Enacting Climate Commitments Act

This bill, sponsored in the Senate, would create a new law called the Climate-Aligned Finance Act and make related changes to several other federal laws affecting banks, pension funds, and Crown corporations. It targets "reporting entities" — a broad category including federally regulated financial institutions (banks, insurers, pension plans), the Bank of Canada, Export Development Canada, the Business Development Bank, the Canada Infrastructure Bank, and other federally incorporated companies. These entities would have to prepare public "climate commitments alignment reports" every year, set emissions-reduction targets consistent with limiting global warming to 1.5°C, and develop plans showing how they will reduce their own emissions and the emissions they finance through loans and investments. Strict rules would limit the use of carbon offsets or unproven future technologies to justify continued emissions.

The bill also requires financial regulators to act. The Superintendent of Financial Institutions would have to create capital rules that penalize banks for financing fossil fuels and other high-emission activities, and could issue binding orders to push institutions toward climate alignment. Boards of major federal financial Crown corporations would need at least one director with climate expertise, and directors generally would have new duties to disclose conflicts of interest tied to fossil fuel involvement and to run their organizations in a way consistent with climate goals. The Bank of Canada's mandate would explicitly include alignment with climate commitments.

Finally, the government would be required to produce a series of follow-up reports and reviews: an action plan on reshaping financial products (tax rules, pension investment rules, bankruptcy priority for "green" bonds) to favour climate-aligned finance, a report on Indigenous perspectives on financial regulation, an evaluation of whether Bank of Canada monetary policy aligns with climate goals, and periodic independent and parliamentary reviews of how the new law is working. Most of the Act would take effect one year after it receives royal assent, giving affected institutions time to prepare.

This bill enacts the Climate-Aligned Finance Act, which imposes climate-alignment duties, reporting obligations, board-appointment requirements and capital-adequacy rules on federal financial institutions and other federally regulated entities, and grants new powers to the Superintendent of Financial Institutions, the Minister of Finance and other ministers to enforce and expand these requirements.

• New legal standard — the Act defines an entity as "in alignment with climate commitments" against detailed criteria (section 4), and requires "reporting entities" (federal financial institutions, CBCA corporations, federal works/undertakings, and Schedule III Crown corporations) to prepare public "climate commitments alignment reports" and multi-year plans with targets, with restrictions on using carbon offsets or unproven future technologies to justify emissions claims.
• Superintendent's powers — the Superintendent of Financial Institutions must develop capital-adequacy guidelines that impose higher risk weights and a "systemic climate risk-contribution capital surcharge" on institutions financing fossil-fuel or emissions-intensive activity, must use these guidelines when assessing capital adequacy, and may issue orders to federal financial institutions "despite any provision of any other enactment" where the Superintendent judges this helps alignment with climate commitments — a discretionary power with no defined ceiling or specific criteria beyond the Superintendent's own opinion.
• Board and personal obligations — at least one director on the boards of listed Crown corporations and financial bodies (e.g., CDIC, CMHC, EDC, BDC, PSP Investment Board, Canada Infrastructure Bank) must be a "person with climate expertise"; directors and officers of reporting entities must disclose conflicts of interest tied to non-aligned organizations and must exercise their duties to enable alignment — with no stated penalty specified in this text for breach.
• Bank of Canada and Crown corporations bound — amendments require the Bank of Canada, Export Development Canada, BDC, PSP Investment Board, CPP Investment Board and the Canada Infrastructure Bank to exercise their powers "only" in ways that align with climate commitments, and deem the Governor in Council to have issued a standing directive to that effect for Schedule III Crown corporations.
• Future action plans left to ministers — a designated minister must produce a "Financial Products Alignment Action Plan" within one year, identifying possible amendments to tax law, bankruptcy law, pension regulations and new criminal offences for false climate reporting — meaning the specific legal changes are not enacted now but are left to future proposals tabled in Parliament.
• Oversight — the Act requires periodic reports from the Bank of Canada and OSFI, an independent review every three years, a parliamentary committee review every three years, and annual implementation reports tabled in Parliament, but contains no sunset clause ending the Act's obligations.