U.S. Tariffs Are the Backdrop as Feds Plot Next Steps on Sustainable Finance, Climate Disclosure

The Carney government expects to move quickly this fall on two long-awaited green finance initiatives, a sustainable finance taxonomy and mandatory climate disclosure regulations, but the measures may not be enacted in time to influence the major projects at the top of the federal agenda.

The Liberal party platform in last spring’s election included a “core commitment” to complete the taxonomy by fall 2026, “so in essence we’ve got to get moving quickly on that,” MP Ryan Turnbull (L-Whitby), Parliamentary secretary to Finance Minister François-Philippe Champagne, told a climate investors’ conference in Toronto last month. Both the taxonomy and mandatory disclosure rules for federally-incorporated companies lead a longer list of sustainable finance measures that includes:

• At least $10 billion per year in new green bonds;

• The country’s first-ever transition bonds, to be introduced by 2027;

• Finalizing federal tax credits for clean electricity and electric vehicle supply chains;

• New investment across the research and development spectrum, from early-stage development to deployment, to spur major growth in private sector investment;

• An increase in the Scientific Research and Experimental Development (SRED) tax credit;

• New mechanisms and tax incentives to derisk investment and support start-ups in key sectors like artificial intelligence, advanced manufacturing, and mining.

“I’m heartened by the fact that we have a prime minister who has advocated for taxonomy and disclosure around the world, and we still don’t have those pieces in place in Canada,” Turnbull added in a follow-up interview. Now, there’s a “very, very good chance that this will move, and move at a pace that we need it to, which is much more quickly than in the past. But there’s still work left to be done.”

Climate or Affordability? Pick Two.

That work begins with addressing the impediments on the horizon, Turnbull warned. “All these things we’re talking about sit within the context of another crisis, which is the trade war we’re fighting, exacerbating the affordability challenges that Canadian families are going through,” he told The Energy Mix. “Obviously, the climate crisis is bigger in kind than all of that.” But “as a government, we’re trying to navigate through this and help Canadians get through the trade war and be able to feed their families.”

All of which adds up to “a big balancing act,” he said. “More than ever, it feels like Canadians are fed up with having to make major life concessions. They told us loud and clear at the doorsteps in the last election that they want affordability for them and their families to be top of mind for us. So there’s a new screen.”

At the 2025 Canadian Climate Investors Conference, hosted by the Toronto Stock Exchange and the TSX Venture Exchange (TMX), Turnbull said Canadians want both affordability and climate action—and shouldn’t have to choose between them.

“They want leadership that demonstrates that we don’t have to make major life concessions to deliver on climate conditions,” he declared. “What’s promised must be delivered. Climate action must realize noticeable benefits,” not least because “the climate crisis marches on. It’s not waiting for us to get our act together,” and “the cost of inaction is ever greater.”

But while “we will be here to share the risk,” he added, the government can’t meet its clean economy goals on its own, with some analysts placing the cost of decarbonization as high as $120 billion per year.

“We need investors and cleantech entrepreneurs,” he said. We need your innovation. We need your drive. We need you to put your capital to work to achieve our shared goals… we want to see you profit, and we want to see the impact you’re trying to achieve.”

Sustainable Finance Needs ‘Certainty’

In discussion with session moderator David Clarke, TMX’s head of government affairs, Turnbull said the previous federal government came close to finalizing a sustainable finance taxonomy that would provide the certainty and regulatory clarity that a growing chorus of investors are asking for. The Sustainable Finance Action Council “got to the point where there was consensus from the largest financial institutions in the country to move forward,” he recalled.

But then, “we got caught in the election cycle, we were just on the cusp, we were going to sign a contribution agreement” with a third-party organization to implement the taxonomy, “but we took two steps forward and one step back.” Now, he told The Mix, the new government is looking at a “fairly compressed timeline” that would allow about a year to finalize an implementation plan for the taxonomy.

On mandatory disclosures, the next step is an amendment to the Canada Business Corporations Act that will tie the new rules to the size of a company. The legislative change would most likely be built into a budget implementation bill, and the whole process will likely take about two years to complete.

Turnbull said any new regulations will run into opposition from lobby groups insisting that the timing is wrong or the cost is too high. But “this is needed because it enables the marketplace, and markets are asking for the information anyway. Many of our companies are already subject to some of these requirements in other jursidictions around the world.”

That means companies are “probably resisting the inevitable” if they try to slow down climate disclosure, he said. “They’re really behind the curve if they’re not doing this stuff. Just from a business decision-making perspective, there are lots of benefits to having better data and information to manage risk effectively, which is really what we’re talking about.”

The other complication is that some provincial regulators will delay their own regulatory amendments, running the risk of a two-tiered system where not all companies face the same climate disclosure rules. Turnbull said Ottawa wants to see the regulations aligned across public and private companies, federal and provincial jurisdictions, and internationally.

Insurance companies, pension funds, financial institutions, and retail investors are all already asking for results on both the taxonomy and climate disclosure, he added. “These things work together. They complement one another. They enable a marketplace that is more credible and competitive, and investors need information to make better decisions about where to invest.”

Still No Agreement on Transition Finance

While those expectations will have to be based on “ethical requirements that are science-based, and that are hopefully aligned with 1.5°C,” the Paris Agreement target for averting the worst impacts of climate change, Turnbull said there’s still no agreement on whether the taxonomy should recognize natural gas as a transition fuel while economies shift to renewable energy. The primary component of natural gas is methane, a climate super-pollutant with about 84 times the warming potential of carbon dioxide over the crucial 20-year span when humanity will be scrambling to get climate change under control.

“Eventually we’re going to have to get very precise on what the climate science tells us, what can we best model out,” but “it’s complicated,” he told The Mix. “With methane right now, we don’t have a really good verification of exactly how much is being produced,” a reality that points to forthcoming federal methane regulations that “many people I talk to feel very adamant about.”

One More Round of Fossil Infrastructure?

All of these factors bring climate action, affordability, and the government’s emerging major projects list together into a single agenda, Turnbull said.

“The sustainable finance work is fundamentally related to our trade relationships with allied countries in the European Union,” where a taxonomy and climate disclosure are directly integrated into the mandate of the European Central Bank, he said. “We need to level up to their standard. If we don’t, we’re going to be less competitive, and certainly they’re going to demand it… which I think is great for us in many ways.”

But none of that rules out the possibility that the government’s major projects agenda will deliver one more round of pipelines and other fossil fuel infrastructure, and Turnbull wouldn’t speculate on whether those developments would qualify for federal subsidies.

“I’m asking myself a lot of those questions, too,” he said. “The way I look at it right now, we need to move quickly. I hope we’re not compromising any of our climate commitments. That’s certainly not my intention. With major projects, we keep getting pigeon-holed or backed into a corner where everyone wants to talk about pipelines,” partly because they’re a “great political wedge” for opposition parties and some provincial premiers.

That dynamic means that “we can’t unify the country if we aren’t open to having a discussion about what constitutes a major nation-building project,” he continued. “We’ve built in our climate commitments to some degree… At the same time, you weigh this out and you ask if there’s going to be a business case for a pipeline, whether there are going to be proponents that want to make that investment.”

With a tariff war in full swing, “I don’t pretend it’s all rosy. It’s not. It’s tough,” Turnbull added. But “building a pipeline doesn’t change the emissions cap.” So “to me, you’ve got to decarbonize your production in order to ship more of your product to other parts of the world.”