Key ESG Developments in 2025

In 2025, Canada’s ESG legal landscape reflects a shift from accelerated regulatory expansion to a cautious pause, as policymakers reassess and align domestic disclosure requirements with evolving international standards and market conditions. A balancing act between progress and growing uncertainty is occurring, as global economic and geopolitical turbulence have tempered earlier momentum toward ambitious sustainability commitments.

Legislative changes have been especially significant: amendments to the Competition Act, effective June 2024 and expanded in June 2025, explicitly target greenwashing by requiring businesses to substantiate environmental claims, which supplement recently introduced steep new penalties (up to 3% of worldwide revenues), and creating a private right of action, including for activists, consumers, and competitors. While designed to promote transparency, these amendments raised concerns of uncertainty, which resulted in “greenhushing”: many businesses, particularly in oil and gas and financial services (that invest in oil and gas businesses), scaled back and even withdrew public ESG commitments to avoid litigation risk. 

In June 2025, the Commissioner of Competition issued guidance which sought to provide certainty and limit the scope of enforcement, including limiting enforcement to consumer-facing marketing, rather than disclosures mandated under securities laws and other regulatory regimes. As of late 2025, no cases have yet been filed. 

As a most recent development, to respond to this market uncertainty and drive investment, on 5 November 2025, as part of the federal budget, the Canadian government announced its plans to further amend the Competition Act to remove the standard to substantiate claims that many businesses believed was difficult if not impossible to comply with, and to remove the private right of action, thus re-inserting the Commissioner of Competition as the “gatekeeper” of enforcement of greenwashing claims.

Meanwhile, the Ontario Securities Commission (OSC) initiated a Tribunal application against a fund manager for alleged false ESG marketing, marking a new front in enforcement under the Securities Act. In parallel, the Canadian Securities Administrators (CSA) paused work on its mandatory climate disclosure rule in April 2025, after the US SEC retreated from similar measures. The federal government likewise deferred implementing previously announced CBCA amendments that would have mandated climate disclosures for large private corporations.

Confidence in the financial sector was rattled when major Canadian banks withdrew from the UN-backed Net-Zero Banking Alliance in 2024, and uncertainty deepened in September 2025 when Prime Minister Carney declined to reaffirm Canada’s 2030 Paris Agreement targets. ESG remains central to Canadian businesses, but the path forward is now more contested than linear.

ESG and Indigenous Communities

The federal Indigenous Loan Guarantee Program (the “ILG Program”) was officially launched on 21 February 2025. First announced in the government’s 2023 Fall Economic Statement and again in Budget 2024, the ILG Program initially offered CAD5 billion in loan guarantees to Indigenous communities. In March 2025, the federal government expanded the ILG Program, doubling the funding to CAD10 billion and broadening the sector eligibility beyond just natural resources and energy into “major projects across all sectors of the economy”, excluding gaming.

Under the ILG Program, loans provided to Indigenous communities by financial institutions and other lenders will be guaranteed by the Canadian government, allowing these communities to benefit from the government’s AAA credit ratings and consequently receive lower interest rates than they may otherwise have received. The ILG Program is intended to create economic opportunities, support Indigenous communities in developing their own economic priorities and to ensure right-holders are a part of Canada’s accelerated push to build.

In May 2025, the Canada Indigenous Loan Guarantee Corporation (CLIGC), created to facilitate the ILG Program, issued its first loan guarantee, covering CAD400 million of a CAD736-million investment to a partnership of 36 First Nations in British Columbia to support the investment of a 12.5% ownership interest in Enbridge’s Westcoast natural gas pipeline system. 

Further emphasising the continued growth in Indigenous equity ownership, particularly in the energy and infrastructure sectors, provincial procurement programmes, like the BC Hydro Call for Power initially launched in 2024 and again in 2025, have mandated requirements and incentives for Indigenous equity participation. The 2025 Call for Power, announced in July 2025, builds on the 2024 Call, which was the first in over 15 years and resulted in ten selected projects totalling nearly 5,000 GWh, and featuring Indigenous equity ownership between 49% and 51%.

AI Code

In 2023, Canada launched the Code of Conduct on the Responsible Development and Management of Advanced Generative AI Systems (the “AI Code”) to achieve accountability, safety, fairness and equality, transparency, human oversight and monitoring, and validity and robustness in the development of AI. The AI Code is voluntary. As of 21 March 2025, 46 companies, including Lenovo, Mastercard, CIBC and Telus, have signed the AI Code.

Additional federal initiatives include Canada’s Artificial Intelligence Safety Institute (AISI), announced in November 2024, intended to bolster Canada’s capacity to address AI safety risks. The AISIA is just one component of the broader CAD2.4 billion investment announced in Budget 2024 that seeks to help researchers and businesses develop and adopt AI responsibly.

Despite the growing concerns related to AI and its management, Bill C-27, the Artificial Intelligence and Data Act (AIDA), intended to update Canada’s digital privacy and data protection laws, died upon the prorogation of Parliament in early 2025. Therefore, Canada’s current data privacy legislation, the Personal Information and Electronic Documents Act (PIPEDA) remains in effect, and the government will need to re-introduce Bill C-27 (or a similar bill) in a future for it to have another chance to become law.

At the individual level, organisations are increasingly expected to have AI governance structures, risk assessments, oversight, transparency and monitoring in place, directly tying into the “governance” piece in ESG. Also emerging as a key area of concern is the exponential energy demand of AI data centres. With analysts forecasting that data centres could consume up to 8% to 10% of global electricity by 2030, and regulatory authorities increasingly focused on how best to manage such demand, there does exist an opportunity for Canada to lead the way as a hub for AI data centres due to its abundance of renewable-energy sources.

There have been significant developments in the E of ESG in a variety of areas, including regulation of plastics, clean electricity and the right to repair.

