The Government of Canada announced the next step in its process to introduce mandatory corporate climate reporting, setting it as the new top priority for its financial industry Sustainable Finance Action Council.

The council, consisting of 25 of Canada’s leading financial institutions, insurance companies, and pension funds, was launched by the government last year, to support efforts to mobilize capital and investment necessary to meet the country’s sustainability goals. The principle mandate of the council was to make recommendations on critical market infrastructure needed to attract and scale sustainable finance in Canada.

Over the past year, the Canadian government has become more focused on establishing mandatory climate disclosure requirements for companies and financial institutions. In December, Prime Minister Justin Trudeau sent mandate letters to cabinet ministers directing them to move towards a system of reporting based on the Task Force on Climate-related Financial Disclosures (TCFD). Canada’s Budget 2022, released last month, introduced new requirements for banks and insurance companies to provide disclosures on their climate-related risks and exposures beginning in 2024.

Under its new mandate, the Sustainable Finance Action Council “will make climate-related financial disclosure its first priority,” and the council has been directed to prepare advice to the finance and environment ministers on the most effective ways to implement mandatory climate disclosures by the end of this year.

The council has also been tasked with the development of capital allocation strategies for aligning private sector capital with the transition to net zero, informing opportunities to achieve the country’s 2030 climate goals.

Additionally, the council will be responsible for helping to coordinate the Canadian financial sector’s input on the International Sustainability Standards Board’s (ISSB) global baseline sustainability reporting standards, and the adoption of the standards in Canada.