The Changing World of Climate Risk, From Disclosures to Green Bonds
Sustainable finance policy and regulatory frameworks continued to evolve in 2025, with implications for how Canadian financial institutions assess climate-related risks and opportunities. Budget 2025 introduced new clean-industrial funding tools and refinements to carbon pricing, while regulators advanced climate-risk supervision and adjusted disclosure expectations. At the same time, global developments — including shifts in U.S. policy and ongoing EU implementation of climate regulations — contributed to a more complex international landscape.
This paper examines key 2025 developments across fiscal policy, prudential supervision, securities regulation, sovereign labelled debt issuance, and transition-finance classification. It highlights how new capital deployment mechanisms, evolving disclosure standards, and industrial policy measures interact with financial risk management, credit assessment, and long-horizon capital planning.
Looking ahead to 2026, the degree of convergence across jurisdictions, progress on Canada’s sustainable investment guidelines, and continued integration of physical and transition risks into enterprise-wide governance will shape market expectations and financial-system resilience.