Assessing the regulatory framework of financial institutions in Canada in the context of international climate risk management practices and Canadian net zero emission targets

TL;DR

This paper evaluates Canada's financial regulatory framework for climate risk management, comparing it internationally, and identifies key areas for improvement to support Canada's net zero emission goals.

Contribution

It provides a comprehensive assessment of Canada's climate-related financial regulations and benchmarks them against international standards.

Findings

Canada's regulatory framework needs enhancement for effective climate risk management.

Current incentives may not sufficiently promote fossil fuel divestment and renewable transition.

Identifies specific gaps in Canada's approach compared to international best practices.

Abstract

The document addresses the essential role of financial regulatory frameworks in mitigating climate-related risks within the financial sector. The assessment evaluates Canada's efforts to establish a regulatory framework for financial climate risk disclosure, compares it to international standards, and identifies areas for improvement. The regulatory framework, fiscal impact, and incentives to relinquish investments in fossil fuel projects and transition to renewable energies swiftly and seamlessly are the primary challenges that Canada faces in achieving energy net zero targets.