ESG and sustainability reporting in Canada: What foreign companies must disclose 

Who is this for: GCs, CFOs, Chief Sustainability Officers, and compliance leads at foreign companies operating in Canada, importing goods into Canada, listed on Canadian stock exchanges, or operating as federally or provincially regulated financial institutions. 

The assumption that creates the most compliance exposure: Foreign companies entering Canada may assume that ESG reporting is a voluntary exercise like a reputational commitment rather than a legal obligation. That assumption was more defensible two years ago, but not anymore. For example, the Fighting Against Forced Labour and Child Labour in Supply Chains Act, commonly referred to as the Modern Slavery Act (the MSA), has been in force since January 1, 2024 and carries penalties of up to CAD $250,000 per offence with personal liability for directors and officers.

For federally regulated financial institutions, the Office of the Superintendent of Financial Institutions’ (OSFI) Guideline B-15 imposes mandatory climate risk management and disclosure obligations. The AMF has issued parallel climate risk guidance for Quebec-supervised financial institutions. 

In addition, all reporting issuers, generally companies that have offered securities to the public in Canada, are subject to existing continuous disclosure obligations that require material ESG risks, including risks related to climate change, loss of biodiversity, and forced labour, to be disclosed in their annual filings. 

Consequently, the direction of travel in Canada is toward more mandatory disclosure, not less. The Canadian Sustainability Standards Board released Canada’s first voluntary sustainability disclosure standards in December 2024. Foreign companies that begin building their Canadian ESG reporting infrastructure now will be materially better positioned than those who wait for mandatory rules to arrive. 

In this article:

1. Modern Slavery Legislation in Canada: mandatory reporting for supply chain risk 

The MSA, which came into force on January 1, 2024, requires affected businesses operating in Canada to submit a public report by May 31 of each year detailing their efforts to prevent and reduce the risks of forced or child labour within their supply chains. 

Who must report? 

The MSA applies to any corporation, partnership, trust, or other unincorporated organization (i) that is listed on a Canadian stock exchange, or (ii) that has a place of business in Canada, does business in Canada, or holds assets in Canada, and meets at least two of the following three criteria for at least one of its two most recent financial years: 

• Holds at least $20 million in assets. 
• Generated at least $40 million in revenue. 
• Employs an average of at least 250 employees. 

The MSA imposes a reporting obligation on in-scope entities if they produce goods in Canada or elsewhere or import into Canada goods produced outside Canada. An in-scope entity controlling another entity engaged in the production of goods or in the importation into Canada of goods will also be subject to the annual reporting obligation. 

Key compliance requirements 

1. Annual Disclosure: Impacted businesses must complete an online questionnaire and submit an annual report to Public Safety Canada by May 31 of each year. 
2. Board Approval: The annual report must be formally approved by the entity’s governing body, for a corporation/company, that is its board of directors, before submission. 
3. Public Accessibility: Reporting entities must publish the report prominently on their corporate website, if they have one. 
4. Mandatory Content: The report must outline the entity’s structure, operational activities, supply chains, due diligence policies, remediation measures, and internal employee training programs. A report that is generic, incomplete, or inconsistent with the company’s actual supply chain practices may create reputational exposure that is separate from and potentially greater than the regulatory penalty for non-filing. 

Penalties for non-compliance 

Failing to submit a report, failing to publish it publicly, or providing false or misleading information is a summary offence. 

• Fines: Violations can lead to financial penalties of up to $250,000 CAD per offence. 
• Personal Liability: Corporate directors, officers, and agents can be held personally liable if they directed, authorized, or acquiesced to the offence. 

The MSA is primarily a transparency and disclosure statute, rather than due-diligence legislation; it does not require companies to eliminate forced labour from their supply chains, but to report on what they are doing about it. However, foreign companies interested in doing business in Canada should proactively review their global procurement processes, as Canadian customs authorities also enforce a strict import ban on goods flagged for forced labour risks. A company whose MSA report identifies forced labour risk in its supply chain and takes no remediation action faces not only regulatory exposure under the MSA but potential import ban enforcement on the goods themselves. The two regimes operate independently but their intersection creates compounding exposure. 

