Canada’s 2025 Budget Disappoints with Weak Sustainable Finance Commitments

Canada’s latest federal budget has drawn criticism from sustainable finance experts who say it lacks ambition, weakens greenwashing rules, and fails to present a credible climate transition plan.

The 493-page document reiterates long-standing commitments to build a green and transition taxonomy, develop a sustainable bond framework, and improve climate-related disclosures.
However, the only new initiative — updating the Competition Act’s greenwashing provisions — is viewed by many as a setback.

Experts Disappointed by Lack of Progress

“We all know who Mark Carney is — a leader who understands both finance and climate,” said Maya Saryyeva, director of the Institute for Sustainable Finance.
“But beyond tweaking greenwashing laws, there’s nothing new here. Everything else has been in the works for years.”

Julie Segal of Environmental Defence Canada echoed the sentiment: “This budget hasn’t materially advanced sustainable finance in Canada.”

Green and Transition Taxonomy

The budget reaffirms Ottawa’s plan to select an external body by the end of 2025 to create voluntary guidelines for identifying “green” and “transition” investments, aiming for completion in 2026.
Saryyeva welcomed the timeline but warned of poor transparency: “We don’t know who will lead, what sectors are included, or how collaboration will work.”

Experts also noted that while Canada’s framework is still pending, Australia has already finalized its own taxonomy, leapfrogging Canada.

Sustainable Bonds and Greenwashing

The government will explore a sustainable bond framework aligned with the taxonomy, potentially paving the way for transition bonds to finance the shift to net-zero.

At the same time, amendments to the Competition Act will remove the requirement for companies to substantiate environmental claims using international standards and block third-party filings of greenwashing cases.
Critics warn that these changes could undermine consumer trust and transparency.

Transition Plans Still Missing

Notably absent from the budget are climate transition plans — roadmaps outlining how companies will adapt their operations to a low-carbon future.
Experts called this a “major gap,” though they welcomed positive signals around modernizing Canada’s industrial carbon pricing system.

“Direction Is Right, Execution Is Key”

Overall, analysts say the budget offers good intentions but weak implementation.

“Directionally, there are positive elements,” said Saryyeva. “But the execution will determine whether this works.”
“The devil’s in the details,” added Segal.