A Business Innovation and Sustainability Blog

Did you read the Canadian Securities Association staff notice 51-333 yet? What? You didn’t? – I know…This is likely not something that has made it to your nightstand. But in spite of it being a relatively laborious read, the notice does provide some clarity on environmental reporting requirements in Canada. Specifically, the notice attempts to clarify disclosure requirements related to the impact of environmental matters on revenues, expenditures, cash flows, liquidity and general performance under National Instrument 51-102 Continuous Disclosure Obligations.

Disclosure requirements under National Instrument 51-102 are typically the basis for environmental sustainability reporting. These requirements are related to:

Environmental risks – Those risks related to litigation, and physical, regulatory, reputational and business model risks;

Trends and uncertainties – Commitments, events, risks and uncertainties that are believed to impact future performance;

Environmental liabilities – Liabilities including compliance obligations, site remediation obligations, fines related to statutory or regulatory non-compliance, obligations to compensate private parties for personal injury, property damage and economic loss, payment for punitive damages, and natural resource damages;

Asset retirement obligations – The legal requirements related to retirement of an asset, which may include remediation, reclamation and disposal of hazardous waste;

Financial and operational effects of environmental protection requirements – The effects of protection requirements on capital expenditures, earnings and competitive position;

Environmental policies fundamental to operations – The disclosure of policies fundamental to the operation of the business including sustainable development, community relation, disposal of toxic / hazardous materials, prevention of spills, recycling, water conservation, and reduction of greenhouse gas emissions;

Board mandate and committees – Information related to how the board manages risk, and,

Forward looking information – Possible events, conditions or results of operations that are based on assumptions about future economic conditions and courses of action (e.g. goals and targets related to environmental matters).

The notice also re-iterates some examples of how environmental matters could impact, positively or negatively, the financial condition of your business. Obviously, you should take note of these:

• Changes in consumer preference or demand for goods and services due to environmental matters or trends;
• Changes in supply chain requirements related to environmental matters;
• New rules requiring design changes to products;
• Delayed or denied regulatory approvals;
• The availability and price of emissions credits or offsets;
• The need to retrofit existing facilities to address physical, health and safety, or regulatory constraints;
• Research and development activities related to more environmentally efficient operations and processes;
• Increased or new insurance coverage or premiums;
• Penalties for failure to meet government-mandated reduction targets;
• Repairing or rebuilding facilities impacted by adverse weather events;
• Investments in productive capacity that embody new “green” or more energy-efficient technologies;

For more details, take a look at CSA Staff Notice 51-333 Environmental Reporting Guidance (October 27, 2010).