Plastic and “Forever Chemicals” Regulations

Plastic regulations

Canada’s progress towards its objective of zero plastic waste by 2030 continued in 2025, with the government’s publication of its Proposed Roadmap to Extend the Life of Plastics in End-of-Use Electronics (the “Proposed Roadmap”) and the introduction of a new National Standard of Canada, CSA R117:24: Plastics Recycling: Definitions, measuring and reporting (the “CSA Plastics Standard”) by the CSA Group, a not-for-profit standards organisation that leads the advancement of standards in the public and private sectors. The Proposed Roadmap, with the final version expected to be published in 2025, focuses on three priority action areas: data collection, collaboration and innovation, and aims to promote the repair and reuse of electronic products to reduce plastic waste. The CSA Plastics Standard aims to establish a consistent definition for plastics recycling.

In June 2025, Canada also launched the official reporting platform for its Federal Plastic Registry. The Registry, which requires companies to register and report on plastics supplied in Canada for the 2024, 2025 and 2026 years, is intended to inform Canada’s extended producer responsibility and is part of Canada’s broader strategy to reduce plastic pollution and promote a circular economy.

Forever chemicals regulations

On 5 March 2025, the federal government published its Final State of PFAS Report (the “Final Report”) and proposed Risk Management Approach for Per- and Polyfluoroalkyl Substances (PFAS), Excluding Fluoropolymers (the “Risk Management Approach”). In the Final Report, the government concluded that the entire class of PFAS, excluding fluoropolymers, meet one or more criteria for designation as toxic substances under the Canadian Environmental Protection Act, 1999, indicating imminent stricter regulations for the “forever chemicals”. Adding PFAS (excluding fluoropolymers) to the List of Toxic Substances in Schedule 1 of CEPA will empower the federal government to create regulations that restrict the use, manufacture, import and release of the listed substances.

Together, the Final Report and Risk Management Approach propose a precautionary, class-based approach to PFAS regulation, in which regulatory measures would apply to all substances under the PFAS class rather than specific varieties of PFAS. These PFAS regulations will reshape many sectors by restricting the manufacture, import, use, and sale of PFAS‑containing products and directly targeting businesses reliant on these substances in their operation.

Businesses are advised to be aware of both federal and provincial regulations impacting their operations related to PFAS, as these changes may heighten litigation risks and public scrutiny.

Clean Energy Regulations

The Clean Energy Regulations are a key component of Canada’s 2030 Emissions Reduction Plan, aimed at achieving net-zero emissions by 2050.

On 17 December 2024, the government released the finalised Clean Electricity Regulations (the “Regulations”). Key updates include the introduction of alternative mechanisms for achieving compliance, which includes revising emission limits to an absolute emissions approach expressed as an annual emission limit, the introduction of a compliance credit system to enable long-term compliance strategies, staggered timelines for compliance, and streamlined procedures for operating high-emission units during emergencies. Beginning in 2035, the Regulations will set limits on carbon dioxide pollution from almost all electricity generation units that use fossil fuels, with the goal of ensuring a net-zero electricity system by 2050, a key tenant of Canada’s Clean Energy Strategy.

Right to Repair

In Budget 2024, the government of Canada committed to launch consultations on a right to repair (RTR) policy for home appliances and consumer electronics. The goal of this policy is to improve product durability and repairability so that devices work longer and harmful electronic waste is reduced. This consultation period is one part of a process to develop a fulsome federal approach to the RTR.

The federal government intends the RTR policy be based on the principles of repairability, interoperability and durability.

Modern Slavery Act

This year marked the second year of reports submitted pursuant to the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Modern Slavery Act”) which targets forced labour and child labour by mandating certain entities to report on the measures they are taking to prevent and mitigate the risks of forced and child labour in their supply chains.

In late 2024, Public Safety Canada published updated guidance on the Modern Slavery Act reflecting feedback provided by entities and others. The guidance clarified three central aspects of the reporting requirements: (i) who must report; (ii) what the report must contain; and (iii) how the report must be filed.

Human Rights Due Diligence

Building upon the Modern Slavery Act, the federal government is considering developing human rights due diligence (HRDD) legislation.

In Canada’s 2024 Fall Economic Statement, the government announced its intention to introduce supply chain due diligence legislation that would require entities operating in Canada to engage with and scrutinise their supply chains for risks to fundamental human and labour rights and require businesses to take definitive action to address and resolve such risks, where found. No reported progress has been made, including wider industry and public consultation, on the proposed HRDD legislation, nor is such progress likely forthcoming.

The federal government has proposed an allocation of CAD25.1 million over two years, starting in 2025 and 2026, to Global Affairs Canada and the Canada Border Service Agency to support the implementation of proposed legislative amendments to strengthen Canada’s import ban on products produced by force labour.

Federal UNDRIP Action Plan

In 2023, the federal government launched the 2023-2028 Action Plan (the “Action Plan”) to implement the United Nations Declaration of the Rights of Indigenous Peoples (UNDRIP). The Action Plan “outlines a whole government roadmap for advancing reconciliation with Indigenous Peoples through a renewed, nation-to-nation, government-to-government, and Inuit-Crown relationship based on recognition of rights, respect, cooperation, and partnership as the foundation for transformative change”. The plan is not a static document but must continue to develop in consultation with First Nations, Inuit and Métis.

Developed over two years of consultation with First Nations, Inuit and Métis, the Action Plan outlines 181 measures organised into five chapters that address shared and specific priorities of Canada’s Indigenous Peoples. The Action Plan stems from the UNDRIP Act, which mandates alignment of Canadian laws with UNDRIP and requires annual progress reports.

In August 2025, the second progress report was released. Some concrete measures in the report include:

• the incorporation of a non-derogation clause in the federal Interpretation Act, ensuring that all federal laws are interpreted in a way that doesn’t infringe Aboriginal and treaty rights;
• the creation of an Indigenous-led independent advisory committee;
• the release of an Indigenous Justice Strategy aimed at reducing overrepresentation in criminal justice;
• measures to improve federal services in Indigenous languages; and
• ensuring stewardship and co-management with Indigenous partners in federal parks and protected heritage places.

