A Guide for Canadian Businesses on ESG Reporting Requirements

The Canadian business landscape is witnessing a shift in accountability, where companies are no longer answerable solely to just customers or owners. Stakeholders now include the broader community and similar groups and they’re demanding transparency and responsibility. Merely offering excellent products or services is no longer sufficient; companies must demonstrate ethical and sustainable operations too.

To fulfill this expectation, Canadian businesses, like many others worldwide, are implementing Environmental, Social and Governance (ESG) reporting initiatives. These programs provide detailed information about a company’s carbon footprint, diversity and inclusion metrics, and corporate governance and decision-making.

The Basics of ESG Reporting in Canada

While ESG reporting encompasses three distinct areas (E, S, and G), this article focuses on the environmental aspect of reporting and outlines what Canadian companies need to know.


Canadian organizations have multiple reasons for reporting their climate disclosures. They may be focused on meeting client or vendor ESG requirements, managing risks, attracting new investors, complying with existing industry standards and expectations, and crucially, preparing for upcoming and potential regulations.


Although ESG reporting remains voluntary in many jurisdictions, this situation is rapidly changing. Recently, the Canadian government announced plans to introduce mandatory climate disclosure requirements by 2024. Initially applicable to federally regulated institutions such as banks and insurance companies, these requirements mandate the provision of disclosures on climate-related risks and exposures.

Now, the Canadian Securities Administrators have set a mandate that all publicly traded companies in Canada must disclose climate risks aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) by 2024. Similarly, the Office of the Superintendent of Financial Institutions released guidelines requiring federally regulated financial institutions to disclose climate-related information in line with the TCFD framework. While large crown corporations with assets exceeding one billion dollars already disclose climate-related information, now, all crown corporations must do so by 2024, adhering to the TCFD framework. But, it’s important to note that the regulatory environment continues to change on a seemingly daily basis.


In June 2023, the International Sustainability Standards Board (ISSB) made a significant step by releasing their first-ever ISSB Standards, namely IFRS S1 and IFRS S2. These standards are set to be implemented globally, including in Canada. This marks a positive development as there is a much-needed consolidation of standards taking place.

Around the same time, in July 2023, the Financial Stability Board requested the IFRS Foundation to take over the responsibility of monitoring companies’ progress on climate-related disclosures from the TCFD (Task Force on Climate-related Financial Disclosures).

While the ISSB is currently seeking input on future standard-setting priorities beyond the inaugural Standards, it is advisable for organizations to adhere to the TCFD framework in the meantime, as it will continue to serve as the core foundation for the new and evolving IFRS S1 and IFRS S2 recommendations.

Understanding the TCFD Reporting Framework

So what exactly is the TCFD? It’s a reporting framework that’s increasingly being adopted globally. Besides Canada, the US and the EU have proposed disclosure rules influenced by the TCFD framework.

Established by the Financial Stability Board, the TCFD developed recommendations for climate-related financial disclosures in response to the need identified by G20 Finance Ministers and Central Bank Governors. The TCFD’s recommendations aim to create a framework that facilitates informed investment, credit, and insurance decisions, and enhances stakeholders’ understanding of carbon-related assets. 

The TCFD’s recommendations and standards can offer guidance to all Canadian businesses, including sector-specific support for both financial and non-financial groups. Guidance documents are available and provide a wide range of TCFD disclosure examples for financial and non-financial reporting companies, along with step-by-step assistance to help businesses integrate climate-related risk management processes with their operational and management practices.

In short, while ESG reporting has traditionally been a do-it-yourself process, standards and frameworks like the TCFD ensure that reported data is meaningful to investors and consistent across businesses.

Overcoming the Hurdles to Sustainable Transparency

Without the right tools, ESG reporting can be a challenge. But gathering the necessary data to support reporting gets even trickier. Consolidating all relevant information can be a daunting task, requiring collaboration from multiple departments, locations, and sources. Data is often stored and managed in various systems, and manual collection can be costly and time-consuming. The process of gathering data to determine an organization’s carbon footprint alone can take months. Take, for example, Scope 1, 2, and 3 emissions.

