🍁 civid v1

Status and scope

• Bill S-238 was introduced in the Senate and was at first reading on October 29, 2025.
• It would create the Climate-Aligned Finance Act and amend several other federal laws. It would affect federal financial institutions, federally incorporated companies, certain federally regulated businesses and Crown corporations, as well as their directors and officers.

Part 1 — Climate-Aligned Finance Act

• Climate alignment: The bill defines commitments to include Canada’s net-zero-by-2050 target, international climate agreements and an emissions pathway consistent with limiting warming to 1.5°C with no or low overshoot. It sets out what constitutes alignment, including not facilitating inconsistent activities and respecting Indigenous rights.
• Plans and reporting: Reporting entities would have to prepare emissions-reduction plans within two years of the new Act coming into force and at least every five years until 2050. They would generally publish an alignment report within 60 days after each financial year, unless they demonstrate no or negligible emissions. Reports would cover targets, progress, emissions, assumptions and climate-related lobbying.
• Financial institutions: Their plans and targets would include emissions they facilitate, with absolute targets at sector, portfolio and individual investment levels. The bill restricts reliance on offsets and future emissions-removal technologies.
• Capital requirements: The Superintendent of Financial Institutions would develop climate-related capital and funding guidelines, including higher risk weights for certain financing and a systemic climate-risk capital surcharge. Initial banking guidelines would be due within one year of the relevant provision coming into force; further guidelines would follow within six months.
• Governance: Certain public financial boards would need at least one member with climate expertise. Board members would face specified disclosure requirements concerning interests or activities connected to organizations not aligned with climate commitments; those disclosure rules would apply to appointments made after the third anniversary of the relevant provision coming into force. Directors, officers and administrators would have to exercise their duties to enable alignment.
• Enforcement: The Superintendent would gain power to issue orders to specified federally regulated financial entities where, in the Superintendent’s opinion, an order aligns with or helps achieve climate commitments.
• Financial products: A designated minister would prepare an action plan within one year of the relevant provision coming into force, considering changes to tax, pension-investment and bankruptcy rules and enforcement. The plan would consider criminal offences for knowingly false or misleading alignment reports; the bill does not itself create those offences.
• Reviews: The bill calls for reports on Indigenous perspectives and Bank of Canada monetary policy within two years of royal assent, independent and parliamentary reviews every three years, and annual implementation reports.

Part 2 — Changes to existing laws

• The Bank of Canada, Export Development Canada, the Public Sector Pension Investment Board, the Business Development Bank of Canada, the Canada Pension Plan Investment Board and the Canada Infrastructure Bank would have to carry out specified powers or purposes in a way that enables climate alignment.
• The Office of the Superintendent of Financial Institutions and its Superintendent would receive climate-alignment responsibilities. The Governor in Council would also gain a related regulation-making power.
• Parent Crown corporations listed in Schedule III to the Financial Administration Act would be deemed to have received a directive to align with climate commitments.
• Export Development Canada’s project review would explicitly consider negative climate impacts. The Canada Pension Plan Investment Board would also be added to the list of boards requiring climate expertise.

Part 3 — Coming into force

• Most of the bill would take effect one year after royal assent. The Canada Pension Plan Investment Board amendments would take effect on a later day or days fixed by order, in accordance with the specified provision of the Canada Pension Plan.
• The provided text does not state an estimated cost.