In attracting investment to Canada, Prime Minister Mark Carney is hunting for big game.
His government aims to catalyze $1-trillion in private investment over the next five years with initiatives such as the Canada Strong fund and the Canada Investment Summit in September.
The goal is ambitious after years of weak investment and lagging productivity.
Investors are drawn to Canada’s stability, safety, talent and adherence to the rule of law, particularly as the U.S. risk profile rises. But Canadian governments are struggling to address the risks that turn investors off: high business costs, long timelines, cumbersome regulation and interjurisdictional gridlock.
To this list, we must add one more: fragmented corporate climate disclosure rules that prevent investors from getting the quality of information they need, adding additional uncertainty when we can least afford it.
At a recent meeting on Parliament Hill, we joined institutional investors, business leaders, academics, MPs and regulators to discuss how to modernize Canada’s securities regulations to strengthen investment markets, address the financial risks of climate change, diversify exports and attract the capital we need.
The group noted a sobering reality: While Canadian securities regulators, like their U.S. counterparts, have paused movement toward global climate disclosure standards, the rest of the world is charging ahead.
Finance experts report that nearly all of Canada’s top non-U.S. trading partners have adopted or are adopting globally aligned climate disclosure regulations, putting us badly out of step.
Some say, reasonably, that it’s risky to burden Canadian firms seeking capital with requirements not borne by their American counterparts. True, but here’s the problem: Large U.S. firms are already ahead of ours on a range of climate metrics. They are readying themselves to report in California and other states with pending disclosure rules, and in Europe and Asia.
Others argue that the resources for reporting would be costly for firms. But a recent study by the Institute for Sustainable Finance suggests these costs should fall as companies gain expertise.
There are also substantial benefits such as lower financing costs as markets reward credible climate strategies and penalize unmanaged risks.
ISF research shows how Canadian climate-reporting firms could have an advantage in attracting financing from Europe.
And evidence presented at our round table showed that in jurisdictions that require sustainability disclosures we see improved firm-level stock liquidity and lower risk of price crashes.
So, how should Canada proceed?
Canadian securities administrators should restart their consultative process, reflecting the federal-provincial co-operation the government promised in its 2025 budget.
Ontario is Canada’s financial capital, yet it is the only province sitting outside the securities regulation passport system, which is supposed to provide simplified, reciprocal treatment. Greater regulatory harmonization within Canada would bring momentum to reform and send a positive signal to global investors.
While we must align with global standards, there is room for “made-in-Canada” customization. A phased approach would mitigate the potential costs. Let’s focus on requiring information that is straightforward and impactful, such as a company’s direct GHG emissions and emissions from power generation (often called Scope 1 and Scope 2).
We should start with large companies responsible for the bulk of Canadian emissions, most of whom are already making sophisticated climate reports. Finally, Canada would also need to support some heavy emitters in essential industries to transition.
The opportunity is compelling: A 2025 Morningstar survey showed that 40 per cent of global asset owners are reducing or plan to reduce exposure to the U.S., creating an opportunity for Canada. The companies that report in alignment with global standards will be at the front of the line for all that capital.
We’re seeing encouraging signs. Parliament has revamped the previous government’s flawed “anti-greenwashing” legislation, which had the perverse effect of disincentivizing disclosure. We also have some of our smartest financial sector minds developing a national classification system that will help markets agree on which investments genuinely contribute to addressing climate change.
Credible, comparable data on climate risks and impacts from Canadian firms is the big missing piece. With bipartisanship, federal-provincial co-operation and business/government collaboration in vogue again, it’s time to get Canada back in the game.
When we’re fighting uncertainty, our best weapon is clarity.
