The Canadian federal government is spearheading a global effort with an ambitious climate plan aimed at boosting the economy while achieving net-zero emissions by 2050. This vision will require annual investments between $125 billion and $140 billion. To support this transition, the government has introduced a $93 billion package of major economic tax credits to attract investments toward a clean economy.
In addition to these incentives, Canada is taking steps to provide investors with clear guidelines for classifying clean economy investments on the road to net-zero. In the 2023 Fall Economic Statement and Budget 2024, the government committed to developing a sustainable finance taxonomy, identifying “green” and “transition” investments, and expanding mandatory climate disclosure requirements to include private companies. These measures are essential to fostering market certainty, unlocking net-zero investments, and meeting the Paris Agreement’s goal of limiting global warming to 1.5°C.
At the Principles for Responsible Investment conference in Toronto, Deputy Prime Minister and Finance Minister Chrystia Freeland announced two major initiatives: the development of Made-in-Canada sustainable investment guidelines and mandatory climate-related financial disclosures for large federally incorporated private companies.
These guidelines will serve as a voluntary tool to help investors and stakeholders identify “green” and “transition” activities, such as electric vehicle battery production, clean energy generation, and decarbonisation of heavy industries. The Canadian taxonomy will be overseen by an external, third-party organisation.
To further attract private capital and ensure Canadian businesses stay competitive, the government is advancing mandatory climate-related financial disclosures for large private companies. These disclosures will provide investors with insights into how businesses are managing climate risks. The government plans to amend the Canada Business Corporations Act to mandate these disclosures, and will launch a regulatory process to define the requirements and scope. While small and medium-sized businesses are exempt, the government may encourage them to voluntarily disclose climate-related information.
The federal government is working with provincial and territorial partners to ensure comprehensive disclosure coverage across the Canadian economy and harmonise regulations with those imposed on public companies by securities regulators.
In addition to these measures, the government has issued an additional $2 billion in green bonds, contributing to the growth of Canada’s sustainable finance industry. These efforts signal to global investors that Canada is committed to mobilising private capital to achieve net-zero and build a resilient, sustainable economy.
“In the 21st century, a competitive economy is a net-zero economy. We are seizing Canada’s economic advantages to attract investment and ensure Canadian workers benefit their fair share in the global race to net-zero. Today’s release of a path for Made-in-Canada sustainable investment guidelines and climate disclosures from large companies will accelerate the flow of private capital into Canada, in turn growing our economy, creating good jobs, and advancing our progress to net-zero emissions by 2050,” said Chrystia Freeland, Deputy Prime Minister and Minister of Finance.
Steven Guilbeault, Minister of Environment and Climate Change, “Building a cleaner economy is not only an environmental imperative, it is a major economic opportunity. The development of a sustainable investment taxonomy, paired with heightened transparency on climate disclosures, amounts to an important stepping stone for Canada on the path towards that cleaner economy. These initiatives will help mobilize needed private sector financial flows to build a cleaner economy and give investors who are looking for the sustainable option the clear direction they seek.”