Photo: Harrison Ha / Shutterstock
Key takeaways
- Mark Carney’s first year as Canada’s prime minister has been described as a “huge disappointment” for climate leadership, due to rolling back key climate policies like the carbon tax and the oil and gas emissions cap.
- Canada is lagging behind its international peers on sustainable finance policy despite facing significant climate-related financial risks, including insurance costs from fires and coastal erosion.
- However, there is a “ray of hope” for Canadian sustainable finance, with a government commitment to a new taxonomy and parliamentary efforts to pass a climate-aligned finance act.
When Mark Carney became prime minister of Canada, climate advocates were hoping his past leadership would translate into more action on securing the country’s transition efforts.
A year on and his actions have been far from what was hoped, even as he has had a tough job dealing with US president Donald Trump, experts told Green Central Banking.
“Overall, it’s been a huge disappointment … He is rolling back established Canadian policies on climate,” said Karine Peloffy, lawyer and finance lead at nonprofit Ecojustice.
Carney has a tough job and is in an “incredibly difficult situation right now” with pressure from Trump to make Canada the 51st US state, said Canadian senator Rosa Galvez.
But she laments the focus on trading raw resources rather than developing Canada’s resources for a green economy.
“This is not good for Canada, because we have to pass from a price taker to a price setter … we have to change, and the possibility and opportunity are there if we embrace the transition. But unfortunately, we’re not embracing the transition. We are still very much in the oil economic model,” she said.
Carney appears to backtrack on climate
In 2015, during his time as governor of the Bank of England, Carney delivered his “tragedy of the horizon” speech, seen by many as a pivotal moment in recognising the systemic financial risks of climate change.
Yet in his first move as prime minister, Carney scrapped Canada’s carbon tax. He then agreed to scrap the oil and gas emissions cap in Alberta province, which resulted in the environment minister resigning. He also has yet to submit a plan to reduce emissions under Canada’s net-zero accountability act.
Canada’s greenwashing rules were softened so companies no longer need to hold their claims to international standards, and plans to mandate climate disclosures at the federal level appear to be on hold.
And there has been no mention of transition plans, despite it being part of the Liberal party’s election platform, the party of which Carney is now leader.
Carney himself has noted the lack of continuity around Canada’s climate disclosure rules, testifying during a Senate hearing in 2024 that “Canadian climate disclosure efforts have been patchwork, delivered late and falling short of international standards”.
In the end, Carney’s rollback on climate policies shouldn’t be much of a surprise, said Peloffy. Carney was vice-chair at Brookfield Asset Management, which is one of the financial institutions with closest links to Canada’s fossil fuel companies, according to an academic paper on the connections between finance and the fossil fuel industry in Canada.
“His track record is he does great speeches once a decade, and loves voluntary action,” said Peloffy.
“Is it a surprise now that he’s become prime minister and coming out like a fossil fuel champion? It’s a big surprise for people that only looked at [his rhetoric], heard the speeches, but maybe not that much of a big surprise [given his past employment]”.
Falling short on climate standards
Canada has fallen short on international climate standards. A research report from Julie Segal, a London School of Economics visiting fellow and senior manager at Environmental Defence, finds that Canada lags behind its peers on climate finance policies.
“We have far more climate risks than almost any other peer jurisdiction,” Segal said. Canada faces increased fires and coastal degradation from climate change, which is likely to cost insurers.
It is particularly relevant as one of Carney’s biggest pushes as prime minister is to grow the Canadian economy with new trade partners and those partners have far more advanced sustainable finance measures, she said.
While Canada has made announcements and commitments, there has been very little material progress.
“We are materially and empirically behind other trading partners on sustainable finance policy, and that needs to be fixed. This government under Mark Carney needs to take climate-related financial policies to the finish line,” Segal said.
But while Carney has been focused on trade, Canada could look inside its own borders.
Canada is a huge exporter of its goods. In 2024, its mineral and metal exports accounted for more than one-fifth of all exports. It is also a huge exporter of crude oil, with almost all of it going to refineries in the US.
If Canada wants to be part of the future of the transition, it needs to invest in its own industries such as renewables, said Galvez.
“We need to go into the extraction, processing, manufacturing, refining, manufacturing in and then selling high value products, instead of just selling raw materials, which deprives future generations of this world,” she said.
Still ‘ray of hope’ for Canadians
While Carney hasn’t been the climate leader some thought he would be, there has been some progress around Canada’s sustainable finance landscape which is a “ray of hope”, said Peloffy.
The government reconfirmed its commitment to creating a taxonomy on sustainable finance by the end of 2026. And a parliamentary report on the impacts of climate change on Canada’s financial system was rescued when it fell foul of the federal election cycle.
Normally, studies that are not finished when the Canadian parliament disbands after an election are scrapped. But even though the report did fall into this category, the committee came back and finished the report.
“So there are still parliamentarians interested in this space and pushing for it,” said Peloffy.
The report also endorsed a climate-aligned finance act, which was introduced for debate by Galvez after the election, who says it is needed now more than ever. The bill is currently in its second to third reading in the Senate.
Canada does not have the money to sustain the economy from extreme weather, she said.
“We know that we have to increase competitiveness, we have to increase productivity, we have to increase innovation.”
Peloffy said she hopes Carney will focus on Canada’s real strengths and resources to help it become a “clean energy superpower”.
“It’s not too late to turn this ship around”.
This page was last updated March 18, 2026
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
