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Bill 294, Securities Amendment Act (Climate Risk Financial Disclosure), 2021

Bell, Jessica

Arthur, Ian

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Acts affected

Original

Bill 294 Original (PDF)

EXPLANATORY

NOTE

The

Bill amends the Securities Act to require issuers and

reporting issuers to conduct climate-related risk assessments in order to

identify material facts and material changes for the purposes of the Act. A

climate-related risk assessment involves an analysis of the risks stemming from

the impact of climate change, as they relate to the issuer or reporting issuer,

in the context of various scenarios.

Bill 294 2021

Act to amend the Securities Act with respect to the disclosure of

climate-related risks

Her

Majesty, by and with the advice and consent of the Legislative Assembly of the

Province of Ontario, enacts as follows:

(1) Subsection 1 (1) of the Securities Act

is amended by adding the following definition:

“climate-related

risk assessment” means a risk assessment conducted in accordance with

section 51.1;

(“évaluation des risques liés au climat”)

(2) Clause

(

a) of the definition of “material change” in subsection 1 (1) of the Act is amended

by striking out “or” at the end of subclause (

i) and by adding the following

subclause:

(i.1) the

identification, through a climate-related risk assessment, of new or increased

risks that would reasonably be expected to have a significant effect on the

market price or value of any of the securities of the issuer, or

(3) Clause

(

b) of the definition of “material change” in subsection 1 (1) of the Act is

amended by striking out “or” at the end of subclause (

i) and by adding the

following subclause:

(i.1) the

identification, through a climate-related risk assessment, of new or increased

risks that would reasonably be expected to have a significant effect on the

market price or value of any of the securities of the issuer, or

The Act is amended by adding the following Part:

Part

xiv.1

climate-related risk assessments

Climate-related

risk assessment

51.1

(1) In order

to identify material facts and material changes, an issuer or a reporting

issuer, as the case may be, shall conduct an assessment of the climate-related

risks referred to in subsection (3), as they relate to the issuer or the

reporting issuer, in each of the scenarios described in subsection (4).

Timing

of assessment

(2) An

issuer or a reporting issuer, as the case may be, shall complete an assessment

before preparing a prospectus, or a short form prospectus referred to in subsection

63 (1), and shall update the assessment annually.

Climate-related

risks

(3) The

following are climate-related risks for the purposes of this section:

1. Risks

stemming from the physical impacts of climate change, such as risks arising

from climate and weather-related events that directly impact on physical assets

or on the productivity of businesses and human labour.

2. Risks

stemming from non-physical changes occurring in response to climate change,

such as reasonably foreseeable changes to climate policy, technology or market

sentiment which could result in the devaluation of assets.

3. Risks

of potential legal liability resulting from the impacts of climate change, such

as any loss incurred, due to the impacts of climate change, by a third party who

may reasonably hold the issuer or reporting issuer responsible for the loss.

Scenarios

(4) The

following are the scenarios referred to in subsection (1):

1. A

scenario in which the issuer’s or reporting issuer’s operating practices and

policies at the time of the assessment are to remain the same in the future.

2. A

and achieve the greenhouse gas reductions most recently communicated in

accordance with the Paris Agreement adopted by Canada on December 12, 2015 in

the context of the United Nations Framework Convention on Climate Change.

3. A

scenario that assumes that the parties to the United Nations Framework

Convention on Climate Change will meet their targets respecting reduction in greenhouse

gas emissions communicated in accordance with the Paris Agreement such that the

increase in the global average temperature will be limited to 1.5 degrees

Celsius above pre-industrial levels.

4. A

scenario that assumes that the parties to the United Nations Framework

Convention on Climate Change will fall short of their targets respecting

reduction in greenhouse gas emissions communicated in accordance with the Paris

Agreement such that the increase in global average temperature will gradually increase

to 4 degrees Celsius above pre-industrial levels.

5. Any

other scenario prescribed by regulations made by the Lieutenant Governor in

Council.

Regulations,

climate-related risk assessment

(5) The

regulations may set out assumptions, data or methodologies to be used in

conducting a climate-related risk assessment.

Regulations,

scenarios

(6) The

Lieutenant Governor in Council may make regulations prescribing scenarios for

the purposes of paragraph 5 of subsection (4).

Subsection 56 (2) of the Act is amended by adding “a climate-related risk

assessment completed within six months before the date of filing of the

prospectus and by” after “accompanied by”.

Subsection 143 (1) of the Act is amended by adding the following paragraph:

9. Governing

any assumptions, data or methodologies to be used in conducting a

climate-related risk assessment.

Commencement

This Act comes into force six months after it receives Royal Assent.

Short

title

The

short title of this Act is the Securities Amendment

Act (Climate Risk Financial Disclosure), 2021 .

Date Bill stage Event Outcome Committee

May 17, 2021

First Reading

Vote

Carried

Debates and Progress

First Reading

May 17, 2021

Committee

Second Reading

Committee

Third Reading

Royal Assent

Acts affected - Bill 294

Most Ontario public acts are available electronically; to view copies of the Acts to be amended by this bill visit e-laws

Securities Act

Legislative Assembly of Ontario

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