Canada’s budget sent a clear signal to investors: now Carney must strengthen the foundations

In an increasingly uncertain geopolitical environment, Canada’s Prime Minister, Mark Carney, has sent key signals to investors with his first budget.  

Delivered in early November, Carney’s budget revealed that the government aims to mobilise roughly CA$1 trillion in investment by crowding in private capital. 

It also includes a novel and informative section on Canada’s new national Climate Competitiveness Strategy, signalling the government’s plan to compete economically through major commitments to clean growth, industrial strategy, and investment incentives.  

This blog explores what is needed post-budget to build a credible, enabling policy environment in Canada. Policy makers should look to create a future that strengthens national competitiveness, supports long-term resilience, and builds a sustainable financial system and economy. 

Canada outlines its industrial transition 

The national Climate Competitiveness Strategy contains some key components:  

• a commitment to extending industrial carbon pricing certainty post 2030 
• support for clean industrial build-out through investment tax credits 
• an expansion of the domestic critical minerals industry 
• maintenance of key technology incentives  

These commitments speak to nation-building, productivity, and long-term economic positioning. This means capital will increasingly move toward sectors aligned with transition pathways (i.e., clean power, critical minerals, efficiency technologies). Investors who fail to align portfolios with these priorities risk shrinking opportunity sets or missing out on policy-supported returns.  

However, strategy only matters if it’s backed by clear implementation and accountability, and that’s where gaps remain: the budget sets direction but leaves investors navigating incomplete timelines and limited details on how accountability mechanisms will be enforced. 

The problem is not the absence of incentives; it’s the absence of conditions 

Canada has put meaningful incentives on the table to support clean growth and industrial decarbonisation. But incentives alone cannot deliver a credible, economy-wide transition. They work effectively only when paired with clear and consistent market rules – rules that establish what companies must disclose, how investors can evaluate alignment, and what constitutes a legitimate transition activity. 

Without common rules and shared reference points, incentives operate in a fragmented environment where investors lack the information and standards needed to assess alignment, compare strategies, or price transition risk with confidence. This limits the ability of incentives to drive coordinated, system-wide progress. 

To understand where the gaps remain, it’s useful to look at how specific elements of the policy architecture were addressed, or left unaddressed, in the 2025 budget and what those choices mean for capital markets.  

The table below summarises several core conditions and the implications: 

Companies still have considerable flexibility in the scope and quality of their climate disclosures, and investors are often working with definitions of transition activities that are not yet fully aligned. This makes it challenging to form a clear, comparable view of transition progress across the market. With more consistent guidance and expectations, the government can strengthen the signals that help investors differentiate between credible transition strategies and those that remain unproven or lack alignment. 

The Climate Competitiveness Strategy signals important long-term intent. Its impact will grow as the supporting policy architecture – disclosure standards, the taxonomy, and expectations for transition planning – continues to mature. As these pieces come together, investors will have clearer signals and stronger confidence in directing capital toward an economy-wide transition. 

Aligning incentives with infrastructure  

To accelerate the agenda articulated by the government under Prime Minister Carney, additional steps are needed to help investors and the private sector align capital flows with this vision. A truly sustainable financial system in Canada would: 

1. strengthen fiduciary clarity  

Pensions, securities, and financial regulators formally clarify that climate and sustainability risks must be assessed where financially material, consistent with existing fiduciary duties. This clarity helps ensure investors can assess long-term risks and opportunities consistently, supporting well-informed capital allocation.   

2. mandate CSSB-aligned climate disclosure 

Large issuers move first; smaller issuers follow. Comparable, consistent, and useful data becomes a market norm, not an option. 

3. require credible transition plans linked to capital allocation 

Companies disclose how spending and strategy align with net zero pathways or explain divergences. 

4. implement a globally interoperable, science-based taxonomy with rigor 

Public finance and incentives support activities aligned with credible decarbonisation pathways. 

5. align public incentives with measurable outcomes 

Support is tied to real world progress, not commitments alone. 

Why aligning policy and capital matter to investors 

Without these foundations, Canada risks: 

• reduced capital deployment opportunities, as global capital continues to flow into markets with clearer rules and policy certainty;¹
• eroding value in key Canadian holdings, as export-dependent sectors lose competitiveness in a decarbonising global economy; 
• heightened exposure to unmanaged transition risks, affecting portfolio stability and long-term returns; and 
• missed growth potential in clean and emerging industries, limiting investment upside and diversification. 

Investors from markets like the EU, UK, and Australia already operate under clearer transition rules: the CSRD and the EU Taxonomy in Europe, mandatory climate disclosures and emerging transition plan requirements in the UK, and Australia’s new ISSB-aligned regime. The PRI’s policy work across these jurisdictions shows that this level of clarity is increasingly becoming a global reference point. For Canada to remain competitive, its policy framework will need to provide comparable transparency and certainty. 

The November budget set out a clear vision for Canada’s economic future. What is needed now is a stronger bridge between that vision and the financial system. Investors must be shown how to align, but they also need the underlying infrastructure – reliable market information, consistent disclosure standards, and a credible taxonomy. Incentives without rules risk locking in emissions; rules without incentives risk slowing industrial build-out. Canada needs both, simultaneously, delivered with clarity and direction. 

The next 18 to 24 months will determine whether Canada shapes the transition or is shaped by it. 

The PRI blog aims to contribute to the debate around topical responsible investment issues. It should not be construed as advice, nor relied upon. The blog is written by PRI staff members and occasionally guest contributors. Blog authors write in their individual capacity – posts do not necessarily represent a PRI view. The inclusion of examples or case studies does not constitute an endorsement by PRI Association or PRI signatories.