How the federal government continues to collaborate with Indigenous communities to achieve the goals of the Action Plan remains to be seen. Given the importance of Indigenous matters to ESG in the Canadian context, readers should review how the federal government is working towards reconciliation through the Action Plan and the annual progress reports.

A key development in terms of governance started in 2022, when Corporations Canada updated requirements for businesses incorporated under the Canada Business Corporations Act (CBCA) to disclose information to shareholders and Corporations Canada on the diversity of their boards of directors and senior management teams. Corporations must specifically report on the four designated groups defined in the Employment Equity Act, which includes:

• women;
• Indigenous Peoples;
• persons with disabilities; and
• members of visible minorities.

The introduction of new guidelines around climate risk management published by the Office of the Superintendent of Financial Institutions (OSFI) enhance the governance aspect of ESG. As of 2025, Canadian banks, insurance companies and federally regulated financial institutions (FRFI) are required to disclose climate-related risks and opportunities. Board members are now also charged with ensuring that management’s approach to climate-related risks is both precise and effective.

On 20 February 2025, the OSFI issued a letter to industry announcing updates to its Guideline B-15: Climate Risk Management, which applies to federally regulated financial institutions. The updates ensure interoperability with corresponding requirements of the CSSB standards and set out OSFI’s governance and risk management expectations for climate-related risks and the disclosure requirement of climate-related risks.

The ESG transition in Canada is propelled by all levels of government, as well as various regulatory bodies. The CSA is the umbrella organisation of Canada’s provincial and territorial securities regulators whose objective is to improve, co-ordinate and harmonise regulation of the Canadian capital markets. To date, the CSA has been primarily responsible for the development of ESG regulations applicable to reporting issuers wishing to access the Canadian capital markets.

The CSA has established several regulations for reporting issuers related to ESG disclosures and practices, including:

• National Instrument 51-102, which mandates disclosure of environmental risks which are material to an issuer;
• National Instrument 52-110, which sets independence requirements for audit committees; and
• National Instrument 58-101, which requires disclosure of corporate governance practices, including diversity metrics.

The CSA has also issued guidance to reporting issuers over the years regarding ESG disclosure obligations. This includes guidance on environmental reporting (CSA Staff Notice 51-333), climate-related risks (CSA Staff Notice 51-358), and on the concerns of overly promotional ESG disclosure (CSA Staff Notice 51-364) and disclosure practices by investment funds as they relate to ESG (CSA Staff Notice 81-334 (Revised) ESG-Related Investment Fund Disclosure). CSA guidance does not impose any new standards but is published to clarify existing obligations of issuers in the context of a growing focus on ESG-related issues.

The CSA had previously published for comment proposed National Instrument 51-107 – Disclosure of Climate-related Matters (NI 51-107), which sets out a proposed framework for Canada’s first mandatory climate-related disclosure rules. However, in light of global economic and geopolitical developments, including the US Securities and Exchange Commission’s decision on 27 March 2025 to withdraw its defence of its climate disclosure rules, the CSA announced that it has paused its efforts to develop a mandatory climate-related disclosure rule for reporting issuers.

Notwithstanding this uncertainty, certain branches of the security regulators in Canada are continuing to focus on ESG-related matters.

Stock exchanges in Canada may also impose additional ESG requirements with respect to listed issuers. See 2.2 Differences Between Listed and Unlisted Entities for further discussion.

Other regulatory bodies, such as OSFI, which oversees and regulates federally registered banks, insurers, pensions plans, and trust and loan companies, play an important role in regulating ESG in Canada. OSFI’s climate reporting regulations require FRFIs to report GHG emissions, including Scope 3 emissions. See 1.4 Governance Trends. 

Additionally, a variety of recommendations, guidelines and standards have been or are being developed by government agencies.

Lastly, supervisory authorities, such as the Canadian Association of Pension Supervisory Authorities’ (CAPSA) play a significant role in this transition.

As Canada deepens its commitment to a net-zero economy, ESG-related laws and regulations are reshaping how industries operate. While all sectors have felt the effects of federal and provincial measures, three stand out as particularly exposed in 2025: energy, financial services, and mining.

Energy

The energy sector remains the most heavily regulated when it comes to climate policy.

Most notably, the federal government announced the cancellation of the federal consumer fuel charge, effective 1 April 2025, ending the consumer carbon tax and rebate programme. British Columbia likewise chose to eliminate its provincial consumer carbon tax, also on 1 April 2025.

Yet, the industrial carbon pricing systems that apply to large emitters remain fully in force. The Output-Based Pricing System (OBPS), established through the output Based Pricing System Regulations under the Greenhouse Gas Pricing Act, creates a price incentive for industrial emitters (such as those in the energy sector) to reduce their GHG emissions, spur innovation, maintain competitiveness within the industry and protect against the risk of industrial facilities moving from one region to another to avoid paying a price on carbon pollution. The OBPS continues to cover jurisdictions such as Manitoba, Prince Edward Island, Yukon and Nunavut, while provinces like Alberta, British Columbia, Saskatchewan and Quebec maintain their own pricing regimes. For major producers, the financial incentive to cut emissions has therefore not gone away.

In addition to the OBPS, there is the OBPS Proceeds Fund, which is a programme that assists Canada in returning proceeds from the OBPS strain of the carbon tax scheme to their jurisdiction of origin.

As mentioned previously, the federal government finalised the Clean Electricity Regulations in late 2024, setting binding emissions standards for fossil-fuel fired generation starting in 2035.

Methane is another focal point for Canada’s energy goals. In particular, Canada’s Methane Strategy is a key initiative aimed at significantly reducing methane emissions in the energy sector, originally introduced in the 2030 Emissions Reduction Plan and updated in 2023 with a regulatory framework. The draft Enhanced Oil and Gas Methane Regulations, released in December 2023, target a 75% reduction in methane emissions from oil and gas operations compared to 2012 levels by 2030. These Regulations propose stricter emissions monitoring, risk-based inspection schedules and mandatory annual third-party audits, with the first requirements set to take effect in January 2027.

