The Rule Was Paused. The Questions Were Not.

In April 2025 the Canadian Securities Administrators paused a rule that had been under development since 2021, and a great many Canadian businesses concluded that a compliance burden had evaporated. That reading is understandable and, for most private companies, close to backwards. The regulated version of this obligation stalled. The unregulated version did not, and it is the harder one to satisfy.

What Was Actually Paused

Precision first, because the pause is frequently described more broadly than it was.

On April 23, 2025, the CSA announced it was pausing work on developing a new mandatory climate-related disclosure rule and amendments to the existing diversity-related disclosure requirements[1]. The climate rule in question was National Instrument 51-107, Disclosure of Climate-related Matters, on which the CSA had issued a notice and request for comment on October 18, 2021, and which had remained in regulatory limbo while the CSA assessed developments including the SEC's climate disclosure rule and the CSSB standards[2].

Two boundaries on that. It was a pause on developing a new rule, not a repeal of anything in force. And as one firm noted at the time, while the CSA paused its work on new climate and diversity-related disclosure requirements for Canadian issuers, existing frameworks and rules remain in force[3].

It is also worth noting the pause covered diversity-related disclosure amendments alongside climate. The CSA had issued a notice in April 2023 on two alternative proposals to update diversity-related disclosure requirements under National Instrument 58-101[1], and that workstream stopped at the same time.

The Stated Reason

The CSA's rationale is worth reporting in its own words rather than characterized.

CSA Chair Stan Magidson, also Chair and CEO of the Alberta Securities Commission, stated: "In recent months, the global economic and geopolitical landscape has rapidly and significantly changed, resulting in increased uncertainty and rising competitiveness concerns for Canadian issuers"[3]. The CSA framed the pause as intended to support Canadian markets and issuers as they adapt to developments in the United States and globally[1][2], and alongside it announced supportive measures for market participants opting to go public, maintain a listing and contribute to capital formation in Canada[1].

The specific developments referenced include the US position and changes to the EU's CSRD[4]. On the US side, the SEC announced on March 27, 2025 that it had voted to end its defence of its own climate rules[2], roughly four weeks before the CSA's announcement.

Not everyone welcomed the decision. The Canada Climate Law Initiative expressed disappointment after three years of work on the standards[5]. This article does not adjudicate whether the pause was the right call, which is a policy question on which readers will have their own views; the purpose here is to establish what it means operationally.

Pause Is Not Cancellation

The distinction matters for planning horizons, and commentary is fairly consistent about it.

One analysis puts it directly: the CSA pause is not a cancellation, it is a deferral while the global landscape stabilises, and most observers expect mandatory requirements to follow once there is greater international alignment[6]. The same source notes that Canada's provincial and territorial regulators and legislators will determine whether CSDS 1 and CSDS 2 should be mandated, and over what scope and timeline[6].

A more sceptical view exists in the same literature. Torys observed that both CSSB standards remain voluntary unless adopted by regulators, which appears unlikely in the foreseeable future[2]. PwC, writing before the pause, took the longer view that there is a global trend toward mandatory sustainability disclosures, that Canadian public companies are unlikely to be immune from some form of mandatory reporting requirement, and that companies should continue planning for further reporting requirements[7].

A business does not need to resolve this disagreement to act sensibly, because as the rest of this article argues, the practical demands arrive through channels that do not depend on whether the CSA ever finalizes its rule.

What Remained Mandatory

This is the section most coverage of the pause omitted, and it is where the operational reality sits.

A practical guide to Canadian sustainability reporting sets out the landscape after the pause: CSDS 1 and CSDS 2 are voluntary unless a regulator, lender, investor, customer, or other requirement makes them part of a company's reporting obligation[8]. That conditional clause is doing all the work. The same guide notes that for reporting issuers, climate disclosure has not disappeared, because the new dedicated CSA rule is paused but existing continuous disclosure obligations, investor expectations, lender requirements and voluntary CSDS readiness still matter[8].

