Reactions to the SEC’s climate rule, recent supplier emissions reductions and Canada's new reporting standards

Breaking news: Canada proposes new sustainability reporting standards based on IFRS guidelines

The Canadian Sustainability Standards Board (CSSB) released a first draft of its sustainability standards, based on the International Sustainability Standards Board’s IFRS S1 and S2. The draft, now under public consultation, includes two standards: CSDS 1, ‘General Requirements for Disclosure of Sustainability-related Financial Information’ and CSDS 2  ‘Climate-related Disclosures’. If approved, Canadian firms could start reporting on or after January 1, 2025. The CSSB will also give a two-year transition period to disclose Scope 3 emissions. Although the adoption of CSSB’s standards will be on a voluntary basis, the news marks a significant step towards mandatory sustainability and climate disclosures. In addition, mandatory sustainability disclosure rules outside of Canada, such as the recently approved SEC climate disclosure rules and the EU CSRD, are likely to exert influence on the Canadian Security Administrators (CSA). In order to be prepared, Canadian firms should start conducting ESG and climate data gap analysis and streamlining data collection processes.

Can the SEC’s proposed climate rule clean up the voluntary carbon market?

After years of discussions, push backs and legal positioning, the SEC announced it had approved its climate disclosure rule on March 6th. Much proverbial ink has already been spilled – Is the rule too diluted? How will legal challenges play out? – and reaction has been mixed on most fronts. One critical element of the climate rule that has thus far dodged major headlines is how the rule will legislate offset disclosures. Now, firms using offsets will need to report their offset ‘balance sheet’ yearly, as well as critical project-level material, such as the specific project type, location and cost. This has the potential to dramatically reshape voluntary credit usage – no more sitting on credits until the time is right to either sell on or retire. And with the idea of an offset balance sheet, we are moving closer to a carbon accounting system espoused by Robert Kaplan and the E-liability Institute. Carbon credits as meaningful sources of mitigation finance? They are getting closer.

Walmart meets supplier emissions reduction target six years early

In February 2024, six years earlier than the target year, Walmart announced that its suppliers had reported projects expected to exceed 1 billion metric tonnes of emissions reduced, avoided or sequestered. Over 5,900 suppliers participated in ‘Project Gigaton’, which the firm launched in 2017. As Walmart announced it had progressed halfway towards its target in April 2022, progress has accelerated in the past year and half. To achieve its goal, Walmart communicated with suppliers to encourage early action and continuous improvement, asking them to set emissions reduction goals from the project outset and sharing best practices to support them along the way. The retailer also facilitated access to renewables and sustainable financing. Walmart collaborated with Schneider Electric to provide access to ‘Gigaton PPA’, allowing suppliers to participate in aggregate utility-scale power purchase agreements (PPAs). Walmart also worked with HSBC to launch a sustainable supply chain finance programme to offer early payment to suppliers setting science-based targets or achieving a CDP score threshold.

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