The federal government is leading the world with a bold climate plan to grow our economy and reach net-zero emissions by 2050. Achieving this goal will require between $125 billion and $140 billion in investment into Canada every year. As a cornerstone of Canada's net-zero economic plan, the federal government's $93 billion suite of major economic tax credits are already available to help attract this investment.
Beyond incentives to attract investment to Canada, investors need robust and transparent guidelines to credibly classify their investments into the clean economy on the path to net-zero. That is why in the 2023 Fall Economic Statement and Budget 2024, the government committed to develop a sustainable finance taxonomy identifying "green" and "transition" investments and to expand the coverage of mandatory climate disclosure requirements to private companies. Moving forward with these commitments is essential for market certainty, for Canada to unlock net-zero investments, and to uphold the Paris climate target of limiting global warming to 1.5°C above pre-industrial levels.
Today in Toronto at the Principles for Responsible Investment conference, the Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced:
- A plan to deliver Made-in-Canada sustainable investment guidelines; and,
- Mandatory climate-related financial disclosures for large, federally incorporated private companies.
The Made-in-Canada sustainable investment guidelines will become an important, voluntary tool for investors, lenders, and other stakeholders navigating the global race to net-zero by credibly identifying "green" and "transition" economic activities. These guidelines will provide the certainty needed to accelerate the flow of private capital into sustainable activities across the Canadian economy. From building electric vehicle batteries, to generating clean energy, to decarbonizing emissions-intensive heavy industries, these guidelines will identify job-creating activities in a way that is scientifically credible and aligned with limiting global temperature rise to 1.5°C above pre-industrial levels. The Canadian taxonomy will be developed and governed by an external, third-party organization(s).
To attract more private capital into Canada's largest corporations and ensure Canadian businesses can continue to effectively compete as the world races towards net-zero, the government is also moving forward with mandating climate-related financial disclosures for large, federally incorporated private companies. These disclosures will help investors better understand how large businesses are thinking about and managing risks related to climate change, ensuring that capital allocation aligns with the realities of a net-zero economy. Specifically, the government intends to bring forward amendments to the Canada Business Corporations Act that will require these disclosures. The government will launch a regulatory process to determine the substance of these disclosure requirements and the size of private federal corporations that would be subject to them. As small- and medium-sized businesses will not be subject to the requirements, the government is considering ways to encourage those businesses to voluntarily release climate disclosures, if they wish.
The federal government is ready to work with provincial and territorial partners to ensure broad disclosure coverage across the Canadian economy. The government will seek to harmonize its regulations with those that will be required from public companies by securities regulators. More details will be released in due course.
These two sustainable finance initiatives will mobilize further private sector capital towards activities essential to building a net-zero economy. More private sector capital will enable businesses to grow the economy, create more good-paying jobs for Canadians, and boost their resiliency against the risks posed by climate change.
In addition to these announcements, today, the federal government successfully issued an additional $2 billion in green bonds, through a re-opening of Canada's second green bond issued in February.
Together, today's progress is about building a flourishing Canadian sustainable finance industry and sending a clear signal to corporate boards and shareholders, at home and around the world, that Canada is their trusted partner for putting private capital to work in the race to net-zero.
