Why do we need standards for sustainability disclosure?
Investors and other stakeholders are demanding higher-quality information and insights about company performance, risks, opportunities, and long-term prospects – beyond what is available in conventional financial statements.
It’s good news that Canadian entities are producing sustainability reports to meet the information needs of their investors and other stakeholders. But these reports are often inconsistent and incomplete.
Entities have to work through these numerous standards, frameworks and initiatives, understand the differences between each, and then identify which one will work for their needs.
That's why having the newly formed International Sustainability Standards Board (or ISSB) working to deliver a baseline set of sustainability standards is a monumental step in driving global consistency in sustainability reporting.
Consistent sustainability reporting standards will help harmonize reporting and bridge the communication gaps that exist between entities and their investors.
What’s more, a convergence of global sustainability reporting standards – realized through the ISSB’s formation – will help combat the confusion companies face today.
Investors and other interested stakeholders will be able to review, understand and compare this information across companies and countries to make better and more informed decisions.
Based on a comprehensive review of the Canadian standard setting structure, the Independent Review Committee on Standard Setting – recommended the formation of the Canadian Sustainability Standards Board (or CSSB).
Canada's standard-setting oversight councils approved this recommendation, and subsequently, the CSSB became operational in June 2023.
The CSSB will work in lockstep with the ISSB to develop and support the adoption of ISSB standards in Canada, serving three important functions:
First, it will provide a formal mechanism through which Canadian interests feed into international standard setting.
Of course, this same function exists in the world of financial accounting and auditing standards, where our Canadian boards ensure Canadian views are considered by their international counterparts. (Importantly, a Canadian counterpart to the ISSB would also align with the ISSB’s aim of working with jurisdictional standard setters to ‘provide a globally consistent and comparable sustainability reporting baseline’.)
Second, the CSSB will review international sustainability standards for use in Canada. Here, too, we look to the example set by our existing Canadian boards, who serve this role when adopting accounting and auditing standards for the private and public sectors.
Finally, Canada has a diverse range of reporting entities, which go beyond publicly listed enterprises. Thus, the CSSB could look to extend and adapt international sustainability standards to suit the unique perspectives of other types of entities.
Beyond these three primary functions, the CSSB would be well placed to identify the need for additional tools and guidance – and respond to that market need as appropriate. After all, as standard setters, we’re committed to developing standards that meet the needs of Canadian entities. And that’s where the Canadian Sustainability Standards Board fits in.
For more information and to stay up to date on the CSSB and the latest in sustainability disclosure, visit: www.frascanada.ca/cssb.