Alongside the paused rule, the same source identifies several live obligations and pressures: OSFI Guideline B-15 for federally regulated financial institutions, supply-chain reporting under S-211, environmental claims rules, and GHG emissions expectations[8].

Reporting issuers should also note that existing continuous disclosure obligations continue to apply to material information. A pause on a dedicated climate rule does not remove an issuer's general obligation to disclose material risks, and a climate risk that is material to a business is disclosable on that basis independent of any specialized instrument.

OSFI B-15 Is Live, And It Reaches You

The most consequential live requirement is one most private businesses assume does not concern them, and the transmission mechanism is worth following carefully.

Federally regulated financial institutions have a separate climate-risk management and disclosure path under OSFI Guideline B-15, which sets expectations for governance, risk management, scenario analysis, capital and liquidity considerations, and climate-related financial disclosures. B-15's timing is already operative for in-scope institutions, effective at fiscal year-end 2024 for domestic systemically important banks and internationally active insurance groups headquartered in Canada, and at fiscal year-end 2025 for other in-scope FRFIs[8].

Now follow it through. An institution with climate risk management and disclosure obligations must understand the climate-related risk in its lending and insurance book. That book is composed of businesses. The institution cannot assess portfolio-level climate risk without information about the borrowers and insureds within it, which means the obligation propagates outward through credit applications, renewals and underwriting questionnaires.

This is the same structural pattern this publication has described for OSFI Guideline E-23 on model risk: a requirement imposed on regulated financial institutions reaches unregulated businesses through the commercial relationship rather than through direct supervision. A private Canadian company with a bank facility or commercial insurance is inside the perimeter of B-15's effects whether or not it is inside its scope.

The Private Company Proposal

A development directed at private corporations specifically, which sits in an uncertain state and deserves tracking.

On October 9, 2024, the Government of Canada announced its intention to amend the Canada Business Corporations Act to introduce mandatory climate-related financial disclosures for large, federally incorporated private corporations[2].

Two observations. This is a different instrument from the CSA rule, operating through corporate law rather than securities regulation, and aimed at a different population, private rather than public companies. The CSA's April 2025 pause does not by itself determine the fate of a CBCA amendment. And the announced target is large federally incorporated private corporations, so most Canadian SMBs would fall outside it even if enacted.

We were not able to establish the current status of this proposal from the sources reviewed for this article, and readers should treat it as an announced intention from October 2024 whose progress should be verified rather than as a pending requirement. Its relevance here is mainly as evidence that the private-company dimension of climate disclosure has been contemplated by Canadian policymakers, which bears on the durability question above.

The Standards Themselves Still Exist

Voluntary is not the same as absent, and the standards have a defined structure a business can use.

The CSSB released CSDS 1 and CSDS 2 on December 18, 2024[4], based on the ISSB's IFRS S1 and S2 issued in June 2023[3], and they are available for voluntary use for annual reporting periods beginning on or after January 1, 2025[8]. CSDS 1 covers general requirements for disclosure of sustainability-related financial information, addressing governance, strategy, risk management and metrics across all ESG topics; CSDS 2 covers climate-related disclosures specifically, including Scope 1, 2 and 3 greenhouse gas emissions, transition and physical risk analysis, and scenario testing[9].

The CSSB built in transitional accommodations worth knowing. Entities adopting CSDS may disclose information on climate-related risks and opportunities only in their first two annual reporting periods, meaning 2025 and 2026 fiscal year reports can focus exclusively on climate[6]. Scope 3 emissions disclosure is deferred until fiscal years beginning on or after January 1, 2027, quantitative scenario analysis is also deferred to 2027 reporting periods, and full sustainability disclosures beyond climate are required only from 2027 onward[9].

One distinctively Canadian feature is worth recording: during the exposure draft phase the CSSB undertook Indigenous engagement, aligning its process with the United Nations Declaration on the Rights of Indigenous Peoples[9].

Scope 3 Is Where You Are

For a small or mid-sized Canadian supplier, one technical concept determines almost everything about their exposure.