Meanwhile, in June 2024, legislation was enacted implementing the carbon capture, utilisation and storage investment tax credit (CCUS ITC), the clean technology investment tax credit (Ct ITC), the clean hydrogen investment tax credit (CH ITC), and clean technology manufacturing investment tax credit (CTM ITC), each offering significant tax incentives for clean energy and promoting investment in emissions-reducing technologies. The government has announced that it expects these clean economy tax credits to support CAD200 billion of private capital investment in Canada over the next five years.

In line with the increased focus on capital investment in Canada, in 2025, governments across the country announced numerous initiatives to fast-track and prioritise certain infrastructure projects. In British Columbia, for example, two key bills received royal assent in May 2025: Bill 14: Renewable Energy Projects (Streamlined Permitting) Act, and Bill 15: Infrastructure Projects Act. Bill 14 established the BC Energy Regulator as the primary permitting agency for renewable energy projects and transmission lines, and streamlined the approval process for certain renewable energy projects, including by excluding certain projects from the provincial environmental assessment process. Bill 15 provides legislative and regulatory tools the Province can use to advance decisions on infrastructure projects that are deemed to be in the public interest.

In a similar vein, across the country, Ontario enacted Bill 5: Protect Ontario by Unleashing our Economy Act, 2025, which aims to “streamline approval processes” and “cut red tape and duplicative processes that have held back major infrastructure”. At a federal level, Bill C-5: One Canadian Economy Act, received royal assent in June 2025. This Bill enables an accelerated regulatory process for infrastructure projects which the federal government designates as in the national interest. While streamlining approvals, Bill C-5 also aims to protect the environment and the rights of Indigenous peoples, including those rights recognised and affirmed by Section 35 of the Constitution Act, 1982 and set out in UNDRIP.

Financial Services

Canada’s financial sector is experiencing ESG pressures less from new legislation than from enforcement against greenwashing. Proposed legislation, including the Act to Enact the Climate-Aligned Finance Act, which sought to mandate large companies to disclose climate-related risks, never passed before Parliament and was dissolved in early 2025.

Despite a lack of tangible developments in legislation, in practice, banks, asset managers and issuers now face higher reputational and legal risks if their climate commitments lack robust governance and evidence. The emphasis has therefore shifted from aspirational pledges to tangible and defensible proof.

Mining

The mining sector sits at the intersection of risk and opportunity when it comes to ESG-related issues. On the one hand, it has long-faced scrutiny over environmental impacts, Indigenous rights, and community relationships. On the other hand, the mining sector is increasingly recognised as indispensable to Canada’s low-carbon future due to its abundant reserves of critical minerals like lithium, nickel, cobalt, graphite, copper and rare earth elements that are essential inputs for things like EV batteries to solar panels. 

Canada’s Critical Minerals Strategy underpins this dual narrative. In 2025, the federal government launched the Critical Minerals Infrastructure Fund which provides up to CAD1.5 billion in federal funding until 2030 for clean energy and transportation infrastructure projects necessary to enable the sustainable development and expansion of critical minerals in Canada.

The first tranche of CMIF funding was announced in Spring 2025 and included multiple Indigenous-led or co-developed projects, highlighting the practical link between reconciliation and resource development.

Initiatives like the CMIF present a valuable opportunity for the Canadian mining industry to become a leader in sustainably developing the critical minerals required to meet the transition to a low carbon economy. Such initiatives also signal that Indigenous equity ownership is rapidly becoming the new normal in major projects.

The mining industry continues to face significant challenges as companies are charged with enhancing their sustainability practices and minimising their carbon footprints to align with the government’s net-zero targets. Regulatory processes now demand stronger independent oversight, and Indigenous groups are pressing for early involvement in design, monitoring and risk assessment. Companies that fail to meet these expectations face growing legal and reputational risks.

Programmes such as the Towards Sustainable Mining Initiative (the “TSM Initiative”) implemented by the Mining Association of Canada, are in part a response to the challenges faced by the mining sector and have become a de facto benchmark for ESG performance in Canadian mining. The TSM Initiative, which has been adopted in countries like Finland and Spain, focuses on key performance indicators to ensure compliance with ESG initiatives and strengthen Indigenous and community relationships.

The progression of Canada’s ESG movement in 2025 continues to be shaped by the country’s political landscape and response to global geopolitical pressures. National priorities such as energy security, Indigenous reconciliation, and the transition to a green economy remain central drivers, but the past year has brought several new regulatory and geopolitical dynamics that heighten ESG considerations across both industry and the government, driving the development of ESG regulation and voluntary ESG progress.

Domestically, the federal government’s decision to eliminate the federal consumer carbon tax while maintaining industrial carbon pricing through the OBPS highlights how domestic affordability concerns and regional pressures influence climate policy and political viability. At the same time, the government’s advancement of the Clean Electricity Regulations and updated methane rules reinforces that the net-zero transition remains a structural commitment.

On the legislative and policy side, newly introduced legislation like the Modern Slavery Act, amendments to the Competition Act and its recently released June 2025 guidance requiring substantiation of all environmental claims, including forward-looking commitments, and the government’s pledge to introduce mandatory HRDD legislation demonstrate that ESG is no longer peripheral, but woven directly into Canada’s legislative and regulatory frameworks.

Globally, geopolitical conflicts have intensified the ESG lens on Canadian financial institutions and corporations.

The continued war in Ukraine and conflicts in the Middle East continue to raise questions about responsible investment, defence-sector exposure and supply chain integrity. In 2025, major Canadian pension funds and banks faced heightened public scrutiny over holdings in defence and energy companies tied to conflict zones.

At the same time, the federal government has reframed trade and investment policy around supply chain security. The expansion of the ILG Program and the launch of the CMIF in 2025 both carry geopolitical undertones: they are designed not only to advance reconciliation and domestic development but also to position Canada as a secure supplier of critical minerals.

