Canada’s top securities regulators are pausing new climate disclosure rules, in what they say is a bid to support competitiveness in tumultuous times, but advocates warn the move might leave the country lagging behind global markets.

The Canadian Securities Administrators (CSA) had been developing a mandatory climate-related disclosure rule to align Canadian reporting standards with international frameworks, like those set by the International Sustainability Standards Board (ISSB). But on April 23, the CSA announced it was pausing work on the rule to support Canadian markets as they “adapt to the recent developments in the United States and globally.”

The move makes Canada look inconsistent, said Maya Saryyeva, acting executive director of the Queen’s University’s Institute for Sustainable Finance.

“By reversing its decision, the CSA has signalled that Canada may not consistently uphold its regulatory commitments, appearing vulnerable to shifting policies in response to unfounded rhetoric originating from the United States,” Saryyeva told The Energy Mix.

“This creates significant risk if we are serious about maintaining the competitiveness of Canada’s capital markets.”

Stan Magidson, chair of the CSA and the Alberta Securities Commission, said in a statement that rapid and significant changes in the global economic and geopolitical landscape have resulted “in increased uncertainty and rising competitiveness concerns for Canadian issuers.”

“In response, the CSA is focusing on initiatives to make Canadian markets more competitive, efficient, and resilient,” he added. While the pause is in effect, the CSA is encouraging issuers to refer to standards issued by the Canadian Sustainability Standards Board as a “useful voluntary disclosure framework.”

It is similarly work on diversity, equity, and inclusion (DEI) disclosure rules on hold, saying it “expects to revisit both projects in future years.” The CSA will continue monitoring disclosure practices and addressing misleading practices, such as greenwashing.

Shift Action for Pension Wealth and Planet Health condemned the move, calling it “a shocking abdication of responsibility” from Canada’s financial regulators. The organization stressed that regulators are responsible for ensuring system stability and reducing risk, and that disclosure rules are “critical for investors and companies preparing for climate disruption.”

Others pointed out that such disclosures are already in place in the European Union and Asia, which are becoming increasingly important trading partners for Canada. And even though recent EU legislation proposes to exempt some companies from climate-reporting, Canada is still starting “from very far behind,” said Julie Segal, senior manager of climate finance at Environmental Defence Canada. Pausing disclosure requirements will prevent Canada from “catching up” to engage with those other economies on an equal footing, Segal told The Mix.

Canadian companies may also be put at a disadvantage when attracting capital from green investors, Saryyeva said. “Canadian and global investors (especially in Europe, Asia, and the U.S.) increasingly require climate-related information before investing, and companies without credible disclosures may lose access to international capital or face higher borrowing costs.”