Written by Julie Segal, Senior Manager Climate Finance and Alex Walker, Program Manager, Climate Finance

On 24th March 2022, Senator Rosa Galvez introduced the ‘Climate-Aligned Finance Act’ (CAFA) into the Canadian Senate. Bill S-243. CAFA is a piece of legislation which would comprehensively align our financial sector – our banks, pensions and insurance companies – with the realities of climate change. CAFA would hold corporate directors to account for climate action, mandate climate action plans from financial institutions, ensure there is no climate-related conflict of interest on boards, and ensure financial regulators act on climate. These policies are key for climate action, and to protect the economy from the risks of the climate crisis.

Climate change is here and it is already impacting communities, nature, and our economy. Wildfires devastated people across the country, and cost the Canadian insurance industry over $3 billion in 2022, and again in 2023. Some homes across the country may soon be without flood insurance, or even mortgages, because of the growing risks from climate change. Without new financial rules like CAFA, people across Canada, as well as the economy as a whole, will not be able to respond to and protect against the climate crisis.

CAFA has received ground-breaking cross party backing, five petitions of public support in the House of Commons, and hundreds of endorsements from academics, civil society groups, and climate experts. On the second anniversary of CAFA, leaders from across the world shared their support for this necessary legislation, and called upon our policymakers to implement it. CAFA would future-proof our economy while holding banks and pension funds accountable for real climate action. Climate-aligned financial policy remains the missing piece of Canada’s climate plan. Let’s fix that, now, by implementing the Climate-Aligned Finance Act.