ESG frameworks not only require reporting on direct emissions (Scope 1 emissions), such as those resulting from burning natural gas or wastewater discharges, but also on indirect emissions (Scope 2 and Scope 3). Indirect emissions encompass sources like purchased electricity and emissions from the supply and value chain. Additionally, demonstrating environmental responsibility extends beyond legal compliance; stakeholders want evidence that businesses are taking proactive steps to reduce their environmental impact. Consequently, environmental components of ESG reporting often include metrics related to energy efficiency, climate change, waste management, carbon emissions, biodiversity, air quality, deforestation, and water quality.

What is the Impact of the New ESG Reporting Mandate on Canadian Businesses?

Apart from being a mandated climate reporting disclosure, these new ESG reporting requirements for all Canadian publicly listed and crown corporations constitute a vital step toward achieving Canada’s 2030 Emissions Reduction Plan of cutting greenhouse gas emissions by 40% to 45% by 2030 and transitioning to net zero by 2050. This mandate will benefit both businesses and the nation as a whole.

The TCFD classifies climate-related risks into two categories: transition risks related to moving toward a lower-carbon economy and physical risks associated with the direct impacts of climate change. And so the mandatory reporting of climate-related metrics necessitates tracking and reporting on a range of climate-related indicators. The TCFD framework comprises four core elements for climate-related financial disclosures:

1. Governance: The organization’s governance pertaining to climate-related risks
2. Strategy: The actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
3. Risk Management: The processes employed by the organization to identify, assess, and manage climate-related risks
4. Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities

This reporting requirement also entails institutions collecting and evaluating information on climate risks and emissions from their customers. If we consider Canadian banks and insurers for a moment, this poses a significant challenge due to their large customer base. Reporting requirements for these institutions may range from capturing the carbon footprint of major companies to tracking the water consumption of everyday consumers.

As 2024 approaches, publicly listed Canadian companies and crown corporations will need to establish systems to accurately collect, track, and report on their climate risks. This is no small task and will require organizations to adopt new technology solutions to meet these reporting requirements and future mandates.

There is no doubt that reporting in line with the TCFD framework poses a significant undertaking for Canadian organizations. Below are some suggestions to assist you in getting started:

• Initiate Reporting Immediately: Avoid waiting for perfect synchronization of data, systems, and policies. Take action now. The TCFD framework is increasingly becoming the standard for global climate disclosure legislation. Several other countries are already progressing with reporting obligations aligned with the TCFD. Organizations that delay will discover themselves falling behind once regulations are enforced.
  
• Leverage TCFD Learning Resources: ESG and sustainability professionals responsible for TCFD reporting can acquire valuable insights by referring to the TCFD Knowledge Hub, which provides free online courses and content.

• Implement Technology for Data Management: Compiling a TCFD report can be overwhelming due to the extensive volume of data required. Sustainability management technology can simplify reporting for the TCFD and other frameworks by consolidating the collection and management of all ESG and sustainability data.

As Canadian businesses navigate this evolving landscape of ESG reporting and sustainability, it’s crucial for them to embrace the changing expectations of stakeholders and proactively demonstrate ethical and sustainable operations. The introduction of mandatory climate disclosure requirements by the Canadian government, along with the adoption of the TCFD framework and monitoring the progress of the evolving ISSB standards, signifies a significant shift towards greater transparency and accountability.

While the reporting process may present challenges, including the consolidation of relevant data and the adoption of new technology solutions, it is a necessary step towards achieving Canada’s emissions reduction goals and fostering a more sustainable future. By initiating reporting immediately, leveraging available resources, and implementing the right sustainability solutions, Canadian businesses can position themselves at the forefront of sustainability, ensuring meaningful information for all stakeholders and consistent reporting practices across the board. Embracing these changes will not only benefit individual organizations but also contribute to the overall well-being of the nation and its pursuit of a net-zero future.