Vancouver, 12 November 2024 – Sonia li Trottier, Director of the Canada Climate Law Initiative, made the following statement in response to the Canadian federal government newly released budget:

“Last week, the Canadian federal government published its 2025 Budget outlining its plan to build Canada strong.

The Canada Climate Law Initiative (CCLI) welcomes the sustainable finance and climate-related measures in the 2025 Federal Budget, which signal an important step towards aligning Canada’s financial system and private sector with the net-zero economy.

A whole economy approach is essential to ensure that the corporate and financial sectors are addressing climate-related financial risks, leveraging opportunities that come with the energy transition, and are accountable.

Notably, we commend the government’s commitment to reconfirm the arm’s length development of a green and transition taxonomy (also called sustainable investment guidelines) by end of 2026, and select and announce an external organization that will lead the development the taxonomy by end of 2025. We urge the government to act on its commitments, given the several announcements the previous Liberal government has made towards the development of a taxonomy. It’s been more than seven years since sustainable finance experts have recommended the establishment of a taxonomy, and more than four years since all major Canadian banks, pension funds, insurance companies, and asset managers have asked for a national green and transition taxonomy.

We also commend the federal government to working with provinces to improve climate-related disclosures across the economy. Standardized, transparent, and comparable climate-related disclosures across provinces and the economy is key to provide decision-useful information to investors and move capital towards sustainable, competitive, and resilient companies. To achieve this, it is crucial that disclosures are both mandatory and aligned with the Canadian Sustainability Standards Board (CSSB) Canadian Sustainability Disclosure Standards 2 Climate-related Disclosures (CSDS S2). While we commend the government to aligning federally and provincially-regulated entities, we note that there are multiple regulators for financial services, and public and private companies. The federal government must show leadership in advancing a whole-economy approach.

At the same time, CCLI notes several concerns.

While Prime Minister Carney included the establishment of broad coverage for climate risk disclosure, including the development of transition plans in his election platform, there are no mention of transition plans in the budget. Credible transition planning is essential if we want to ensure Canadian companies are competitive, resilient to climate disruptions, and aligned with our allies’ approach, including the United Kingdom, the European Union, and Australia, that are in the process of developing transition plan requirements. In 2024, Prime Minister Carney gave a keynote speech at the G7-IEA Conference as former UN Special Envoy for Climate Action and Finance and Co-Chair of the Glasgow Financial Alliance for Net Zero, and stated, “Every country, city, company, and financial institution needs a credible, science-aligned net-zero transition plan to fulfill their commitments.”

We also note the government’s intention to update the greenwashing legislation through the Competition Act. While we appreciate the legal risks and unintended consequences, whether real or perceived, that has arisen from Bill C-59, especially with regard to removal of companies’ voluntary climate-related disclosures, the proposed legislation amendment is concerning. The federal government proposes to remove “the requirement for businesses to substantiate their environmental benefit claims based on internationally recognised methodology standards.” This proposed legislative change leaves a lot of questions open on the intent and extent of the amendments and what that will mean for the substantiation requirement for claims. CCLI published a joint statement with the Principles for Responsible Investment, endorsed by over 5,000 global signatories representing approximately US$120 trillion in asset under management, including over 230 in Canada, where we recommended that the Bureau create a clear pathways for emerging methodologies, which would allow provisional use of reputable international methodology. This approach would balance flexibility for innovation with strong consumer and investor protection.

Despite the current climate of economic and political uncertainty, and heightened geopolitical risk, embedding climate-related considerations into financial policies and regulations should not be deferred. Climate-related risk management is simply good risk business management. Climate risk is financial risk.

Canadian companies must be equipped to face climate disruptions and remain competitive. Building Canada strong should go hand in hand with a budget and laws that prioritize environmental, financial, and legal accountability to building a competitive, thriving, and resilient Canada.”