Hon. Julie Miville-Dechêne: Honourable senators, I rise to speak in support of Senator Galvez’s Bill S-238.
The Act to enact the Climate-Aligned Finance Act and to make related amendments to other Acts has ambitious objectives. It invites us to think about how our financial system, which drives our economy, can help us shift gears toward achieving our climate goals rather than putting the brakes on the transition.
I believe that, despite the trade war with the United States, we must not give up on reducing our greenhouse gas emissions. The future of our planet and our children is at stake.
The facts are clear, overwhelmingly clear. They demand action and clarity. First, the science is unequivocal about the source of climate change. This is no longer up for debate; it is a reality we can all measure and feel. Climate change is undeniably caused by GHG emissions resulting from human activities.
These emissions are primarily from the fossil fuels that still fuel the majority of our energy systems, our modes of transportation, our industries and even, at times, our agricultural activities. Despite repeated warnings from scientists and the international commitments Canada has made since the Paris Agreement, overall emissions from the energy sector continue to rise.
In Canada, emissions from the oil and gas sector account for about 28% of our national total. That is the main reason why, despite our best efforts, the country has never met a single climate target.
Second, our financial institutions are over-invested in fossil fuels. Unfortunately, Canada’s financial sector remains one of the most exposed to fossil fuels in the developed world. The country’s five largest banks have gradually increased their exposure to fossil fuel financing, from an average of 15.5% in 2020 to 18.4% in 2022. That is, on average, three times higher than U.S. banks. This means that our money — Canadians’ savings, our retirement funds and our bank deposits — continues to support projects that exacerbate the climate crisis.
Another striking example is that our largest pension fund, the Canada Pension Plan, has abandoned its net-zero target and continues to invest more than others in the energy sector. This is in stark contrast to Norway, for example, whose $2-trillion sovereign wealth fund is reinforcing its climate commitment with the companies in its portfolio.
Third, climate change is already having a significant impact on our financial institutions. Losses are not limited to destroyed homes and infrastructure. They also involve economic disruption, lost jobs and growing instability in financial markets.
The World Economic Forum’s Global Risks Report 2025 notes that environmental risks are growing in intensity and frequency. It states that environmental risks — storms, droughts, wildfires and rising water levels — are among the most serious and likely threats to the global economy over the next decade.
Fourth, other jurisdictions have begun to enact legislation and regulations to make their financial systems more resilient to climate change while diverting investment flows away from the fossil fuel projects that are causing climate change and toward clean energy sources that will power our future.
In the United States, for example, the Securities and Exchange Commission, or SEC, introduced new climate risk disclosure requirements for publicly traded companies.
Canada, in contrast, is moving more slowly. We launched the Sustainable Finance Action Council and adopted some disclosure guidelines, but they remain voluntary. Without legal obligations, progress remains piecemeal.
This brings me to Senator Galvez’s Bill S-238, which proposes an innovative solution to a complex problem: ensuring that finance serves our country’s climate goals. The new act would require public and private financial institutions to explain how they align their loans and investments with our climate commitments, including net-zero emissions by 2050. It would also require Crown corporations, such as Export Development Canada, or EDC, and the Canada Infrastructure Bank, to incorporate climate expertise at the highest level of decision making. This would ensure that investment decisions take into account not only financial returns, but also climate risk and environmental impact.
Finally, the bill seeks to promote financial transactions that accelerate the transition.
This bill is bold, yes, but it is necessary. It challenges the idea that the financial sector is an untouchable domain, aloof from climate imperatives and social responsibilities.
This bill was introduced for the first time during the last parliamentary session and came in for some criticism. Several people, myself included, felt that the bill was too prescriptive. There was criticism that the requirements regarding the guidelines for adequate capital could infringe on the prerogatives of the Superintendent of Financial Institutions. These were legitimate concerns. I want to point out that the current version of the bill incorporates several amendments that address those criticisms by offering greater regulatory flexibility.
Those criticisms notwithstanding, this bill deserves to be studied without undue delay. In the last Parliament, this bill was referred to the Standing Senate Committee on Banking, Commerce and the Economy in June 2023, more than a year after second reading began. The committee finally began its study of the bill five months later in November 2023, but it ultimately set it aside.
Having participated in those spread-out meetings, I believe we could have done better. Isn’t it our duty as legislators to create laws for the benefit of future generations of Canadians? Without a clear legislative framework, our financial institutions will not make the necessary changes of their own accord. The argument that markets will regulate themselves no longer holds water.
Colleagues, 15 or 20 years from now, most of us will no longer be sitting here. However, the decisions we make today will shape the world our children and grandchildren will live in. By voting in favour of sending the revised Bill S-238 to committee, we are choosing integrity and accountability. We are saying that Canada must fulfill its commitments, that our financial institutions must reflect our values, and that the country’s economic prosperity can no longer grow at the expense of the climate.
Once debate at second reading is completed, I urge you to send the bill to committee for thorough study without undue delay.
Thank you.
Some Hon. Senators: Hear, hear.