Scope 3 covers emissions in a company's value chain, which means a large company's Scope 3 is composed substantially of its suppliers' Scope 1 and 2. When a large customer is required, or chooses, to report Scope 3, it cannot do so from its own records. It has to ask its suppliers.

Under CSDS the Scope 3 requirement is deferred to fiscal years beginning on or after January 1, 2027[9]. But that deferral governs voluntary Canadian adopters only. Companies selling into the EU, UK, Australia or Singapore may face climate disclosure requirements from customers or regulatory frameworks in those jurisdictions[6], on those jurisdictions' timetables rather than Canada's.

So the Canadian supplier's exposure is not set by Canadian rules at all. It is set by the reporting obligations of its largest customers, wherever those customers are regulated. A Canadian manufacturer supplying a European or British buyer will be asked for emissions data on that buyer's schedule, and the CSA pause is irrelevant to that request.

The Inversion: Why A Pause Made It Harder

Here is the argument this article exists to make, and we present it as our own analysis rather than a finding in the sources.

A mandatory rule, whatever one thinks of its merits, would have delivered several things a supplier benefits from: a single defined standard, a published scope determining who is captured, phased implementation with transitional relief, a public consultation process, and a common vocabulary shared by every counterparty. The CSDS transitional accommodations described above illustrate exactly that kind of structured ramp.

What replaces a paused rule is not silence. It is each customer, lender and insurer asking for what it needs, in its own format, on its own timetable, with no common standard, no scope threshold protecting smaller suppliers, and no transitional relief. A business with five large customers in different jurisdictions can face five different questionnaires seeking overlapping but non-identical information, none of which it can decline without commercial consequence.

That is a worse position than a standardized obligation for a supplier, even though it involves no legal requirement. The regulated version has a defined endpoint; the commercial version has as many endpoints as you have counterparties. This is why we think the widespread reading of the pause as relief is mistaken for private suppliers, and why the practical recommendation below is to build the underlying data capability regardless of what the CSA eventually does.

Financial Versus Double Materiality

A conceptual distinction that determines what a business is actually being asked for, and which explains why questionnaires from different customers diverge.

CSDS uses financial materiality, meaning how sustainability matters affect the company, whereas the EU's framework applies a different concept[6]. The EU's approach, commonly described as double materiality, asks both how sustainability matters affect the company and how the company affects the environment and society.

For a Canadian supplier the practical consequence is that a question framed under a financial-materiality standard and a question framed under a double-materiality standard are asking different things, even when the words look similar. A customer reporting under European requirements may need impact information that a Canadian customer reporting under CSDS would not request at all.

A business receiving multiple questionnaires should establish which framework each derives from before attempting to answer them from a single dataset, because the mismatch is a common source of inconsistent responses across customers, and inconsistent public-facing environmental statements carry their own risk, discussed below.

A Worked Case: The Questionnaire With No Standard

A Canadian industrial supplier with four significant customers: a Canadian bank as a service client, a large European manufacturer, a UK distributor, and a domestic private company. The reconstruction below illustrates a recognizable pattern rather than a specific engagement.

Following the April 2025 pause, the supplier's leadership concluded that climate reporting had been shelved and closed a small internal project on emissions measurement. Over the following eighteen months, three separate requests arrived through commercial channels rather than regulatory ones: the bank sought climate risk information as part of a credit renewal, consistent with its own obligations; the European customer requested value-chain emissions data on a European timetable; and the UK distributor sent a supplier questionnaire in a different format seeking overlapping but differently-defined information.

The supplier answered each request separately and inconsistently, because no underlying measurement existed and each response was assembled by a different person under deadline. The costs were real: staff time repeated three times, a strained conversation with the European customer about data quality, and a set of externally-circulated statements the company could not reconcile with each other.

Had the internal project continued, one measurement exercise would have supported all three responses. The decision to close it was rational given the information the leadership had, and wrong because it mistook the pausing of one channel for the closing of all of them.

