Donald Trump\u2019s swearing-in as President of the United States has sent shockwaves through global trade, the clean tech industry and decarbonization efforts.<\/p>\n\n\n\n
With Trump 2.0 policies aggressively promoting large-scale fossil fuel extraction to counter China\u2019s clean tech dominance, Canadian politicians and industry leaders are starting to backtrack on decarbonization targets, justifying the move as a way to safeguard our industrial competitiveness and energy self-sufficiency.<\/p>\n\n\n\n
Does this development cast doubt on the future of climate action? Could it undermine the federal and Quebec governments\u2019 climate goals?<\/p>\n\n\n\n
On the first day of his second term, President Trump announced that the US would withdraw from the Paris Agreement on climate action, loudly pledging to \u201cdrill, baby, drill.\u201d Echoing arguments used when his first administration withdrew from the agreement for several months in 2017, he said that it does not reflect American values and that the US should not support countries that don\u2019t merit its financial assistance.[4]<\/a><\/p>\n\n\n\n Clearly illustrating the grip climate skeptics have on his administration, this move was followed by climate change information being buried deep within US government websites\u2014or simply removed.[5]<\/a> In addition, US delegates were muzzled and barred from attending certain meetings of the Intergovernmental Panel on Climate Change (\u201cIPCC<\/strong>\u201d),[6]<\/a> and NASA abolished its Office of the Chief Scientist, putting a world-renowned climatologist out of work.[7]<\/a><\/p>\n\n\n\n In April 2024, the Securities and Exchange Commission (\u201cSEC<\/strong>\u201d) suspended its new climate disclosure rules pending a ruling from the United States Court of Appeals for the Eighth Circuit. The pause came in response to legal challenges filed by a number of energy sector stakeholders, who argued that the rules were an overreach of the SEC\u2019s mandate and amounted to environmental regulation.<\/p>\n\n\n\n On February 11, 2025, without consulting his fellow commissioners, the acting SEC chair unilaterally directed staff to request that the Court of Appeals delay scheduling arguments, stating that the SEC\u2019s brief did not reflect its current views. He went on to argue that the Court should be informed of recent changes in the SEC\u2019s composition and a new presidential memorandum that directs all agencies to postpone sending rules to the Office of the Federal Register until they have been reviewed and approved by a department or agency head designated by President Trump.<\/p>\n\n\n\n Then on March 27, 2025, the SEC voted to end its defence of its climate disclosure rules for public companies. Following the vote, \u201cSEC staff sent a letter to the court stating that the Commission withdraws its defence of the rules and that Commission counsel are no longer authorized to advance the arguments in the brief the Commission had filed.\u201d[8]<\/a><\/p>\n\n\n\n This effectively dashed any hopes of the American government implementing climate disclosure rules.<\/p>\n\n\n\n On February 11, the SEC issued new Compliance and Disclosure Interpretations (\u201cCD&I<\/strong>\u201d) regarding the interpretation of the rules governing beneficial ownership reporting for issuers listed on a US exchange.[9]<\/a> They included an expanded scope of activities that can be considered to influence the control of an issuer. Activist shareholders whose activities can be considered to have the effect of influencing the control of the issuer will now be required to file a Schedule 13D beneficial ownership report. This comes with a significantly heavier disclosure burden than the Schedule 13G report typically filed by shareholders who are not considered to influence the issuer\u2019s control. Under US securities legislation, anyone who has direct or indirect influence over an issuer\u2019s securities and holds more than five percent of the voting rights for the issuer\u2019s outstanding voting shares must file a beneficial ownership report with the SEC.<\/p>\n\n\n\n Under the new guidance, the intent behind a shareholder\u2019s engagement with an issuer\u2019s management and the context in which it occurs are relevant in determining whether the shareholder is holding the securities with the goal of \u201cinfluencing\u201d the issuer\u2019s control.<\/p>\n\n\n\n Generally, a shareholder who discusses with management its views on a particular topic and how its views may inform its voting decisions, without more, would not be disqualified from the simplified Schedule 13G reporting. A shareholder who goes beyond such a discussion, however, and exerts pressure on management to implement specific measures or changes to a policy may be \u201cinfluencing\u201d control over the issuer.