Climate risk disclosures must be mandatory for companies

From: Mark Hughes and Barbara Zvan
To: Canadian fiscal observers
Date: October 31, 2025
Re: Climate risk disclosures must be mandatory for companies  

“The reports of my death have been exaggerated,” Mark Twain famously quipped after reading the news of his own passing. Today’s headlines are ringing a different death knell, for the end of sustainable finance and the impact of climate on investment decisions.  Let’s parse the signal from the noise.

The backlash against ESG is real, and so is the impact it is having on some asset owners’ public-facing efforts - in particular, those related to membership-based alliances. What is also true is that climate disruption is an increasingly urgent material financial risk – and the investment sector knows it.  As Will Goodwin, co-CIO at the Guardians of New Zealand Superannuation, the nation’s $68-billion sovereign wealth fund : “Investors don’t mistake surface changes for the deeper currents – the direction of travel [on climate] is clear, and it isn’t reversing.”

While the names of some financial institutions may be showing up less in the climate limelight, they are showing up equally, if not more, in the charge for better, clearer, and more credible climate data. The International Sustainability Standards Board (ISSB), which set the global standard for climate-related financial disclosures, now has 66 leading asset owners and managers on its advisory board – including four out of the five largest investors by assets under management in the world.

The upshot for those seeking to attract global capital:  Your disclosure of material climate-related risks (and opportunities!) matters. Canada’s competitors around the world are priming their companies to provide investors with this data. We are not. That leaves Canadian businesses at a distinct disadvantage.

Few categories of information are more relevant and predictive for investment decisions than those associated with climate-related disruption. The physical realities are already affecting us. In 2024, worldwide losses from wildfires, floods and storms topped US$400-billion. As our climate warms, these risks will inevitably grow worse. The transitional implications of climate change are equally clear. While conventional energy will play a role in the global economy for some time, the demand for non-emitting sources such as wind, solar, geothermal and nuclear will only grow.

In the face of transformative shifts, the job of finance and investment professionals is to identify risks and opportunities, then allocate capital accordingly to keep our long-term investments healthy and our economies running. Information is the fuel for that engine.

For more than a decade, the global financial and investment community has been working to align on credible, comparable climate-related financial disclosure rules, culminating in the 2023 establishment of the ISSB’s standards. Since then, 36 jurisdictions have officially adopted the standard or are taking steps to do so. That includes most of the places Canada aims to do business as a means of trade diversification.

Europe’s disclosure standards, the highest bar in the world, have more than prepared their companies to compete for capital in an ISSB-aligned world. The United Kingdom has required publicly listed and large private companies to disclose climate-related risks since 2022. China has said that it will roll out aligned standards by 2027. Emerging markets such as Brazil, Mexico, and Malaysia are all moving forward, no doubt to increase their companies’ competitiveness in international markets.

Until recently, Canada was on the same path. In December, 2024, the Canadian Sustainability Standards Board (CSSB) published a set of ISSB-aligned disclosure standards that reflects Canada’s unique needs and context. The Office of the Superintendent of Financial Institutions, which oversees federally regulated banks, pension funds and insurance companies, integrated CSSB into its existing, mandatory climate-disclosure guidelines.

The next step should have been adoption by the Canadian Securities Administrator (CSA). This would have paved the way for mandatory disclosure across nearly all of Canada’s economy.  But in April, the CSA hit pause. It explained its decision as a response to a “rapidly changing global economic and geopolitical landscape.”

Canada’s direction through that changing landscape is now clear. In his recent statements, Prime Minister Mark Carney has put a fine point on the ambition to build stronger trade and investment relations with non-US partners. Climate disclosure is, and will remain, one of the expectations our companies will need to meet to succeed in those markets.

The decision to put off clarity and direction on disclosure for Canadian businesses does them a disservice. Not only does it put Canadian firms out of step with their competitors, it makes catching up even more difficult. Every region that adopts mandatory climate-disclosure rules does so in phases to ensure businesses have time to plan and prepare. A delay means choosing between a longer lag or a shorter, steeper climb; both put Canadian companies at a disadvantage.

This is the moment for Canada to act in our own, long-term interests. Getting climate disclosure right, now, is critical to that endeavour. It’s time for Canada’s regulators to unpause their efforts and press forward.

Mark Hughes is a board member of UBS Group AG, a former group chief risk officer at Royal Bank of Canada and former chair of the Global Risk Institute. Barbara Zvan, a senior fellow at the C.D. Howe Institute, is the chief executive officer of the University Pension Plan Ontario, a former chief risk and strategy officer of Ontario Teachers’ Pension Plan and a member of Canada’s Expert Panel on Sustainable Finance.

Want more insights like this? Subscribe to our newsletter for the latest research and expert commentary.