Remarks by the Deputy Prime Minister and Minister of Finance announcing Made-in-Canada sustainable investment guidelines and mandatory climate disclosures at the UN Principles for Responsible Investment conference

Toronto, Ontario - October 9, 2024

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I would like to begin by acknowledging that we are gathered on the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinaabeg, the Chippewa, the Haudenosaunee, and the Wendat.

It is so great to be here. I am excited to talk a bit about Canada’s climate story.

I want to thank my Parliamentary Secretary, Ryan Turnbull, and recognize his work. He has devoted his entire professional life to climate, to sustainable finance, to impact investing. That was one of the principal inspirations for him to run for office, and to become an MP.

He has taken that knowledge and that passion and applied it to working hard on developing our climate agenda. I feel a bit badly making today’s announcement because this is work he has poured his heart and soul into. I’m so grateful to him and Canadians are lucky we have him in Parliament.

I also want to thank Kathy Bardswick, who has done a lot of work on the plan, on the elements I’m going to announce today.

Before getting to today’s specific announcement, I want to take a moment to talk to people here about Canada’s climate plan and our climate action. I know that everyone here recognizes that climate change is real and that acting on climate change truly is an existential challenge. Our government—from the moment we were elected in 2015—rejected a dichotomy you often hear, which is that we need to make some kind of choice between climate action and a good sensible economic plan.

We said from the outset that climate and the economy go together. I believe that is becoming more true every single day. Speaking as Minister of Finance, I want to quote a guy who used to be a mere humble Minister of Finance, Olaf Scholz, today the Chancellor of Germany. At a gathering of G7 Finance Ministers he put the economic challenge very clearly.

He said there is no economic transformation as big as the one we need to undertake today to build a green economy. No transformation as big as that apart from the Industrial Revolution itself. He’s completely right. We want to maintain an industrial manufacturing economy and we need to plug it into a different power source.

The countries that will succeed economically in the 21^st century are the countries that recognize that today you cannot have an economic plan without having a climate plan, and who recognize also that your climate plan needs to be an economic plan. That is the approach we are taking in Canada.

We have already in place in Canada a $160 billion net-zero economic plan. We believe that Canada is the only country in the world that has matched, as a share of GDP, the US industrial policy. We think we’re investing a little more than them. I want to talk to you about some of the elements of that plan.

Part of that plan is the Canada Growth Fund. This is $15 billion of concessional finance to be invested in the green transition. We knew we had to put some money on the table. We knew we had to help some of these climate projects take off. We had to help companies working in the green space, but we also knew we had to do it in an economically effective way. We had to apply a professional investor mindset. The Canada Growth Fund is managed by one of Canada’s pension funds.

I hope everyone here recognizes Canada has—okay, I’m going to brag a bit—the best pension funds in the world. They are really our crown jewels. They are excellent world class investors. We said to PSP, one of our pension funds, we’ll give you $15 billion of the people’s money, and we want you to invest on a concessional basis but with your smart investor mindset in the green transition. That is exactly what they are doing at a pace that the urgent climate crisis demands.

They’ve already announced that they have done eight deals deploying $2 billion of capital, including three historic carbon contracts for difference. They’re investing in things like carbon capture, utilization, and storage projects, in Markham District Energy that provides low emissions heating here in Ontario, and there is a lot more to come.

The second element of our climate plan, our economic climate plan, is a suite of investment tax credits (ITC). We have six in total and four of them have received Royal Assent. That means they are passed into law. That means that anyone here can make an investment in Canada and, if you qualify for that ITC, you don’t need to talk to a single other Canadian government official. Make the investment, claim the tax credit. Companies around the world are doing this. Dow Chemical has made a $12 billion investment in a net-zero plastics plant outside my hometown of Edmonton in Alberta.

Honda has made a $15 billion investment in an electric vehicle plant just north of here in Alliston, Ontario. More investments to come and already in 2023 Canada had the highest per capita foreign direct investment in the world. The people making those investments know something. If you’re not one of them, you might want to consider joining them.

Today, we issued an additional $2 billion in green bonds. That brings our green bond issuance in total to $11 billion. We are finding there is high demand for Canadian green bonds. It’s a space where we’re going to continue to be active.

I’ve talked to you about the measures, the policies, the tax credits, the concessional finance that we have in place to encourage private sector investment in Canada’s green transition. That’s because we know that this is a tremendously important economic transformation.

We know that the climate depends on us getting it right and we know that Canadian jobs and growth depend on us getting it right. But we know we need to pull in even more private capital. We need to crowd in even more private capital to have a transition happening at the pace and scale the climate requires.