In 2025, Canada’s ESG landscape reflects a growing convergence between domestic politics and global geopolitics. For Canadian companies and investors, these means ESG strategy is becoming inseparable from sanctions compliance, supply-chain risk management and reputational resilience in an increasingly volatile geopolitical environment. Both the government and businesses must therefore remain agile, aligning policies with climate and social priorities while navigating rapidly shifting global political currents.

The CBCA has added a new requirement to increase transparency to fight money laundering and tax evasion. As of 22 January 2024, corporations created under the CBCA are required to provide information regarding Individuals with Significant Control (ISC) over the business to Corporations Canada. This disclosure is mandatory upon the inception of the company and must be updated annually in conjunction with the submission of annual reports. Certain other corporate statutes in various provinces and territories have also implemented requirements to produce transparency registers, subject to varying disclosure requirements.

These developments are in addition to the previously enforced requirements under Section 172.1 of the CBCA that promote accountability regarding diversity of boards of directors and senior management, which have been in effect since 2020.

Corporate governance requirements in Canada differ for listed and unlisted companies. Many unlisted companies are not “reporting issuers” in Canada and are not subject to the corporate governance requirements imposed by the CSA for listed entities and other reporting issuers. For example, listed entities are required under NI 58-101 to make diversity-related disclosure in their annual disclosure documents on a comply-or-explain basis and are also subject to certain independence requirements imposed by the CSA.

Further, listed entities are subject to the policies and rules of the applicable stock exchange in which they are listed and may be subject to different corporate governance rules and standards depending on the stock exchange in which they are listed.

Stock exchanges can also impose additional disclosure requirements. For example, the TSX and TSX-V policies require the timely disclosure of material information, which encompasses both material facts and material changes relating to a company, which can include ESG considerations such as environmental matters and climate change-related risks. The timely disclosure obligations in the exchanges’ policies exceed those found in securities legislation.

Directors have an obligation to consider any issue that may impact the best interests of a corporation. ESG developments in corporate law are expanding what constitutes the best interest of a corporation beyond simple financial considerations. For example, Section 122(1.1) of the CBCA, which has been in place since 21 June 2019, states that directors and officers may consider the interests of stakeholders, such as employees, consumers and the environment, when exercising their powers and performing their duties.

Under Canadian securities laws, directors and officers of a reporting issuer are responsible for the issuer’s compliance with timely and continuous disclosure rules and must approve certain documents filed with the securities regulator(s). Attention must be paid to the preparation of issuer disclosure documents, including the ESG-related disclosures therein, as Canadian securities laws in certain provinces and territories provide a right of damages or rescission against directors and certain officers, among others, for misrepresentations in certain disclosure documents.

The Modern Slavery Act mandates specific Canadian entities to report their efforts to eliminate forced and child labour within their corporate structure and supply chains. It also requires that a director or officer approve these reports and provides for severe monetary penalties for failure to file, including possible personal liability on the directors of the entity.

Canadian companies can be incorporated both federally and provincially (or territorially). British Columbia is the only Canadian jurisdiction that has adopted the business form of a “benefit company”, which was created in June 2020 through an amendment to the British Columbia Business Corporations Act. Benefit companies are for-profit companies that must include a “benefit statement” and a “benefit provision” in their incorporation documents. In these documents, the company must specify the public benefits the company will promote, as well as declare its commitments to conduct its business in a “responsible and sustainable manner” and to promote the specified public benefits it has committed to. Benefit companies in British Columbia must submit benefit reports that measure the company’s performance in implementing their social responsibility commitments against a third-party standard of their choice.

Each province has its own legislation governing the incorporation and regulation of not-for-profit corporations. A not-for-profit may also be incorporated federally under the Canada Not-for-Profit Corporations Act.

The law concerning charities and not-for-profits has not often been considered by Canadian courts. However, it is generally accepted that a not-for-profit must fall into one of the four “heads” of charitable purposes to benefit from certain tax advantages. Those heads were originally set out in Tax v Pemsel, an 1891 House of Lords case, and confirmed by the Supreme Court of Canada in Vancouver Society of Immigrant and Visible Minority Women v MNR, [1999] 1 SCR. Those four heads are:

• the relief of poverty;
• the advancement of education;
• the advancement of religion; and
• other purposes beneficial to the community and not falling under any of the preceding heads.

There are increasing expectations for directors of corporations to consider a broader group of stakeholders, rather than focusing only on value maximisation for shareholders. At the same time, the increase in ESG-focused shareholder activism shows that some shareholders are pushing for further ESG action by companies.

On 18 December 2024 the CSSB released the official versions of the first Canada-specific ESG reporting standards – the CSDS, CSDS 1 and CSDS 2. CSDS 1 and CSDS 2 mirror the disclosure standards released by the ISSB, with minor modifications relating to implementation timelines.

The CSDS were developed to implement the ISSB standards with modifications appropriate to the Canadian context, however, the CSDS are not mandatory. The CSA has not yet incorporated the CSDS into its rules. In April 2025, the CSA issued a statement that, due to recent global unrest, the adoption of any CSDS provisions was halted indefinitely.

In addition to the CSSB, the federal government announced, on 9 October 2024, its plan to establish a sustainable investment taxonomy (the “Taxonomy”). At a high level, the Taxonomy will be a set of guidelines that categorise sustainable economic activities with the goal of facilitating sustainable financing and investment and is intended to help Canada reach its sustainability targets of net-zero emissions by 2050 and limiting global temperature rise to 1.5°C.

To access the Canadian capital markets and raise capital in Canada, Canadian public companies which are not “venture issuers” are required to disclose matters such as the composition of the board (including the number of independent directors), any ethical business mandates on the board and matters related to the number of women on the board of directors in executive positions under Form 58-101F1 ‒ Corporate Governance Disclosure. Lesser standards are applicable to those companies which are “venture issuers” under Canadian securities laws.

On 23 April 2025, the CSA announced that it was pausing work on proposed amendments to Form 58-101F1, noting that it would monitor domestic and international regulatory developments with respect to diversity-related disclosures and expect to revisit the project in future years.

