Galvez Reintroduces Climate-Aligned Finance Act

Sen. Rosa Galvez has introduced a new, improved version of her Climate-Aligned Finance Act (CAFA), after the previous edition died on the order paper at the end of the last Parliament.

The bill would require financial institutions and Crown corporations to develop climate action plans and targets, make it the duty of directors and officers of federally-regulated entities to align with climate commitments, require climate expertise on boards of directors, and make capital reserve requirements for financial institutional proportionate to the climate risk they take on.

With climate change “already starting to wreak havoc on our financial system,” Galvez (ISG-Quebec) said in a release, “CAFA is not radical, it is simply inevitable. It is the next logical step to protect Canadians, our economy, and our climate. Voluntary pledges have failed to shift capital at the scale and speed required.”

The bill “is essential because Canada’s reliance on fossil fuel financing is increasing systemic risk,” she added. “We need structural rules, not wishful thinking.”

The release says the new version of CAFA, Senate Bill S-238, was “strengthened through expert consultations” by removing references to specific capital risk-weights for financing of fossil fuel activities, requiring disclosure but not removal of board members with “climate conflicts,” and “deeming those complying with the new duty to align with climate commitments to carry out their duties under any other enactment.”

Galvez introduced the previous version of CAFA, Bill S-243, on March 24, 2022. It was endorsed by 89 investment firms, academic organizations, and environmental groups, referred to the Senate Committee on Banking, Commerce and the Economy in June, 2023, and finally received a brief hearing the following November. In March, 2024, as supporters marked the bill’s second anniversary with social media posts, a Senate source reported no immediate plans on the part of committee chair Pamela Wallin (CSG-Saskatchewan) to bring the legislation forward for detailed study.

“The committee’s leadership is failing in its responsibility to undertake a comprehensive study of a bill that was referred to it by the Senate,” Galvez told The Energy Mix at the time. “The committee has only heard from two witnesses, and experts in finance and climate are still waiting to be invited to testify on this important subject.”