to reorient the financial sector to support the transition to a net-zero economy.

While securities regulation falls under provincial jurisdiction, the federal government has tools to encourage regulators if they fall short. Ottawa might have to set a higher bar than provinces are willing to accept, and force federally regulated financial institutions — and, by extension, their corporate customers — to meet it.

While the CSA warn of an onerous regulatory burden if companies face mandatory reporting on the full scope of emissions, failure to meet international standards would come at a cost, two leading financial experts warned last month in a Globe and Mail opinion piece.

International standards call for disclosure of the full range of emissions that result from a company’s operations. For an oil company, for example, they include: Scope 1 emissions from its production facilities; Scope 2 emissions from the energy it uses to produce the crude, and Scope 3 emissions when customers burn the fuel in a vehicle or industrial plant.

Consideration of the full scope of emissions matters when, for example, the federal government has to decide whether to give tax breaks for corporate investments that result in lower emissions at the production stage, but more oil production, and, therefore, more GHGs overall. To meet such requirements, banks and pension funds would have to demand the full scope of disclosure from their customers and the companies in which they invest. Similarly, mandatory disclosure for federal agencies such as the Business Development Bank of Canada and Export Development Canada will flow through to their customers.

 

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