Access to green financing is still limited in Canada. One method of green financing is Canada’s Green Bond programme, which began in March 2022 to mobilise capital in support of its climate and environmental objectives. In its initial release, the programme saw extensive demand, which led to a final book order of over CAD11 billion.

In November 2023, the government updated its Green Bond Framework to align with Canada’s 2030 Emissions Reduction Plan, with updated priorities in terms of expenditures. Despite government green bonds being popular, corporate green bonds have yet to make as significant an appearance in Canada, as they have in other major financial jurisdictions.

The evolving ESG landscape provides significant challenges but also significant opportunities to the Canadian oil and gas sector, noting that the Canadian oil and gas sector has in recent years made significant investments and taken action to meet these challenges. The June 2024 amendments to the Competition Act to introduce greenwashing provisions and the political landscape, however, have created an uncertain regulatory standard.

The Canadian oil and gas sector is a global leader in investments and action in respect of the transition towards ESG goals, including investing in methane reduction, carbon capture technology and other technologies. For example, businesses are engaged in Canada’s Hydrogen Strategy (announced in 2020), which is one of the ways in which the country aims to achieve net zero by 2050. The strategy includes a vision of growing the hydrogen sector up to a revenue over CAD50 billion. According to the federal government, low-carbon hydrogen has attracted over CAD100 billion in potential investments as of May 2024.

The uncertainty about the scope and enforcement of the amendments to the Competition Act to combat greenwashing raise significant challenges to the oil and gas industry’s ability to communicate publicly about ESG plans, objectives and initiatives. In June 2024, many of the leading oil and gas companies removed statements about environmental goals and plans from their websites and social media pages and other public disclosure, typically citing concerns over the new greenwashing provisions in the Competition Act. As stated by Pathways Alliance, a consortium of Canada’s largest oil sands producers with a goal of achieving “net zero by 2050,” it makes it difficult for all Canadian companies who “want to communicate publicly about the work they are doing to improve their environmental performance”, due to the “significant uncertainties” around the requisite methodology that must be used to substantiate public statements regarding actions that improve the environment or mitigate the effects of climate change, as it is not a defence that the claim is in fact true. This trend continued in 2025, with the Royal Bank of Canada announcing the retirement of its “Sustainable Financing Framework”, citing, in part, the uncertainty arising from the standards set out in the new greenwashing provisions in the Competition Act.

The federal government’s evolving policy has supported the oil and gas sector’s active participation in achieving ESG goals (eg, Canada’s Hydrogen Strategy) but significant challenges remain including a lack of certainty with respect to a holistic regulatory regime to support such innovation and transparency (eg, the greenwashing amendments to the Competition Act). What will prevail remains to be seen.

As a most recent development, to respond to market uncertainty and drive investment, on 5 November 2025, as part of the federal budget, the Canadian government announced its plans to further amend the Competition Act to remove the standard to substantiate claims that many businesses believed was difficult if not impossible to comply with, and to remove the private right of action, thus re-inserting the Commissioner of Competition as the “gatekeeper” of enforcement of greenwashing claims.

As ESG policy increasingly becomes regulated, businesses face new challenges in keeping pace with both mandatory and other standards. Similarly, reputational pressures are forcing businesses to address ESG concerns.

Canada has not seen the aggressive anti-ESG movements that have occurred in other jurisdictions, such as the USA. As a result, anti-ESG sentiment is not a major consideration for businesses in Canada. According to a recent study published in September 2025, 62% of institutional investors surveyed replied that they had not changed their investment process because of ESG pushback in the USA. At the same time, 24% of institutional investors are monitoring or planning for potential changes, but not due to ESG pushbacks alone. The 14% of investors who have made tactical shifts have specified that their shifts are primarily because of geopolitical risk or valuation concerns.

There is an increase in soft law becoming hard law in Canada. The greenwashing amendments to the Competition Act, the coming into force of the Modern Slavery Act and developments in plastics regulations and PFAS are major examples in which soft law became hard law.

Moving forward, this trend can be expected to continue, though experts have indicated that this shift is being tempered by political, economic and geopolitical uncertainty. One recent example of a shift is the 5 November 2025 announcement by the Canadian government that the greenwashing provisions in the Competition Act will be amended to reduce uncertainty by removing a standard that many believed was uncertain and to remove the private right of action to challenge alleged greenwashing. However, even where laws are not yet mandatory, voluntary guidelines, standards and norms are doing a lot of “heavy lifting.” Many argue that even when formal legislation isn’t yet in place, markets, investors, procurement and regulatory bodies increasingly treat soft law compliance as de facto hard law requirements.

The Modern Slavery Act’s reporting requirements have led to businesses implementing supply chain codes of conduct that are increasing due diligence requirements throughout the value chain. Similarly, the potential development of mandatory human rights due diligence legislation in Canada would create hard law due diligence requirements throughout the value chain. This indicates that due diligence requirements are likely to continue to increase moving forward.

It is likely that recent supply chain disruptions, some of which are caused by geopolitical tensions, have caused businesses to turn their minds to human rights and geopolitics when working with their supply chain partners. This is especially the case when enforcement actions against human rights violations in the supply chain are becoming prevalent.

Looking ahead, the emergence of voluntary Scope 3 GHG emission reporting requirements in the CSDS may make businesses further consider the amount of emissions of their supply chain partners and whether these partners engage in any carbon capturing activities. Businesses may also consider whether their supply chain partners are able to provide data of their own GHG emissions in the first place.

Specific ESG considerations that simultaneously carry legal liability risks are increasingly included in the M&A due diligence process. Consequently, ESG considerations are often addressed in representation and warranty clauses. However, this does not necessarily extend to all ESG considerations, especially not to those that do not create a material risk.

In Canada, representations and due diligence analyses regarding the existence of disputes with Indigenous groups or First Nations is particularly prevalent in the natural resource sector, specifically with respect to Indigenous land and rights claims associated with land.