<\/p>\n\n\n\n For example, going forward, a shareholder who recommends that the issuer undertake specific actions on an environmental policy and, as a means of pressuring the issuer to adopt the recommendation, explicitly or implicitly conditions its support of one or more of the issuer\u2019s director nominees on the issuer\u2019s adoption of its recommendation could be considered to be influencing the issuer\u2019s control and required to use the much more rigorous Schedule 13D report.<\/p>\n\n\n\n Activist shareholders using Schedule 13G who engage with issuers need to carefully consider this new interpretation. This will help them assess whether tactics previously viewed as standard practice might now disqualify them from the simplified Schedule 13G reporting.<\/p>\n\n\n\n The SEC\u2019s underlying aim in issuing these new CD&Is is to rein in certain activist shareholders who are pushing for corporate sustainability policies and climate ambitions.<\/p>\n\n\n\n The US withdrawal from the Paris Agreement, its step away from climate disclosure rules and the new limits on shareholder activism could have major repercussions for our economy\u2019s transition towards net-zero. It might also influence the pace and extent to which our federal and provincial governments adopt public policies to support the shift to a low carbon economy.<\/p>\n\n\n\n Last month, to meet its Paris Agreement commitments, the Government of Canada submitted its nationally determined contribution for 2035. However, this was calculated based on the existence of the now-abolished carbon tax for individuals.<\/p>\n\n\n\n Will Canada have to scale back its level of climate ambition under article 4, paragraph 11 of the Paris Agreement?[10]<\/a><\/p>\n\n\n\n Furthermore, any reassessment of Canada\u2019s nationally determined contribution will have to include a review of the targets the Minister of Environment and Climate Change must set under the Canadian Net-Zero Emissions Accountability Act<\/em><\/a>.<\/p>\n\n\n\n On January 1, the two first Canadian Sustainability Disclosure Standards, CSDS 1, General Requirements for Disclosure of Sustainability-related Financial Information<\/em>, and CSDS 2, Climate-related Disclosures,<\/em> came into effect for voluntary adoption. Drafted in record time by the Canadian Sustainability Standards Board (\u201cCSSB<\/strong>\u201d) and finalized in December 2024, these Canadian standards closely mirror IFRS S1<\/a> and IFRS S2<\/a>, adopted by the International Sustainability Standards Board in June 2023. The Canadian Securities Administrators (\u201cCSA<\/strong>\u201d), an umbrella organization of Canada\u2019s provincial and territorial securities regulators, whose objective is to improve, coordinate and harmonize regulation of the Canadian capital markets, has supported the CSSB\u2019s work since the latter\u2019s establishment in June 2022. Indeed, the CSA is now developing a revised climate-related disclosure rule, which will incorporate the CSSB standards.<\/p>\n\n\n\n The CSA released a first draft of this rule in October 2021 as Proposed National Instrument 51-107, Disclosure of Climate-related Matters <\/em>(\u201c51-107<\/strong>\u201d).[14]<\/a> However, it noted that certain adjustments could be made to 51-107 to incorporate and improve upon the CSSB standards for Canada\u2019s capital markets. In a December 2024 press release,[15]<\/a> the CSA said it \u201cwill continue to work towards a balanced approach that supports the assessment of material climate-related risks, responds to requests for consistent, comparable and decision-useful climate-related disclosures, and contributes to efficient capital markets, including considering the needs and capabilities of issuers of different sizes.\u201d<\/p>\n\n\n\n In the same press release, the CSA added that it will continue to monitor international developments related to climate-related disclosure. Given the interconnectedness of our markets, it will \u201cbe carefully considering developments in the United States.\u201d<\/strong><\/p>\n\n\n\n Given the recent changes south of the border, will Regulation 51\u2011107 ever see the light of day? If it does, how watered down will its disclosure requirements be in comparison to the CSSB standards?<\/p>\n\n\n\n With Canadians heading to the polls in late April 2025, several initiatives announced in recent fiscal updates could return to the government\u2019s agenda, depending on which party wins.<\/p>\n\n\n\n These include a requirement for large federally incorporated private companies to file non-financial climate-related disclosures. Additionally, private companies may be mandated to adopt a Canadian taxonomy of activities the financial sector could classify as \u201cgreen\u201d and \u201ctransition\u201d to help align private sector capital with the net-zero principle and Canada\u2019s Paris Agreement targets, while also accelerating the flow of funds into sustainable initiatives.<\/p>\n\n\n\n Moreover, with the potential closure of American markets to specific Canadian products due to the Trump administration\u2019s trade war, Canadian manufacturers are likely to look to expand into new markets like Europe.