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Canada’s Office of the Superintendent of Financial Institutions (OSFI) has announced a significant delay in the mandatory reporting of Scope 3 financed emissions by banks and insurance companies. This three-year postponement—from 2025 to 2028—gives Canadian financial institutions more time to prepare, but it also signals broader shifts in ESG expectations and regulatory alignment.
For ESG professionals, understanding the implications of this delay is crucial. It presents both a temporary reprieve and a strategic window to strengthen ESG practices, particularly in emissions tracking, climate risk management, and sustainability reporting.
What is Scope 3 Emissions Reporting?
Scope 3 emissions are indirect emissions that occur in a company’s value chain, including financed emissions—those linked to investments and lending portfolios in the financial sector. Measuring Scope 3 is inherently complex but vital for achieving net zero targets, as these emissions often account for the largest share of a financial institution’s carbon footprint (EPA).
OSFI’s New Timeline
Originally slated for 2025, OSFI’s finalized Climate Risk Management Guidelines now push the reporting deadline for Scope 3 financed emissions to 2028. The regulator cited challenges in data availability, measurement methodologies, and the evolving global standards landscape.
This move aligns Canada’s financial sector with global efforts to develop consistent carbon accounting practices, such as those championed by the Partnership for Carbon Accounting Financials (PCAF) and the newly released ISSB sustainability standards.
Implications for ESG Professionals
1. Strategic Planning Timeframe Extended
ESG leaders in financial institutions now have additional time to:
- Develop internal capabilities for measuring financed emissions.
- Integrate climate risk into lending and investment decisions.
- Align with global disclosure standards like ISSB’s IFRS S2 (IFRS).
However, delaying preparation could lead to future compliance risks and stakeholder distrust. ESG professionals must use this time to build robust, scalable ESG data infrastructure.
2. Increased Demand for ESG Training
The delay underscores the need for specialized ESG training, especially in Canada’s financial sector. Professionals must understand:
- Carbon accounting for Scope 3 and financed emissions.
- Evolving reporting frameworks (e.g., ISSB, TCFD).
- Integrating climate risk management within financial decision-making.
Platforms like Brightest emphasize the growing need for ESG expertise to navigate Canada’s regulatory landscape.
3. Investor and Stakeholder Expectations Remain High
Despite regulatory delays, investors, clients, and civil society continue to demand climate accountability. Organizations like the Glasgow Financial Alliance for Net Zero (GFANZ) urge financial institutions to move forward on measuring and reducing financed emissions even without mandatory requirements.
4. Opportunity to Influence Standards
With the reporting window extended, Canadian ESG professionals and institutions have a unique opportunity to engage in shaping best practices and standards for Scope 3 reporting, especially in alignment with international frameworks such as PCAF, GFANZ, and ISSB.
How ESG Training Can Prepare You
To effectively navigate these changes, ESG professionals should seek training that:
- Covers carbon footprinting methodologies for Scope 3 emissions.
- Teaches best practices in climate risk management.
- Provides insights into upcoming Canadian and international ESG regulations.
The Certified Sustainability (ESG) Practitioner Program by CSE is specifically designed for Canadian professionals looking to enhance their ESG reporting, risk management, and strategy formulation skills.
Conclusion
The OSFI Scope 3 emissions reporting delay is not a pause in ESG progress—it’s an invitation for Canadian financial institutions and sustainability leaders to prepare better, build expertise, and align with evolving global standards.
If you’re an ESG professional or consultant in Canada, now is the time to upskill. Explore the Certified Sustainability ESG Practitioner Program to gain the competencies you’ll need ahead of 2028.