Quebec-specific disclosure obligations for listed issuers 

In addition to the MSA, Quebec’s Autorité des marchés financiers (AMF) (Quebec’s securities regulator) has issued a notice relating to modern slavery disclosure requirements applicable to issuers subject to the regulatory purview of the AMF. The notice reminds issuers that Canadian continuous information regulation requires issuers to disclose in their Annual Information Form (AIF), the risk factors relating to the company and its business most likely to influence an investor’s decision to purchase securities of the company which could include information regarding modern slavery if a reasonable investor’s decision to buy, sell or hold securities of the issuer would likely be influenced or changed if the information in question was omitted or misstated. 

For example, an issuer could face the following risks : litigation risks, reputational risks and operational risks associated with modern slavery. The issuer could also face risks affecting its supply chain, where applicable. 

The AMF notice also reminds issuers that the AIF requires an issuer to describe the social policies the company has implemented that are fundamental to its operations as well as the steps to implement them. The definition of “social policy” is broad and may include policies dealing with issues related to modern slavery. Finally, the AMF notice reminds issuers that Regulation 58-101 respecting Disclosure of Corporate Governance Practices (Regulation 58-101) requires issuers to disclose whether or not the board of directors has adopted a code of conduct and ethics for directors, officers and employees. Such code of conduct and ethics should be designed to promote integrity and deter wrongdoing, in particular, as regards fair dealing with the issuer’s employees. Regulation 58-101 also requires the issuer to disclose the steps taken by the board of directors to encourage and promote a culture of ethical business conduct. 

2. OSFI Guideline B-15: Climate risk management and AMF climate risk management guideline

Who it applies to 

OSFI Climate Risk Management Guideline (Guideline B-15) establishes OSFI’s expectations related to the federally regulated financial institutions’ (FRFIs) management of climate-related risks (both physical and transitional risks). It aims to support FRFIs in developing greater resilience to, and management of, these risks. Guideline B-15 applies to all FRFIs except foreign bank branches. 

What it requires

Guideline B-15 is divided into two chapters and is aligned with the four pillars contained in the Task Force on Climate-related Financial Disclosure (TCFD) Framework now embedded in the International Sustainability Standards Board (ISSB) IFRS S2. 

Chapter 1 — Governance and risk management: The FRFI must identify and understand the impact of climate-related risk on its short-term and long-term strategy, capital and financial plans and recommend the implementation of a climate transition plan in line with its business plan and strategy. In developing this climate transition plan the FRFI should assess its achievability under different climate-related scenarios and have internal metrics and targets to help measure its progress in achieving its climate transition plan. 

Chapter 2 — Climate-related financial disclosures: FRFIs must disclose information specific to the current and potential future impact of climate-related risks and opportunities on the FRFI’s markets, business, corporate or investment strategy, financial statements and future cash flows. The climate-related financial disclosure should serve the needs of sophisticated users, but also be concise enough to be understood by the general public and be balanced between qualitative and quantitative information. The information reported should be verifiable and of high-quality and use best-in-class measurement methodologies (for example GHG emissions should be accounted for using the GHG Protocol Corporate Standard) and be based on the Canadian Sustainability Standards Board (CSSB) disclosure standards and recognized climate scenarios such as the ones developed by the International Energy Agency, the Intergovernmental Panel on Climate Change and the Network for Greening the Financial System and should also consider domestic legislation such as the Canadian Net-Zero Emissions Accountability Act. 

3. AMF Climate Risk Management Guideline: Quebec-supervised financial institutions 

Who it applies to 

Similar to Guideline B-15, in July 2024, the AMF issued its Climate Risk Management Guideline, aligned with the ISSB IFRS S2. The guideline applies to insurers, financial services cooperatives, trust companies, and other deposit-taking institutions operating under the AMF’s supervision. 

Implementation timeline

The guideline establishes phased implementation timelines based on institution size: 

• Larger institutions: Required to comply within 180 days following the end of the 2024 financial year, meaning larger AMF-supervised institutions should already be in compliance. 
• Smaller institutions: Required to comply by the close of the 2025 financial year. 
• Scope 3 GHG emissions: Disclosure obligations become effective one year after the primary implementation deadline for each institution size category. 