Matters related to data and privacy considerations, which were considered one of the more “traditional” ESG considerations in M&A due diligence, continue to be prevalent. Social considerations, such as workplace-related representations, also face scrutiny in M&A due diligence.

On the other hand, a recent review of M&A circulars in Canadian public companies suggests that ESG considerations only appear in a small minority of circulars, suggesting that broader ESG considerations are not yet considered material risks for shareholders.

There are a variety of disclosure obligations applicable to reporting issuers (generally, public companies/entities) in Canada. There are various ways to become a reporting issuer and having securities listed on a Canadian exchange is one method. There is no national securities regulator in Canada; rather, each province and territory has its own securities laws. Certain disclosure requirements are harmonised across jurisdictions in the form of National Instruments.

The CSA’s current regulatory framework is largely silent on environmental and social disclosure. However, National Instrument 51-102-Continuous Disclosure Obligations requires reporting issuers to disclose any “material” information in their continuous disclosure documents. Material information includes information that, if omitted or misstated, would influence a reasonable investor’s decision to buy, sell or hold a security. ESG-related information, to the extent that it is “material”, must be disclosed. This sort of disclosure often includes disclosure concerning environmental liabilities that might have a financial impact on the issuer.

NI 58-101 and National Policy 58-201 Corporate Governance Guidelines (collectively, the “Corporate Governance Disclosure Rules”) impose certain corporate governance disclosure obligations on reporting issuers. The Corporate Governance Disclosure Rules require reporting issuers to disclose certain information about various corporate governance principles, including diversity of board composition on a “comply-or-explain” basis.

As indicated in 3.1 Progress in Green Financing, the CSSB’s development of the CSDS is a significant step forward in terms of Canada-specific voluntary disclosure, while also closely aligning such disclosures with the ISSB’s disclosures that are intended to be a global baseline for voluntary reporting. The CSA is ultimately responsible for deciding whether the CSDS (or another standard) will be mandatory in Canada and, if so, which entities will need to comply with the standards and over what time period. As noted, the CSA’s work in this regard is currently paused.

Lastly, the federal government has indicated an intention to amend the CBCA to mandate climate-related financial disclosure for large, federally incorporated private companies. Whether these amendments come to fruition remains to be seen, however, particularly in light of the recent pauses from other regulatory bodies.

There is currently no obligation for Canadian companies to publish transition plans or commit to targets. However, there are frameworks in place to encourage voluntary actions in this respect. For example, any business operating in Canada may voluntarily join the government of Canada’s Net-Zero Challenge (the “Net-Zero Challenge”). 

Net-Zero Challenge participants agree to set a target of net-zero emissions by 2050 for their Scope 1, Scope 2 and, if applicable, Scope 3 emissions. Participants further agree to establish two sets of sequential interim targets (eg, 2035 and 2045). As the programme is voluntary, the only penalty for a participant’s failure to meet minimum requirements or timelines is removal from the programme.

Both the Competition Act and the Consumer Packaging and Labelling Act play a role in restricting certain sustainability claims and imposing certain conditions on ESG labels.

The recent amendments to the Competition Act expressly tackle greenwashing in addition to the Competition Act’s existing, more general deceptive marketing provisions regarding false or misleading representations. A representation can take the form of a statement or claim regarding a product, business or business interests and can be made in written, oral, electronic or other form of media.

The Consumer Packaging and Labelling Act does not specifically set out any conditions to ESG labels but does prohibit the sale, import or advertisement of any prepackaged product that has a label containing and false or misleading representation.

As there are a variety of laws that require ESG disclosure in Canada, there are a variety of regulators in this regard. These regulators include, but are not limited to:

• each provincial and territorial securities regulator, which are responsible for the administration and enforcement of securities laws in their respective jurisdiction and may bring enforcement proceedings against an issuer in breach of securities laws, including a breach resulting from failing to disclose material ESG-related information or making misleading ESG-related claims;
• the Minister of Public Safety and Emergency Preparedness, who is responsible for the administration and enforcement of the Modern Slavery Act;
• OSFI, which regulates FRFIs and monitors climate-related disclosures that are required by such institutions; and
• the Competition Bureau, which is responsible for the administration and enforcement of both the Competition Act (in addition to private rights of actions in respect of greenwashing claims (although the Canadian government has announced the private right of action may be eliminated or tempered in the near future)) and the Consumer Packaging and Labelling Act.

Penalties for non-compliance with disclosure obligations are as broad and varied as the obligations themselves.

Enforcement action for a failure to make disclosure of material information in the manner and time required under relevant securities laws, or providing disclosure that contains a misrepresentation, can potentially be brought against the responsible issuer or any director or officer who authorised, permitted or acquiesced in the breach. Again, penalties are broad, but a monetary penalty is the most typical remedy.

An entity or individual that fails to submit and publish a satisfactory report as required under the Modern Slavery Act is guilty of a summary offence and liable to a fine of up to CAD250,000. Any director or officer who directed, authorised, assented to, acquiesced or participated in any of these offences may also be held personally liable.

Distributing corporations which fail to comply with diversity disclosure obligations under the CBCA, or which make false or misleading statements in these reports may be liable to pay a fine not exceeding CAD5,000. Any person who participates in making such a report may be held personally liable and ordered to pay a fine not exceeding CAD5,000, to imprisonment for a term not exceeding six months or both.

The Competition Act sets out the remedies for a breach of deceptive marketing practices, which include greenwashing claims. These remedies include a court order to require a business to pay an administrative monetary penalty (AMP) in an amount up to:

• CAD10 million, and for each subsequent order, CAD15 million; and
• three times the value of the benefit derived by the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenues.

Canada can expect the trend in increasing voluntary ESG reporting to continue. Similarly, increased mandatory reporting requirements mean that more and more companies will be reporting on ESG matters. Nonetheless, challenges remain for both voluntary and mandatory reporting.

The CSDS, if made mandatory in the future, has the potential to pose significant challenges to Canadian companies. The standards are somewhat burdensome, especially in comparison to the SEC’s climate disclosure rules.