We estimate that Canada is going to need between $125 billion and $140 billion a year of investment from private and public sources. Right now, we’re at about $15 billion to $25 billion, so we need all of you to get even more engaged.

We know we have to create a framework that helps you do that. We launched the Sustainable Finance Action Council in May of 2021. They gave us some good advice. We’re building on it now and we have leaned on it to make the announcements I’m making today.

The first is that we are launching a climate taxonomy. These are Made-in-Canada guidelines for sustainable investing.

The development of that Canadian taxonomy will provide guidelines to identify green and transition investments. Green investments are low or zero emitting. Transition investments reduce emissions in high emitting sectors. I think you all know why we’re doing this. We’re doing it because we know markets want certainty. We’re doing it because we know there’s a lot of capital out there that wants to be directed towards the green transition.

But you want to know for sure when you’re making your investment, if it’s really a green investment. The taxonomy is going to help everyone do that. This taxonomy is voluntary. Lenders and investors can choose to adopt the guidelines. We’re establishing our expectations upfront. Central is that the guiding principles need to be scientifically credible. They need to be aligned with the Paris climate targets. That means, as everyone here knows, keeping global warming limited to 1.5 degrees above pre-industrial levels.

We have a lot of respect for external expertise, so an external body is going to write and govern the taxonomy at arm’s length. We think that’s going to give more credibility to the taxonomy and will provide investors with more certainty. The external body that does this work is going to be expected to work hard with Canadian stakeholders. We’re expecting them to work hard with industry, with Indigenous partners, with unions, with financial institutions.

We’re going to provide some initial support through the development phase. We’ve laid out some priority sectors for the external body to work on and to publish the guidance right away on. Those sectors include electricity, transport, building, forestry.

Our goal is that for two or three of the priority sectors, within 12 months of the external taxonomy body starting work, that we will publish the detailed specific guidance. We’re publishing a document today with full details of the mission, the guidelines, the approach that the development of this taxonomy is going to be led by. That’s my first announcement.

The second announcement is about climate disclosure. Again, I know that when I talk about the importance of climate disclosure I am preaching to the choir. We all agree. Climate disclosure a good thing for business, right?

I’m announcing today our government’s intention to amend the Canada Business Corporations Act to require climate disclosures from large federally incorporated private businesses.

We know that requiring these disclosures is the right thing for businesses. It’s the right thing for their lenders, the right thing for their insurers, the right thing for their shareholders. Requiring disclosures means people can make decisions based on transparency and understanding of climate risks and climate exposure. Canada—Canadians—will know this very well but for our visitors, Canada is really big and we are also a highly decentralized country.

The announcement I’m making applies to the federally incorporated private businesses. The federal government is going to work with provinces and territories to support efforts by them to require climate disclosures of private businesses that are incorporated at the provincial and territorial level. I’d like to take the opportunity today to encourage provinces and territories to join with us in this important step.

If you’re Canadian, you could talk to your provincial or territorial government. Tell them you think it’s a good idea. If you’re an investor, you could talk to them and tell them that, too.

I do want to pause for a moment and talk about small- and medium-sized businesses. There will be no requirements for small- and medium-sized businesses. There will be voluntary tools that they can use if they wish and we will provide resources to help them.

But I do want to strongly reassure small- and medium-sized businesses that we recognize this can be challenging and we believe that taking a voluntary approach, a supportive approach of our small- and medium-sized businesses in this space is the right thing to do.

I am going to take the opportunity as I talk about small- and medium-sized businesses to remind them and say, especially to the non-Canadians here, they are going to be getting really big cheques in December.

The Canada Carbon Rebate will be returned to small- and medium-sized businesses in just a few months. $2.5 billion is going to go to our small- and medium-sized businesses, returning the proceeds from the price on pollution. In the province of Ontario where we are, a small business with 10 employees will get more than $4,000. A small business with 499 employees will be getting a cheque for $200,000. That is real money.

This is because a price on pollution works, and how we make sure it works is by giving the proceeds back to Canadian families and to Canadian small- and medium-sized businesses. You don’t have to fill out any forms to get that money, just fill out a tax return.

So thank you for listening. Thank you for your hard work. I know that the people here are really dedicated. You are working hard for our economy and for our environment.

I want to assure you that the Government of Canada understands the importance of the environment and the importance of the economy. We understand that today we must work on both together for everyone. Today, we cannot have an economic plan without having a climate plan that is at the heart of that economic plan. That is exactly what we are doing now.

We understand that a sustainable finance market is fundamental to a climate and economic plan. Thank you so much for your work.

I hope you like what you’ve heard about what we’re doing here in Canada. I hope you’ll take a closer look and I hope that will encourage you to bring your cheque books and invest in the Canadian economy.

Thank you very much.