Government advances Made-in-Canada sustainable investment guidelines and mandatory climate disclosures to accelerate progress to net-zero emissions by 2050

October 9, 2024 - Toronto, Ontario - Department of Finance Canada

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.

Quotes

“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.”

The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

“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.”

The Honourable Steven Guilbeault, Minister of Environment and Climate Change

“Canadian workers and businesses are already attracting historic investment in areas such as clean energy, critical minerals, and electric vehicles, and seeing the associated benefits for job creation and economic growth. With changes announced today, investors will have more certainty that companies are taking real and serious action to address the climate crisis and drive down emissions, while building a strong economy.”

The Honourable Jonathan Wilkinson, Minister of Energy and Natural Resources

“Fighting climate change as well as protecting the economy and Canadians from the costs of climate inaction is a priority for our government. It’s important to send a clear signal to Canadian companies and organizations that climate risks and opportunities are critical to integrate into corporate culture and decision making, and that’s what we’re doing.”

The Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry

“Creating a financial system that is sustainable and globally competitive is essential for Canada’s economic future. In order to compete both at home and abroad, we are moving forward with sustainable investment guidelines and mandatory climate disclosures to help provide credibility, accountability, and transparency in the marketplace. These are essential conditions for investors and companies to fill the investment gap necessary to meet the climate challenge while seizing generational opportunities for clean prosperity.”

Ryan Turnbull, Parliamentary Secretary to the Deputy Prime Minister and Minister of Finance and to the Minister of Innovation, Science and Industry

Quick facts

• In Budget 2024, the federal government committed to provide an update by the end of 2024 on the development of Made-in-Canada sustainable investment guidelines, in recognition that promoting credible climate investment and combatting greenwashing are critical to fostering investor confidence and mobilizing the private investment Canada needs to achieve net-zero by 2050. 

• In the 2023 Fall Economic Statement, the federal government committed to develop options for making climate disclosures mandatory, as part of expanding mandatory climate disclosures across the Canadian economy. It also first announced the government’s commitment to developing a Made-in-Canada taxonomy. 

• The development of a Made-in-Canada sustainable finance taxonomy and regulations to require climate disclosures from large companies builds on the important work done by the Sustainable Finance Action Council.

• The federal government is investing over $160 billion in its net-zero economic plan, including through a $93 billion suite of tax credits for major economic investments in:

  • Carbon capture, utilization, and storage;
  • Clean technology;
  • Clean hydrogen;
  • Clean technology manufacturing;
  • Clean electricity; and,
  • Electric vehicle (EV) supply chains.

• In addition to tax credits for major economic investments, the federal government is attracting net-zero private sector investment by:

  • Catalyzing private investment in low-carbon projects, technologies, businesses, and supply chains through the $15 billion Canada Growth Fund, which has already invested over $2 billion across eight deals, including three novel Carbon Contracts for Difference;
  • Leveraging at least $20 billion from the Canada Infrastructure Bank to build major clean electricity and clean growth infrastructure projects;
  • Securing Canada’s advantage as the world’s supplier of choice for critical minerals and the clean technologies they enable, by further developing supply chains through a $3.8 billion Critical Minerals Strategy; and,
  • Building more clean, affordable, and reliable power, and supporting innovation in electricity grids, including offshore wind, through the $3 billion recapitalization of the Smart Renewables and Electrification Pathways Program.

• The third-party, arm’s-length organization(s) will further develop and implement the taxonomy.

• The Department of Finance, Environment and Climate Change Canada, and Innovation, Science and Economic Development Canada will work together to make the required legislative and regulatory changes for mandatory climate disclosures.