ESG Updates in Canada and British Columbia

ESG Updates in Canada and British Columbia

As regulatory frameworks evolve to address global issues, CPAs play a crucial role in ensuring compliance and promoting ethical practices. Below are highlights of the latest developments in sustainability disclosures, greenwashing regulations, labour practices, pay transparency, and producer responsibility – all essential information for CPAs to support their organizations.

Canadian Sustainability Disclosure Standards (CSDS)

  • On December 18th, 2024, the Canadian Sustainability Standards Board (CSSB) published its final CSDS 1 General Requirements for Disclosure of Sustainability-related Financial Information and CSDS 2 Climate-related Disclosures, exclusively though the CPA Canada Handbook – Sustainability.
  • These standards follow IFRS S1 and IFRS S2 quite closely, with the exception of transition relief for certain disclosures. This ensures Canadian reporting will align with the IFRS global substantive baseline with an extension for Canadian reporting entities to better prepare for these sustainability disclosures.
  • Currently, these standards are voluntary;
    • The Canadian Securities Administrators (CSA) coordinates and harmonizes regulation for the Canadian capital markets. They have acknowledged the publication of CSDS 1 and CSDS 2 and are focusing on those requirements necessary to support a climate-related disclosure rule. CSA continues to monitor international developments related to climate-related disclosure and is carefully considering developments in the United States, given the interconnectedness of our markets.
    • On March 7th, 2025, the Office of the Superintendent of Financial Institutions (OSFI) updated Guideline B-15 on Climate Risk Management to remain interoperable with the corresponding requirements set out by CSSB.

Greenwashing – Bill C-59

  • Canadians are concerned about the environment and climate change, with 65% feeling they have a moral obligation to use environmentally friendly products. However, a study identified that 43% of Canadians believe that brands are greenwashing their sustainability initiatives.
  • Enacted on June 20, 2024, Bill C-59 introduced amendments to the Competition Act to address the practice of making false or misleading environmental claims.
  • The law establishes a private right of action, enabling individuals to sue companies accused of greenwashing. It requires businesses to substantiate their environmental claims using internationally recognized methodologies, placing the burden of proof on them. While the facts cited in the claim must be properly tested or substantiated, this alone may not suffice. If the overall impression of the claim to an average person implies a broader meaning, that implied broader meaning must also be tested or substantiated.
  • For more details, check out these primers by BD&P, McInnes Cooper and KPMG.
  • All public cases can be viewed on Competition Bureau Canada’s database.

Fighting Against Forced Labour and Child Labour in Supply Chains Act – Bill S-211

  • The International Labour Organization estimates that over 27 million people are in forced labour, generating $236 billion USD in illegal profits annually. Additionally, 160 million children are engaged in child labour globally.
  • Bill S-211, which came into force on January 1, 2024, aims to promote responsible business conduct and safeguard human rights by imposing reporting obligations. Government institutions and companies that produce or import goods into Canada, or control entities that do so, must report on their efforts to address forced and child labour in their supply chains.
  • These reports must be publicly available on the entities' websites, enhancing transparency and allowing consumers and stakeholders to make informed decisions. Reports can also be submitted to Public Safety Canada, where they will be published in the Supply Chain Act Library Catalogue.
  • For CPAs, this means ensuring accurate and thorough documentation of supply chain practices and compliance with the reporting requirements set forth by the bill. This involves collaborating with various departments to gather necessary information and ensuring that all reports are truthful and comprehensive.

Pay Transparency Reporting in British Columbia

  • The gender pay gap refers to the difference in earnings between people of different genders. While it affects people all along the gender continuum, it is most often expressed as a difference in hourly wages between men and women and is a significant barrier to gender equality.
  • To promote employer accountability on gender pay gaps, the Pay Transparency Act, effective May 11, 2023, requires companies in BC to report annually. Companies with 300 or more employees must report by November 1, 2025, and those with 50 or more employees by November 1, 2026.
  • The information disclosed by companies is compiled into an annual report by the Ministry of Finance.
  • For more details, you can visit the Pay Transparency in BC page.

Extended Producer Responsibility (EPR)

  • Extended Producer Responsibility (EPR) programs are crucial for environmental protection, waste reduction, and economic benefits. They shift the responsibility for product lifecycle management to producers, encouraging sustainable design and proper disposal. EPR programs also promote consumer awareness, compliance, and accountability, fostering better corporate practices and reducing greenwashing.
  • British Columbia’s Recycling Regulation requires producers (or distributors, brand-owners, importers and/or retail sellers) of regulated products to manage the entire lifecycle of their products, from design to end-of-life. An EPR plan with annual performance reporting must be submitted to ExtendedProducerResponsibility@gov.bc.ca
  • Regulated products in BC include:
    • antifreeze
    • beverage containers
    • solvent and flammable liquids
    • pesticides
    • gasoline
    • lead-acid batteries
    • pharmaceuticals
    • lubricating oils
    • empty oil containers
    • oil filters
    • paint
    • electronic and electrical products
    • tires
    • packaging and paper products
  • For more details, you can visit B.C.'s recycling system (EPR) and regulations page and review the current approved recycling plans and reports.

For CPAs, staying informed and compliant with these regulations is vital for legal adherence and fostering trust in the marketplace. Proactive engagement and thorough documentation will be key to navigating these changes successfully and supporting ethical business practices.