Bill S-238, the proposed Enacting Climate Commitments Act, would create a new Climate-Aligned Finance Act and amend several existing federal laws. Its stated goal is to align certain entities’ activities with climate commitments and address climate-related risks to the financial system. The supplied text is a bill: these provisions are proposed, not shown as in force.
Reporting entities—including many federal financial institutions, federally incorporated companies and federal Crown corporations—would have to set targets, prepare plans to meet them and publish annual progress reports.
Federal financial institutions would have to include emissions they finance in their plans. Their targets would include absolute emissions targets for sectors, portfolios and individual investments across debt and equity.
The Office of the Superintendent of Financial Institutions (OSFI) would have to develop climate-related capital and funding guidelines, use some of them in assessing capital adequacy, and apply enforcement measures within its existing powers.
The bill would require climate expertise on the boards of specified federal bodies. It would also require certain board members to disclose specified ties to entities not aligned with the bill’s climate commitments, and bar them from accepting gifts or benefits from those entities.
The Bank of Canada, Export Development Canada and several federal development, infrastructure and pension investment bodies would face limits on how they exercise their powers. Parent Crown corporations listed in Schedule III of the Financial Administration Act would be deemed to have a directive to align with climate commitments.
A minister would have to prepare a plan on financial products, including possible future changes to tax, pension investment and bankruptcy laws. Those changes would not themselves be made by this bill.
Companies and other reporting entities: Within two years after the Act comes into force, you would have to prepare a plan with targets and measures to meet them. Plans would be updated at least every five years through 2050. Most reporting entities would also have to publish an annual report within 60 days of each financial year-end. An exception applies if an entity can show it had no or negligible emissions in the previous year.
Financial institutions: Your plans would cover emissions linked to financing and explain how you engage with funded entities—for example, to encourage decommissioning emissions-intensive activities, support zero-emissions energy and infrastructure, escalate concerns, and exclude entities unable or unwilling to align.
Banks and other institutions supervised by OSFI: Climate-related exposure would be reflected in capital guidelines. The bill specifically calls for increased risk weights for financing exposed to acute transition risks, including fossil fuel activities, and a surcharge linked to an institution’s financially facilitated emissions.
Directors, officers and administrators: Those of a reporting entity would have to exercise their duties and powers in a way that enables the entity to align with climate commitments. Board members of specified federal bodies would have added expertise, disclosure and gift-related requirements.
Specified federal bodies: The Bank of Canada, Export Development Canada, the Business Development Bank of Canada, the Canada Infrastructure Bank, and certain pension investment bodies would be limited in how they carry out their purposes and use their powers.
Everyone else: The bill does not itself change taxes, pension investment rules, bankruptcy priorities or consumer financial products. It requires a plan to consider possible later changes in some of those areas.
The bill sets out alignment criteria, but some important terms—such as “substantially,” “significant harm” and “negligible emissions”—are not defined in the text. A minister may define “negligible emissions” by order.
The bill does not set out a detailed process for checking plans and reports, handling disputes or appealing decisions. It gives OSFI and, in some cases, broad order or enforcement powers.
The full scope of reporting obligations could be significant: the definition of emissions includes direct and indirect emissions across an activity’s life cycle.
Most provisions would start one year after royal assent. The amendments adding the Canada Pension Plan Investment Board to the board-expertise requirement and changing its governing Act would start on a later date fixed by order, no earlier than that anniversary.
The bill would impose detailed planning, reporting and governance duties, but the available material gives no estimate of the cost or the staff needed to meet them.
Some alignment criteria are broad, while the bill does not provide a detailed decision or appeal process. That could leave entities uncertain about how compliance would be judged.
OSFI could issue orders to certain federal financial institutions if it considers them appropriate for alignment. The bill does not set out specific limits or a separate review process for those orders.
The bill requires work on possible changes to tax, pension investment and bankruptcy laws without deciding what those changes would be. Their effects remain unknown.