In an era defined by rising material costs, supply chain disruptions, and evolving regulations, Canadian real estate and construction companies are facing new challenges.
With the December 2024 release of the Canadian Sustainability Disclosure Standards (CSDS) for voluntary adoption, real estate and construction leaders have a new framework to guide sustainability reporting and proactively address these risks while seizing opportunities for business improvement and growth.
The CSDS are developed by the Canadian Sustainability Standards Board (CSSB) to establish consistent, transparent, and comparable sustainability-related reporting for Canadian entities. They include CSDS 1, General Requirements for Disclosure of Sustainability-related Financial Information, and CSDS 2, Climate-related Disclosures.
Early adoption can offer strategic advantages to those ready to lead in an industry undergoing rapid transformation.
Why sustainability disclosure matters now more than ever
The real estate and construction sector contributes approximately 30% to 40% of global carbon emissions, making it a key target for climate action. As Canada races to build 3.9 million new homes by 2031, balancing growth with sustainability is no longer optional. With rising tariffs inflating material costs and extreme weather events disrupting project timelines, real estate and construction leaders must treat sustainability as both a regulatory requirement and a business opportunity.
Understanding and aligning with the CSDS regulations can not only help companies remain compliant as rules evolve but also reveal opportunities for cost savings, investment, and risk reduction. It also helps position your business at the forefront of sustainability issues.
Here’s a deeper look at how sustainability report can act as a competitive advantage for your organization:
1. Unlock cost savings with data-driven reporting
Accurate sustainability data isn’t just for regulators—it’s a tool for finding efficiencies. Under CSDS, organizations will need to measure and disclose energy consumption, carbon emissions, water usage, and waste management. But beyond compliance, this data can help uncover operational inefficiencies.
For example, tracking energy use can highlight areas where building designs or operations waste resources, allowing companies to cut utility costs. According to Natural Resources Canada and the International Energy Agency, energy audits and retrofits often lead to 10% to 30% savings on energy expenses, particularly when improving heating, ventilation and air conditioning systems, lighting, and building insulation.
Similarly, measuring waste streams can identify opportunities to recycle materials, reducing both disposal expenses and procurement costs at a time when tariffs are driving prices higher.
Sustainability reporting is a powerful cost-control mechanism—if leveraged correctly.
2. Meet stakeholder expectations and secure investment
Investors, tenants, and regulators are raising the bar for transparency. Tenants want buildings that lower their utility bills and carbon footprints, while investors increasingly favour companies with lower exposure to climate risks.
Sustainability disclosures provide a window into how well a company is managing these risks. Under CSDS 1 and CSDS 2, companies must report on key areas like greenhouse gas emissions (Scope 1, 2, and 3) and the impact of climate risks on asset values. Companies that can demonstrate progress in these areas are more likely to attract capital, secure favourable financing, and build trust with eco-conscious tenants.
In an environment where sustainability ratings influence investment decisions, transparency is a market differentiator.
3. Mitigate risks by integrating sustainability with financial reporting
Climate-related risks aren’t abstract—they’re already affecting bottom lines. Extreme weather can delay projects, damage infrastructure, and increase insurance premiums. The CSDS framework requires organizations to assess how these climate risks could impact their cash flow, access to financing, and operational costs over the short, medium, and long term.
This is where collaboration becomes essential. Real estate and construction leaders need to work closely with sustainability, operations, and legal teams to embed sustainability metrics into financial reporting. For example, understanding the carbon footprint of materials early in the design phase can help companies choose cost-effective, low-emission alternatives.
Organizations that integrate sustainability risks into their financial planning will be better prepared to navigate disruptions.
4. Differentiate by leading
Meeting the minimum standards under CSDS will help companies align with evolving expectations from investors and regulators, reducing the risk of reputational damage, limited access to capital, or future compliance challenges. Those who exceed the requirements can gain a market advantage by positioning themselves as leaders.
Companies that proactively innovate in areas like green construction materials, energy-efficient design, and low-carbon supply chains will be well-positioned to charge premium prices, attract high-value tenants, and secure partnerships with sustainability-focused investors—including Canada’s top pension funds that have communicated their support for the CSSB standards.
Regulators are watching, but so are potential clients and talent. Sustainability leadership is increasingly a factor in attracting top employees who want to work for companies committed to long-term climate responsibility.
Companies that lead on sustainability have an opportunity to outcompete those who treat it as a compliance checkbox.
Getting started with CSDS: Three actions to take now
Aligning with the CSDS doesn’t have to be overwhelming, but waiting too long could put your business at a disadvantage. A structured approach is key—here’s how to get started.
Assess how aligning with the standards can enhance your credibility, strengthen stakeholder trust, and reduce risk exposure. Contrast these benefits with the potential fallout of lagging behind competitors, such as losing investor confidence or missing market opportunities.
Conduct a focused audit of your current reporting practices to pinpoint gaps in alignment with the standards. Prioritize high-impact areas like Scope 1 and 2 emissions, climate-related risks, and supply chain transparency. Develop a phased road map to address these gaps, beginning with the areas most critical to your stakeholders and long-term strategy.
Start with initiatives that deliver the greatest return on effort, such as establishing a baseline for carbon emissions or enhancing supplier data collection. Gradually scale up efforts by integrating these improvements into broader operational processes, ensuring momentum without overextending resources.
From compliance to competitive advantage
Sustainability disclosure is not just about avoiding fines or satisfying regulators. At its core, it makes good business sense. Controlling costs and creating new marketable opportunities for growth will always be part of the consideration for savvy businesses.
Despite regulatory rollbacks in the United States, any predictions about the demise of environmental, social, and governance (ESG) considerations may prove to be unfounded. Instead, ESG expectations are likely to evolve as the cost of reporting ESG compliance comes under scrutiny. As a result, reporting requirements for ESG compliance might be simplified to minimize costs, thereby speeding up construction projects for developers.
Companies that embrace this new era of transparency will gain more than compliance—they’ll gain trust, efficiency, and long-term resilience.
As tariffs, supply chain risks, and climate pressures escalate, how prepared is your organization to turn sustainability reporting into a strategic advantage? Let’s discuss how you can move forward with confidence.