What A Business Should Actually Do

Ask your largest customers what they will need and when. This is the single highest-value step, and it is free. Their obligations, not Canada's, determine your timeline.

Measure Scope 1 and 2 once, properly. Your own direct emissions and purchased energy are the foundation of every request you will receive, because they are your customers' Scope 3. One credible measurement serves every questionnaire.

Use CSDS as a voluntary structure even if nothing compels you. The standards exist, are ISSB-aligned, and give you a defensible framework rather than an ad hoc response. Voluntary adoption is encouraged particularly for companies with global supply chains or institutional investors[4], and one analysis notes the first-mover point that companies with established processes will have a head start when mandatory rules eventually arrive[6].

Identify which framework each request derives from. Financial materiality and double materiality ask different questions, and answering both from one dataset without recognizing the difference produces inconsistency.

Confirm your position on the obligations that never paused. Supply-chain reporting under S-211 and environmental claims rules are separate regimes with their own applicability tests.

If you are a federally regulated financial institution, treat B-15 as current. Its timing is already operative, and fiscal year-end 2025 has passed for other in-scope FRFIs.

The Greenwashing Overlap

A connected exposure that increases precisely when disclosure becomes unstandardized.

Environmental claims rules remain live in Canada[8], and as this publication has examined in the context of Competition Act amendments and the parallel AI-washing enforcement discussed elsewhere, unsubstantiated environmental claims carry their own regulatory and litigation risk independent of any disclosure standard.

The interaction is worth naming. In a standardized reporting regime, a company's environmental statements derive from a defined methodology, which provides substantiation almost automatically. In an ad hoc regime, statements are assembled per-customer without a common evidentiary base, and inconsistent claims across counterparties are exactly the pattern that creates substantiation problems.

A business responding to varied customer questionnaires should recognize that those responses are representations, that some may become public through the customer's own reporting, and that the substantiation standard applying to environmental claims does not soften because the request came from a customer rather than a regulator.

The Limits Of This Analysis

Several caveats matter. This is a moving file: the CSA pause dates to April 2025 and the position may have developed since the sources reviewed here, so readers should verify current CSA and CSSB status before relying on it. We were unable to establish the current status of the announced October 2024 CBCA amendment for large federally incorporated private corporations, and have flagged it as an announced intention rather than a pending requirement. The central argument of this article, that a paused rule leaves suppliers in a harder position than a standardized one, is our own analysis rather than a finding in any cited source. Several sources are published by sustainability reporting software or consulting providers with a commercial interest in continued adoption. This article does not address the merits of climate disclosure policy, on which readers will hold their own views, nor does it set out the technical requirements of CSDS 1, CSDS 2, OSFI B-15 or S-211, each of which requires specialist advice. Nothing here is legal, accounting or sustainability reporting advice.

Related Reading

Compliance Competition Act Greenwashing And Drip Pricing Rules The substantiation standard that applies to environmental claims regardless of any disclosure rule. AI & Automation In Finance OSFI E-23: Canada's Real AI Rulebook, And Why It Reaches Businesses It Doesn't Regulate The same propagation pattern: a requirement on regulated institutions reaching unregulated suppliers. Tech & Cross-Border Your Invoice Is Not Legally Delivered: E-Invoicing Mandates And Canadian Exporters Another obligation Canadian suppliers inherit from foreign customers rather than domestic rules.

Frequently Asked Questions

What exactly did the CSA pause?

On April 23, 2025 it paused work on developing a new mandatory climate-related disclosure rule, which had been under development as National Instrument 51-107 since October 2021, and on amendments to existing diversity-related disclosure requirements. It was a pause on developing new rules, not a repeal of anything in force.

Are CSDS 1 and CSDS 2 dead?

No. They were released December 18, 2024, are ISSB-aligned, and are available for voluntary use for annual reporting periods beginning on or after January 1, 2025. Commentary is divided on whether mandatory adoption follows, with some describing the pause as a deferral pending international alignment and others viewing regulatory adoption as unlikely in the foreseeable future.

