ESG in Canada 2026: What Companies Must Prepare for

ESG in Canada: The 2026 Landscape

In 2026, ESG in Canada moves from strategy to execution. Even without a single national climate rule, expectations continue to rise. Investors, banks, insurers, and major buyers now expect structured and comparable sustainability information that supports financial decisions. The Canadian Sustainability Standards Board finalized the Canadian Sustainability Disclosure Standards (CSDS 1 and CSDS 2) as voluntary reporting standards for sustainability and climate-related disclosures, creating a more consistent baseline for reporting companies.

CSDS 1 and CSDS 2 provide a framework for governance, strategy, risk management, and climate metrics that many issuers are adopting ahead of formal mandates. In practice, this means companies now see ESG in Canada as a competitive advantage and a compliance priority rather than a long-term aspiration.

At the same time, securities regulators paused work on mandatory climate rules in 2025 to observe global developments and prioritize climate elements of disclosure first. This pause does not remove accountability under existing materiality obligations in securities law. Instead, it increases scrutiny on how boards justify decisions about ESG risks and disclosures. As a result, firms that delay readiness risk reactive compliance and loss of credibility.

How ESG Regulations and Market Expectations Are Evolving in Canada

Even without a single mandatory climate mandate, regulatory and market expectations build from multiple angles.

OSFI’s climate risk guideline B-15 now requires governance frameworks and climate risk management for federally regulated lenders and insurers, and that pressure flows to corporate clients. Companies engaging with these institutions must be prepared for structured data requests and detailed risk discussions.

Canada also strengthened rules on environmental claims through Bill C-59 and Competition Bureau guidance on greenwashing. These changes increase legal and reputational risk for unsubstantiated sustainability statements. Businesses now must back up environmental claims with credible evidence, or face enforcement actions.

At the same time, the federal government confirmed plans to introduce mandatory climate-related financial disclosures for large, federally incorporated private companies. While timelines may extend, this sets a clear direction for ESG in Canada 2026 and beyond.

Global requirements still influence Canada. International investors, EU buyers, and cross-border lenders continue to expect climate risk disclosure aligned with global reporting norms. Firms operating internationally cannot treat domestic policy as a substitute for global expectations.

Which Canadian Organizations Face the Highest ESG Exposure

Under ESG in Canada 2026, exposure depends on market position more than just size.

The most exposed groups include:

• Public companies with institutional investors demanding CSDS or ISSB-aligned disclosures.

• Financial institutions and their borrowers subject to OSFI and market disclosure expectations.

• Large private companies seeking capital or major procurement contracts.

• Carbon intensive sectors, such as energy, mining, transport, construction, and real estate.

• Brands with strong sustainability marketing claims that now face more stringent greenwashing guidance.

Companies that sit at the intersection of these categories have the most immediate incentive to build ESG readiness.

Common Readiness Gaps Across Canadian Companies

Despite increased awareness, many organizations still struggle with:

Governance gaps: Boards often do not have clear ESG oversight structures. Responsibility scatters across sustainability, finance, and legal teams without clear accountability. Materiality assessments lack documented rationale and review processes.

Data gaps: Many firms have Scope 1 and Scope 2 emissions data, but struggle with traceability, controls, and assurance ready processes. Scope 3 data often remains estimated with limited supplier engagement, leaving material components undefined.

Skills gaps: Finance teams may lack climate risk literacy, while sustainability teams lack reporting rigor. Risk and internal audit functions do not fully cover ESG data flows. Procurement teams often lack effective tools to engage suppliers on emissions and climate risk.

These gaps make it hard to support robust reporting and to defend disclosures before auditors, stakeholders, and regulators.

Preparing for Mandatory Climate Reporting in Canada

Preparation for ESG in Canada should focus on building systems built for accuracy and scrutiny.

1. Choose a reporting baseline and stick to it. Use CSDS 1 and CSDS 2 as the backbone for climate and sustainability reporting.

2. Strengthen governance. Assign board oversight to ESG performance. Clarify executive accountability. Set up a formal disclosure committee with finance, risk, sustainability, and legal participation.

3. Build a climate data architecture. Map every reported metric to a responsible owner, a source system, a method, and a control. Prioritize robust Scope 1 and Scope 2 measurements before expanding Scope 3 using a risk-based approach.

4. Connect climate risks to financial impacts. Investors now expect companies to articulate how physical and transition risks affect financial performance, cost structures, and capital plans.

5. Audit every public ESG claim. Ensure that all sustainability statements are defensible with evidence that complies with Competition Bureau expectations for environmental claims.

By adopting these practices, companies will not only comply with rising expectations but also strengthen stakeholder confidence and preserve access to capital.

Prepare for ESG in Canada with CSE’s CANADA 2026 Program

As ESG in Canada continues to take shape, organizations need clarity on regulatory direction, market expectations, and practical implementation challenges. The CANADA | Certified Sustainability (ESG) Practitioner Program, Advanced Edition 2026 is designed for professionals who want to strengthen governance structures, improve climate and sustainability reporting readiness, and align ESG strategy with evolving Canadian and international requirements. The program focuses on applied knowledge, supporting organizations in translating standards, regulatory guidance, and market expectations into credible and defensible ESG practices.

Learn more and register here.