Executive Summary:
Canada has often been labelled as a laggard on climate-related financial policies (Carney 2024; Galvez 2023; Jones 2024; Krauter 2023; Office of the Auditor General of Canada 2022; Riopel 2025). This paper evaluates whether Canada’s reputation as a laggard on climate-related financial policy is supported by evidence. It assesses the degree to which policies have been implemented cohesively across the financial system and considered alongside broader climate-mitigation efforts, with direct implications for Financial institutions (FIs), market stability, and competitiveness.
Canada is compared with three peer jurisdictions—the European Union (EU), the United Kingdom (UK), and Australia—chosen for their economic ties and relevance to Canada’s investment and trade ambitions. The analysis identifies eight typical climate-related financial policy areas and compares implementation across jurisdictions.
Findings indicate that Canada is behind its peers. Canada has implemented fewer than three of the eight policy areas, while comparators have implemented four to eight. Canada’s pace has also been slower; for example, Australia finalized its climate commitment later yet has progressed further. Most notably, Canada is the only jurisdiction that has not implemented certain core measures: peers have issued directives for regulators and supervisors to consider climate change, and they require climate-related disclosures broadly across financial institutions and corporates. The result is greater fragmentation in Canada, while peers benefit from more consistent, system-wide disclosure that enables integration and comparability.
Climate-related financial policies help reduce financial and economic risk by mitigating systemic climate exposures. In Canada, climate-related insured losses exceeded CAD $8 billion in 2024—doubling record totals from the prior two years (Insurance Bureau of Canada, 2025). Such shocks can propagate across the system, with losses in insurance and banking spilling into other sectors through correlated exposures and second-round effects (Bruneau et al., 2023). Reflecting these dynamics, financial regulators warn that “delaying climate policy action increases the overall economic impacts and risks to financial stability,” heightening the “risks of financial market dislocation” (Bank of Canada and Office of the Superintendent of Financial Institutions, 2022).
Canada did not materially differ from peers in initially incorporating sustainable finance into its climate commitments, signaling comparable intent. The gap is in execution: relative to the EU, UK, and Australia, Canada has implemented fewer measures and with less cohesion – heightening transition and competitiveness risks and leaving the economy underprepared.
For Canadian institutions, this translates into greater uncertainty for risk pricing, disclosure readiness, and capital planning; boards and executives can pre-empt convergence by aligning with ISSB expectations, strengthening climate-risk governance and stress testing, and scaling transition-finance solutions.