Reason #2 Why Canadian Companies Need to Measure Carbon Emissions Starting in 2024

Mandated Carbon Reporting for Publicly Listed Companies: What You Need to Know

On June 10, 2024, the Canadian Sustainability Standards Board (CSSB) completed a public consultation on the draft sustainability disclosure standards (CSDS 1 & CSDS 2) for publicly listed companies in Canada (published feedback can be found here). These standards, once finalized, will require companies, including major grocery retailers, to annually report their carbon emissions across Scopes 1, 2, and 3.

This marks a significant step in Canada’s efforts to combat climate change, as it aims to enhance corporate transparency and accountability in alignment with countries across the globe who have already implemented similar reporting requirements. Further, this critical step will help strengthen global competitiveness and attract investment to Canadian industry. The inclusion of Scope 3 emissions, which encompass indirect emissions across the entire value chain, means that suppliers to these companies—whether publicly listed or not—will likely be impacted. While it’s not totally clear exactly how and when this will happen, further details are expected soon and suppliers need to be prepared, including the anticipated requirement to measure and report carbon footprints at the product level.

Why This Matters for Food and Beverage Companies

For publicly listed companies, this means adopting more comprehensive reporting practices. Scope 1 (direct emissions from owned or controlled assets) and Scope 2 (indirect emissions from purchased electricity) are straightforward, but Scope 3 presents a significant challenge. For retailers, these emissions include the carbon emissions of products purchased and sold through stores or other distribution channels. Known as “Category 1”, emissions from Purchased Goods and Services represent the largest portion of a retailer’s footprint making suppliers’ Product Carbon Footprints a critical piece to accurately accounting for climate impact.

Even if not publicly listed, suppliers to publicly listed retailers or other companies need to be prepared to measure and report their emissions at both the company and product levels to ensure continued market access. This could drive a major shift in how businesses operate across various sectors, pushing for more sustainable practices across the entire agri-food value chain.

This will likely lead to more companies investing in tools and technologies that enable them to efficiently calculate, report and reduce their emissions. Accurate carbon data will become a competitive advantage, especially as companies prepare to meet these new reporting requirements and receive further pressure from retailers and other stakeholders to show progress toward Net Zero.

Timeline and What to Expect Next

The CSSB intends to finalize the sustainability disclosure standards by the end of 2024, at which time it will be handed over to the Canadian Securities Administrators for review and dissemination across the various jurisdictions.

While a timeline for implementation is still being finalized, according to the CSSB, listed entities could begin reporting climate-related information in 2025. But it is important to remember that until those standards are mandated by jurisdictional regulators, they are voluntary*.

It is also important to note that there is a proposed two-year deferral for Scope 3 reporting, giving companies and their suppliers time to prepare. Further, each of the Retailers will need to determine their approach and timeline for requesting more granular, product-level emissions from suppliers. Nevertheless, companies will be well served to begin preparing now by measuring emissions across all 3 scopes and putting plans in place to measure emissions at the product level.

Businesses that take proactive steps to measure and reduce their carbon footprints now will not only meet regulatory and stakeholder requirements but also position themselves to compete and win in a circular, Net Zero world.

Is your business ready for the impending carbon reporting requirements? Contact us today to learn how you can prepare for these changes and streamline your reporting processes.

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*Financial Reporting & Assurance Standards Canada [FRAS Canada]. (n.d.). Frequently asked questions. Frascanada. https://www.frascanada.ca/en/cssb/about/faqs

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