Foreign financial institutions operating in Quebec under AMF supervision should confirm which category they fall into and whether their implementation deadline has already passed. For larger institutions whose 180-day window has elapsed, the AMF guideline is not a future compliance project, but a current obligation. 

Finally, in July 2026, the AMF issued a staff notice informing in-scope financial institutions carrying out asset management activities that it was indefinitely deferring the disclosure requirement for financed emissions related to off-balance-sheet investments. These disclosure obligations were initially set to take effect in 2029. 

4. General ESG disclosure obligations applicable to all reporting issuers 

Who it applies to 

All reporting issuers (companies that have made a distribution of securities to the public in Canada) are subject to disclosure of ESG risks in their continuous disclosure documents. Foreign companies listed on Canadian exchanges or that have otherwise made a public distribution of securities in Canada are reporting issuers subject to these obligations. 

Climate and environmental risk disclosure 

Reporting issuers are required to disclose in their Management’s Discussion & Analysis (MD&A) and AIF risks that may reasonably have a material effect on the future performance of the issuer including total revenue and profit or loss from continuing operations. These risks may include risks resulting from climate change or loss of biodiversity, the effects of environmental regulation or policies. These obligations exist under current securities law and apply regardless of whether CSSB standards are adopted voluntarily or mandated. A foreign company that is a Canadian reporting issuer and does not disclose material climate-related risks in its MD&A or AIF is non-compliant today, not at some future date when mandatory sustainability standards take effect. 

The Canadian Sustainability Standards Board: voluntary standards now, mandatory framework coming

The CSSB released its finalized sustainability disclosure standards, CSDS 1 (General Requirements for Disclosure of Sustainability-related Financial Information) and CSDS 2 (Climate-related Disclosures), in December 2024, effective for annual reporting periods beginning on or after January 1, 2025. The standards are currently voluntary. 

For reporting issuers preparing for the eventual mandatory regime, early voluntary adoption of CSDS 1 and CSDS 2 serves two purposes: it builds the internal data infrastructure and governance processes that mandatory compliance will require, and it signals to investors and regulators that the issuer is engaged with the direction of Canadian disclosure expectations. Companies that wait for mandatory rules to adopt the standards will face a compressed implementation timeline that companies already reporting voluntarily will not. 

Board diversity disclosure: non-venture issuers

Certain reporting issuers (non-venture issuers) are required to disclose in their proxy solicitation circular or AIF governance information concerning the representation of women on the board of directors and in executive officer positions. 

CBCA diversity disclosure: publicly traded CBCA corporations

Finally, all publicly traded corporations governed by the Canada Business Corporations Act (CBCA) are required to disclose information on the issuer’s policy regarding diversity of the board of directors and senior management. The CBCA requires information concerning the number and percentage of members of the board of directors and senior management who are women, indigenous peoples, members of visible minorities and persons with disabilities and also requires the issuer to disclose whether or not it has adopted a target of representation in such positions, and if no such target has been adopted, the reason why. Foreign companies incorporated under the CBCA that are publicly traded in Canada must meet this disclosure obligation annually. The absence of a diversity target does not excuse the disclosure; the obligation is to disclose the policy position, whatever it is.

How Miller Thomson can help 

Canada’s ESG and sustainability reporting landscape is evolving faster than at any point in its history. The Modern Slavery Act, OSFI Guideline B-15, the AMF Climate Risk Guideline, existing securities disclosure obligations, and the voluntary sustainability standards framework of the CSSB collectively create a compliance environment that requires coordinated legal, governance, and reporting advice, not a single-practitioner response. 

Miller Thomson’s ESG and Carbon Finance teams advise foreign companies on the full spectrum of Canadian ESG reporting obligations, from Modern Slavery Act threshold assessment, compliance program implementation and annual report preparation through OSFI and AMF climate risk compliance, continuous disclosure obligation review, CSSB voluntary adoption planning, and board diversity disclosure. Our national presence includes Quebec practitioners who advise on the AMF-specific obligations that apply in addition to the federal framework. 

Speak with a Miller Thomson ESG and Carbon Finance lawyer about your Canadian reporting obligations