[16]<\/a> With the recent implementation of the European Union\u2019s Carbon Border Adjustment Mechanism for certain goods whose production is at most significant risk of carbon leakage, such as iron and steel, aluminum and fertilizers, it will be crucial for these businesses to ensure that their products have a carbon intensity comparable to that of similar European products. Otherwise, they may be subject to import tariffs in Europe.<\/p>\n\n\n\n Companies that gather and analyze sustainability information unlock value in a variety of ways. For example, disclosure requirements:<\/p>\n\n\n\n Claiming that sustainability and emissions transparency reports create a competitive disadvantage might soothe populist and revisionist sentiments, but it is not a winning business strategy for future success. We need to move past the false dilemma that pits ambitious sustainability goals and regulations\u2014especially those related to climate and biodiversity\u2014against maintaining competitiveness. The two are not mutually exclusive.<\/p>\n\n\n\n To navigate a rapidly changing regulatory landscape, you need legal expertise.<\/strong> Whether you\u2019re a business looking to align your strategies with new market realities or an investor concerned about the implications of American and Canadian reforms, our specialized lawyers are ready to guide you. Contact us<\/a> today to explore emerging risks and opportunities and ensure that your operations remain compliant and sustainable.<\/p>\n\n\n\n [1]<\/a> https:\/\/gazette.gc.ca\/rp-pr\/p2\/2025\/2025-03-15-x2\/html\/sor-dors107-eng.html<\/a><\/p>\n\n\n\n [2]<\/a> https:\/\/www.pm.gc.ca\/en\/cabinet\/honourable-terry-duguid<\/a><\/p>\n\n\n\n [3]<\/a> https:\/\/www.ledroit.com\/actualites\/politique\/2025\/01\/21\/arrivee-de-trump-quebec-pourrait-ajuster-son-plan-climat-7GRRU5XUWRERNEV4WKX6CFIJHQ\/<\/a><\/p>\n\n\n\n [4]<\/a> \u00a0\u00a0\u00a0\u00a0 https:\/\/www.whitehouse.gov\/presidential-actions\/2025\/01\/putting-america-first-in-international-environmental-agreements\/<\/a><\/p>\n\n\n\n [5]<\/a> https:\/\/climate.law.columbia.edu\/content\/mentions-climate-change-removed-federal-agencies-websites<\/a><\/p>\n\n\n\n [6]<\/a> \u00a0\u00a0\u00a0 https:\/\/www.scientificamerican.com\/article\/trump-orders-u-s-scientists-to-skip-key-ipcc-climate-report-meeting\/<\/a><\/p>\n\n\n\n [7]<\/a> \u00a0\u00a0\u00a0 https:\/\/www.france24.com\/en\/live-news\/20250312-nasa-fires-chief-scientist-more-trump-cuts-to-come<\/a><\/p>\n\n\n\n [8]<\/a> https:\/\/www.sec.gov\/newsroom\/press-releases\/2025-58?utm_medium=email&utm_source=govdelivery<\/a><\/p>\n\n\n\n [9]<\/a> https:\/\/www.sec.gov\/rules-regulations\/staff-guidance\/compliance-disclosure-interpretations\/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting#103.12<\/a><\/p>\n\n\n\n [10]<\/a> \u00a0\u00a0 https:\/\/unfccc.int\/sites\/default\/files\/english_paris_agreement.pdf<\/a><\/p>\n\n\n\n [11]<\/a> \u00a0\u00a0 https:\/\/www.canada.ca\/en\/services\/environment\/weather\/climatechange\/climate-plan\/2035-emissions-reduction-target.html<\/a><\/p>\n\n\n\n [12]<\/a> \u00a0\u00a0 https:\/\/www.canada.ca\/en\/services\/environment\/weather\/climatechange\/climate-plan\/2035-emissions-reduction-target.html<\/a> (see Section 1 paragraph 17)<\/p>\n\n\n\n [13]<\/a> \u00a0\u00a0 https:\/\/rosagalvez.ca\/media\/zlnpkimm\/galvez-c12-countries-with-nz-commitments-legislation-en.pdf<\/a><\/p>\n\n\n\n [14]<\/a> \u00a0\u00a0 https:\/\/lautorite.qc.ca\/en\/professionals\/regulations-and-obligations\/securities\/5-ongoing-requirements-for-issuers-and-insiders-51-101-a-58-201\/51-107-disclosure-of-climate-related-matters<\/a><\/p>\n\n\n\n [15]<\/a> \u00a0\u00a0 https:\/\/www.securities-administrators.ca\/news\/csa-issues-market-update-on-climate-related-disclosure-project\/<\/a><\/p>\n\n\n\n [16]<\/a> \u00a0\u00a0 https:\/\/taxation-customs.ec.europa.eu\/carbon-border-adjustment-mechanism_en<\/a><\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Donald Trump\u2019s swearing-in as President of the United States has sent shockwaves through global trade, the clean tech industry and decarbonization efforts. With Trump 2.0 policies aggressively promoting large-scale fossil fuel extraction to counter China\u2019s clean tech dominance, Canadian politicians and industry leaders are starting to backtrack on decarbonization targets, justifying the move as a way […]<\/p>\n","protected":false},"author":5,"featured_media":31602,"parent":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[569],"insight-format":[416],"class_list":["post-30856","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-esg-and-carbon-finance"],"acf":[],"yoast_head":"\nThe SEC backs away from climate disclosures<\/h2>\n\n\n\n
Shift in the regulatory landscape for activist shareholders<\/h2>\n\n\n\n
Impact of these shifts in Canada and globally<\/h2>\n\n\n\n
Adjusting Canada\u2019s Paris Agreement commitments<\/h2>\n\n\n\n
\n
Is the SEC\u2019s shift a perfect excuse for Canadian Securities Administrators?<\/h2>\n\n\n\n
A glimmer of hope<\/h2>\n\n\n\n
Added value<\/h2>\n\n\n\n
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