I am a private company. Does any of this apply to me?

Probably through commercial channels rather than direct regulation. Your bank has climate risk obligations under OSFI B-15 that propagate into credit processes, and customers subject to EU, UK, Australian or Singaporean requirements will ask you for value-chain data on their timetables. The government also announced in October 2024 an intention to amend the CBCA for large federally incorporated private corporations, though its status should be verified.

Why does Scope 3 matter to a small supplier?

Because a large customer's Scope 3 is composed substantially of its suppliers' Scope 1 and 2 emissions. When that customer reports Scope 3, it must ask you. Under CSDS the Scope 3 requirement is deferred to fiscal years beginning on or after January 1, 2027, but that deferral governs Canadian voluntary adopters, not foreign customers on foreign timetables.

Isn't a pause good news for business?

For a reporting issuer preparing a dedicated filing, arguably yes. For a private supplier, we would argue not. A mandatory rule brings one standard, a defined scope, phased transition and a common vocabulary. What replaces it is each customer and lender asking in its own format on its own schedule, with no scope threshold protecting smaller suppliers and no transitional relief.

What is the cheapest useful step?

Ask your largest customers what they will need and when. Their obligations determine your timeline, not Canada's, and the conversation costs nothing. Then measure your own Scope 1 and 2 once, properly, since that single dataset underpins every request you will receive.

References

1. Cassels. (2025, May 21). CSA Pauses Climate-Related And Diversity-Related Disclosure Projects. cassels.com/insights/csa-pauses-climate-related-and-diversity-related-disclosure-projects
2. Torys LLP. (2025, April 30). CSA's Climate Disclosure Rule On Hold: An Update On Climate Disclosure In Canada And The U.S., including the NI 51-107 history, the SEC's March 27, 2025 decision and the October 9, 2024 CBCA announcement. torys.com/en/our-latest-thinking/publications/2025/04/csa-climate-disclosure-rule-on-hold
3. BD&P. (2025, April 24). CSA Pauses Work On New Climate & Diversity Reporting Requirements, including the statement from CSA Chair Stan Magidson. bdplaw.com/insights/csa-pauses-work-on-new-climate-and-diversity-reporting-requirements
4. Arbor. What Are The Canadian Sustainability Disclosure Standards (CSDS)?, on the December 18, 2024 release and voluntary adoption encouragement. Note: published by a carbon accounting software provider. arbor.eco/blog/canadian-sustainability-disclosure-standards-csds
5. CPABC. (2025, September). 2025 Sustainability Reporting Update, including the Canada Climate Law Initiative response. bccpa.ca/news-events/cpabc-newsroom/2025/september/2025-sustainability-reporting-update
6. Materiality Master. (2026, April 9). CSDS 1 And CSDS 2: Canada's Sustainability Reporting Standards Explained, on the deferral framing, transitional accommodations, foreign customer requirements and the materiality distinction. materialitymaster.com/blog/csds-sustainability-reporting-canada-guide
7. PwC Canada. Canada's Sustainability Disclosure Standards, on the global trend toward mandatory disclosure and Scope 3 timing for voluntary adopters. pwc.com/ca/en/services/sustainability/insights/need-to-know-about-csds.html
8. Keslio. (2026, May 27). Sustainability Reporting Requirements In Canada, on the post-pause landscape, OSFI B-15 timing and S-211. Note: published by a sustainability reporting advisory provider. keslio.com/requirements/canada
9. PACE Academy. (2025, July 11). Canada's CSDS Sustainability Reporting Guide, on the content of CSDS 1 and CSDS 2, transitional deferrals and the CSSB's Indigenous engagement. pace-esg.com/academy/canadas-csds-sustainability-reporting-guide

This article discusses regulatory announcements and voluntary standards and is provided for general informational purposes. It is not legal, accounting or sustainability reporting advice, and does not set out the technical requirements of CSDS, OSFI B-15 or supply-chain legislation. This file is developing; verify the current position with the CSA, CSSB and qualified advisors.