Canadian Prime Minister Justin Trudeau has directed the government’s cabinet ministers, including Deputy Prime Minister and Minister of Finance Chrystia Freeland and Minister of Environment and Climate Change Steven Guilbeault, to move towards mandatory climate related financial disclosures, among several other moves aimed at enabling the country to achieve its goal to transition to net zero by 2050.
The climate initiatives were unveiled in the mandate letters sent by the Prime Minister to his cabinet ministers, outlining the objectives that each minister is directed to work towards accomplishing. The climate-related directives follow the government’s announcement last year of its commitment to achieve net zero emissions by 2050, followed in July 2021 by an interim goal to cut greenhouse gas (GHG) emissions by 40% – 45% by 2030.
In the letters to Freeland and Guilbeault, the PM directs the ministers “to move toward mandatory climate-related financial disclosures based on the Task Force on Climate-related Financial Disclosures,” and also to require federally regulated institutions, which include financial institutions, pension funds and government agencies, to issue climate-related disclosures and net zero plans.
In announcing the move, Canada joins a growing list of jurisdictions that are shifting towards mandatory climate reporting for companies and financial institutions. In October, the UK government announced formal plans to introduce legislation requiring mandatory climate-related disclosure, and the U.S. SEC Chair Gary Gensler revealed earlier this year that he is aiming to have proposed rules in place for mandatory climate risk reporting by companies by the end of this year.
In addition to the climate reporting mandates, the PM’s letters revealed several other significant climate and sustainable finance-related mandates. These include making investments towards achieving a net zero electricity system by 2035, mandating that 50% of light duty vehicle sales be zero emission vehicles by 2030, accelerating the government’s commitment to eliminate fossil subsidies from 2025 to 2023, and introducing investment tax credits for capital invested in Carbon Capture, Utilization and Storage projects.
The letter to Freeland also asks the minister to launch an annual program of green bond issuances. The government announced earlier this year that it is preparing for its inaugural $5 billion green bond offering.
In the letters, Trudeau wrote:
“The science is clear. Canadians have been clear. We must not only continue taking real climate action, we must also move faster and go further. As Canadians are increasingly experiencing across the country, climate change is an existential threat. Building a cleaner, greener future will require a sustained and collaborative effort from all of us. As Minister, I expect you to seek opportunities within your portfolio to support our whole-of-government effort to reduce emissions, create clean jobs and address the climate-related challenges communities are already facing.”