The cost of implementing these more stringent standards may be a barrier to Canadian entities in comparison to those operating in the US market. Given the interconnected markets in these regions, differences in reporting standards could lead to difficulties for businesses with operations in both countries.

There are several tools in Canada that can be used to start ESG-related cases against companies, with a range of ease of access to parties who wish to rely on them.

The recent amendments to the Competition Act also introduced a new enforcement right, effective 20 June 2025, allowing private parties to directly file applications with the Competition Tribunal (the “Tribunal”) seeking leave to apply for an order against a business allegedly making misleading representations. The test for leave is a finding by the Tribunal that the application is in the “public interest”. However, there is no guidance on how this “public interest” test will be applied, and no private parties have filed an application under the new greenwashing provisions at this time. Recognising the uncertainty of the greenwashing provisions and the increased risks associated with the inclusion of a private right of action, the Canadian government announced on 5 November 2025 the intention to remove the private right of action as it applies to greenwashing. Until such amending legislation is proposed and receives Royal Assent, this private right of action continues to be effective, unamended.

Beyond use of the Competition Act, parties may commence civil suits, including class actions and derivative actions by shareholders to bring ESG-related claims. The scope of these potential claims is vast and could include claims concerning the environment, human rights, supply chains or workplace safety. A claim may also arise from a company’s perceived failure to meet its ESG-related commitments.

Canadian companies may also face civil actions for their ESG-related actions in a foreign jurisdiction, including for breach of customary international law. What exactly constitutes a breach of customary international law is not always clear, and bringing a claim rooted in this cause of action is not an easy process.

Derivative actions brought by shareholders are also a concern in this context. In Canada, a derivative action is a legal mechanism that allows shareholders to bring an action on behalf of a corporation against its officers or directors for an alleged wrongdoing. This sort of action addresses a harm done to the company rather than one particular shareholder.

NGOs and activists are important parties to consider in Canada. For example, environmental organisations in Canada have relied on the “six resident” application mechanism in the Competition Act that compels the Competition Bureau to commence an investigation into claims of deceptive marketing, specifically greenwashing. The initial complaint in 2019 focused on recyclability claims of a coffee business, which resulted in a consent agreement providing for monetary penalties and corrective orders. Since that initial application, NGOs and activists have filed many other applications, most of which focus on the oil and gas sector.

In addition to regulatory action and litigation commenced by NGOs and activists, ESG-related shareholder activism appears to be on the rise in Canada. In 2023, a 145% rise in board activism and a 71% rise in transactional activism was reported in comparison to 2022.

Of note, no new “six resident” applications or any private party actions claiming greenwashing have been initiated in 2025.

Greenwashing is understood in Canada to be the process of making false or misleading positive claims or downplaying negative qualities about the sustainability attributes of a product, service or business. In contrast, greenbleaching or greenhushing is used to describe an entity choosing not to make claims respecting the ESG features of its products or business to avoid regulatory scrutiny or other legal risks.

Greenwashing has been the subject of many investigations by the Competition Bureau, but with limited enforcement action under the Competition Act currently. The 2024 amendments to the Competition Act and statements by the Competition Bureau that greenwashing is a priority have been expected to result in increased enforcement of claims of deceptive marketing as it relates to environmental claims. However, on 5 November 2025 the Canadian government announced plans to further amend the Competition Act to remove the standard to substantiate claims that many businesses believed was difficult if not impossible to comply with, and to remove the private right of action, thus tempering the expected challenges alleging greenwashing.

In contrast, greenbleaching has not yet been addressed by Canadian regulatory authorities, and companies may move towards greenbleaching to avoid regulatory action and penalties related to greenwashing, which have become stricter. Canadian regulatory bodies may have to create a framework to respond to this potential rise in greenbleaching.

The June 2024 amendments to the Competition Act to permit private parties (with leave, if found to be of public interest) to apply for an order from the Tribunal in respect of deceptive marketing (including greenwashing), have been expected to have a significant impact on the number of proceedings in Canada regarding deceptive marketing related to ESG claims, particularly greenwashing. This expectation is based in part on the fact that environmental activists in Canada have already used the Competition Act as a tool to compel the Competition Bureau to investigate claims against businesses alleged to be engaged in greenwashing, and the expanded access created by new amendments further reduces barriers to challenge greenwashing claims by businesses. In addition to activists, the June 2024 amendments to the Competition Act granted third parties – including consumers and competitors – the right to apply to the Tribunal for orders in respect of claims of greenwashing. This is a major change: previously, the government was the main actor in enforcement. Now, the new route gives third parties a more direct role. However, in response to the uncertainty raised by such private right of action, on 5 November 2025, the Canadian government announced its plans to further amend the Competition Act to remove the private right of action, thus re-inserting the Commissioner of Competition as the “gatekeeper” of enforcement of greenwashing claims.

As noted above, ESG-related civil claims may arise from a company’s perceived failure to meet its ESG-related commitments. To the extent that climate-related disclosure becomes mandatory in Canada, companies may run the risk of facing civil actions based on perceived failure to live up to commitments that have been set out in disclosure documents.

Thus far in 2025, companies are responding in mixed ways: some are enhancing internal compliance programmes and ensuring greater rigour in substantiating ESG disclosures, while others are scaling back or softening claims to reduce litigation exposures. Financial institutions have begun revisiting and revising/withdrawing their sustainable finance disclosures after the Competition Act amendments to explicitly address greenwashing raised questions about legal defensibility of forward-looking targets.

Shareholder activism is also evolving in response to global geopolitical tensions. Conflicts in Ukraine, Palestine and the Middle East have fuelled investor interest in energy security, defence-sector exposure, and human rights, resulting in shareholder proposals with a more geopolitical edge. Canadian issuers are increasingly expected to anticipate and respond to how such political shifts will shape investor demands.

The legal and regulatory trend line is clear: with new private enforcement tools, tougher substantiation standards, and shifting shareholder expectations, ESG-related proceedings in Canada are expected to increase in both number and scope through 2025 and beyond.