Canadian ESG Reporting: Navigating CSDS, A Guide for the Aviation Sector

July 11, 2025

Canada is advancing its sustainability reporting framework through the Canadian Sustainability Disclosure Standards (CSDS), aligning with global expectations for ESG transparency and climate accountability.

Developed by the Canadian Sustainability Standards Board (CSSB), CSDS 1 and CSDS 2 reflect the international baseline set by the ISSB’s IFRS S1 and S2, while incorporating Canadian-specific reliefs and context.

Although mandatory adoption has been paused, voluntary CSDS adoption is now available and increasingly encouraged for Canadian companies seeking to stay competitive and responsive to investor demands. Especially those in high-emissions sectors like aviation.

This guide covers:

What are the Canadian Sustainability Disclosure Standards?
Regulatory Status: Voluntary for Now
Who is impacted by CSDS
How to prepare for CSDS Reporting
Key Milestones and Reporting Timeline for CSDS
Aviation Sector Considerations

What Are the Canadian Sustainability Disclosure Standards?

Finalised in December 2024, the CSDS framework consists of two core standards:

CSDS 1: General Requirements for Disclosure of Sustainability-related Financial Information – covering governance, strategy, risk management, and ESG metrics ^1,3,6.
CSDS 2: Climate-related Disclosures – including GHG emissions (Scope 1, 2, and 3), transition and physical risk analysis, and scenario testing ^1,3.

The standards are effective for annual reporting periods beginning on or after 1 January 2025, with voluntary early adoption permitted ^1,3,6.

Disclosure Timeline for Early Adopters

To support preparers who voluntarily adopt CSDS, the CSSB introduced phased reliefs ^1,5:

Climate-only disclosures are permitted from 2025 through 2026.
Scope 3 emissions disclosure is deferred until fiscal years beginning on or after 1 January 2027.
Quantitative scenario analysis is also deferred until 2027 reporting periods.
Full sustainability-related risks and opportunities disclosures beyond climate are required only from 2027 onwards.

Indigenous Perspectives and Social Context

Canada’s sustainability standards reflect local realities and values. During the exposure draft phase, the CSSB undertook Indigenous engagement, aligning its process with the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP). This positions the CSDS framework within Canada’s broader reconciliation and governance context ².

Regulatory Status: Voluntary for Now

On 23 April 2025, the Canadian Securities Administrators (CSA) announced a pause on mandatory climate-related and diversity-related disclosure requirements, including those under National Instrument 51-107 ^2,8.

The CSA cited uncertainty in the global regulatory environment, including developments in the U.S. SEC and EU CSRD as reasons for delaying mandatory rulemaking ^2,8.

However, material climate risks must still be disclosed under existing securities laws.

What this means for companies:

CSDS remains voluntary, not legally required as of 2025.
Material ESG risks must still be disclosed under current securities frameworks.
The CSA intends to revisit mandatory rules in the future but has not committed to a timeline ^2,6,8.

Who Is Impacted by CSDS?

While CSDS is not mandatory, the following groups are most affected by voluntary expectations and related regulations:

Public Companies: Expected to adopt CSDS voluntarily to meet investor and market expectations ³.
Large Private Companies: Encouraged to disclose sustainability risks, particularly those with global investors or supply chains ^3,8.
Financial Institutions: Subject to OSFI Guideline B-15, which requires Scope 3 emissions disclosure by FY 2028, aligning with CSDS timelines ⁴.

How to prepare for CSDS Reporting

Companies preparing for Canada’s sustainability reporting requirements under CSDS should take the following steps:

Understand the Standards
Review CSDS 1 and CSDS 2 alongside ISSB’s IFRS S1 and S2, noting Canadian-specific relief periods ^1,3,6.
Conduct a Materiality Assessment
Determine what ESG and climate-related risks are financially material to your operations ³.
Build a Data Foundation
Start collecting Scope 1 and 2 emissions, climate risk data, and governance metrics. Plan for Scope 3 and scenario analysis by 2027 ^5,7.
Strengthen Governance Oversight
Ensure board and executive-level awareness and accountability for sustainability-related disclosures ³.
Develop Reporting Processes
Align disclosures with CSDS formatting and integrate them with financial reporting cycles ⁶.
Consider Voluntary Assurance
External assurance enhances credibility and may be expected by investors even if not mandatory ³.
Monitor Regulatory Shifts
Stay alert for CSA announcements and potential reactivation of the mandatory disclosure framework ⁸.

CSDS Compliance Made Easy with PACE

Stay ahead of Canada’s emerging sustainability disclosure standards. PACE provides accurate aircraft emissions calculations to help aviation stakeholders align with CSDS 1 and 2, based on the ISSB’s global baseline.

Key Milestones and Reporting Timeline for CSDS

Canada’s phased approach to sustainability disclosure reflects regulatory caution while encouraging voluntary best practice alignment.

Milestones

June 10, 2024: Public consultation closes on CSDS 1 and 2 drafts ¹
December 2024: CSDS 1 and 2 finalised and published ³
January 1, 2025: CSDS effective on voluntary basis ^1,3,6
April 23, 2025: CSA pauses mandatory disclosure rules ^2,8
January 1, 2027: Scope 3, scenario analysis, and full sustainability disclosures effective (for those using CSDS) ^1,5
To Be Determined: CSA to revisit mandatory rulemaking ^2,8

Aviation Sector Considerations

Although there are no aviation-specific mandates under CSDS, Canadian aviation companies face increasing pressure to disclose emissions and climate risks:

Scope 3 Emissions: Key for aviation, including upstream (fuel supply) and downstream (passenger) impacts ⁷.
Scenario Analysis: Required from 2027 under CSDS; important for aviation’s exposure to transition and physical risks.
Global Alignment: Voluntary reporting aligned with ISSB, CORSIA, and ICAO standards strengthens investor confidence and international comparability.
Leadership Opportunity: Early adoption positions aviation firms ahead of regulatory mandates and peer benchmarking.

Conclusion

Canada’s sustainability reporting requirements are entering a new era. While CSDS is voluntary as of 2025, its alignment with global ISSB standards, combined with phased relief and increasing investor expectations, make early adoption a strategic advantage.

Companies – particularly in high-emissions sectors like aviation and finance should treat CSDS not as an obligation, but as an opportunity. To build trust, demonstrate resilience, and prepare for the inevitable evolution toward mandatory climate and ESG disclosure.

References