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In mandate letters sent last week to Canada’s ministers of finance and the environment, Prime Minister Justin Trudeau outlined numerous executive priorities for his government’s third term. Among them are addressing climate change, facilitating Canada’s economic recovery from the pandemic, and furthering indigenous reconciliation efforts. 

In one of the letters’ sections regarding climate, Trudeau directed Finance Minister Chrystia Freeland and Environment Minister Steven Guilbeault to: 

“[W]ork with provinces and territories to move toward mandatory climate-related financial disclosures based on the Task Force on Climate-related Financial Disclosures [TCFD] framework and require federally regulated institutions, including financial institutions, pension funds and government agencies, to issue climate-related financial disclosures and net-zero plans.”

The TCFD is a non-governmental organization chaired by Michael Bloomberg that issues recommendations on how companies can disclose their organizational efforts to prepare for climate-related risks and opportunities. Though many companies already voluntarily make the recommended disclosures, there is a growing international movement to mandate such disclosures for publicly-traded investments. 

Trudeau’s directive follows shortly on the heels of Canadian Securities Administrators’ (CSA) proposed instrument to require TCFD-aligned disclosures from publicly-traded Canadian companies. 

Since Canada’s federal government lacks jurisdiction over securities law, Canadian investments are governed almost entirely by provincial agencies, with the CSA serving as an organizing body to streamline regulation across jurisdictions and simplify cross-border compliance obligations. Though it has little power over the CSA, the federal government can work with the CSA (as well as individual provincial governments) to facilitate rules aimed at accomplishing shared objectives. Such as, in this case, making Canadian investments more climate conscious. 

Trudeau’s reference to federally-regulated institutions, though, reflects the federal government’s unique constitutional ability to regulate certain entities (such as certain pension funds, airlines, etc.) beyond provincial authorities’ jurisdiction; including with respect to financial disclosure. 

The letters’ directive implies that the ministries of finance and the environment should mandate climate-related disclosures where its authority exists, and encourage disclosures where provinces have jurisdictional authority.