April 23, 2026

By Malorie Bertrand and Dr. Ollie Kaiser

A recent webinar hosted by the Smart Prosperity Institute’s (SPI) sustainable finance research team explored three emerging topics in Canada’s sustainable finance ecosystem: blended finance, climate transition planning and nature-related financial disclosures. These innovative tools and approaches are gaining attention in Canada but need more rigorous research and clearer policy framing to move from concept to practice.

Below are our key research takeaways from this timely discussion between Dr. Ollie Kaiser, Anik Islam and Caelan Welch.

We must bridge the financing gap

Climate change is no longer just a policy challenge; it’s a financing one. The energy transition depends on capital flowing into the technologies, infrastructure and companies needed to cut emissions and build a low-carbon economy.

According to Budget 2022, Canada faces an estimated annual gap of $115 billion to transition to a low-carbon economy. While the government funds most climate action, this isn’t sustainable. Canada needs more capital from private sources.

A resilient and competitive Canada needs a sustainable finance ecosystem

The sustainable finance ecosystem is the infrastructure that helps align our financial system with a sustainable future. It doesn’t just move money; it enables the financial system to value sustainability and invest in it. To build this ecosystem, we must begin by aligning its building blocks: disclosures, taxonomies, transition plans and scenario analysis, all underpinned by data and analytics. When they’re coherent, they reduce policy and investment uncertainty, improve competitiveness and support long-term economic resilience.

Private capital will flow when risks, returns and information align

Currently, private investment in sustainable projects is often held back. Projects can face high upfront costs, uncertain revenues and weak market demand. At the same time, investors operate with different mandates, return expectations, time horizons and risk appetites. These misalignments make many climate-aligned opportunities difficult to finance.

Blended finance can help attract private capital

Blended finance is one approach to bridging the financing gap. It combines public and philanthropic capital to attract private investment and achieve climate and economic goals. For example, the public sector might provide risk-sharing capital to help de-risk an EV charging project, allowing private investors to participate on terms that better match their return expectations.

Canadian public financial institutions are playing an important role in advancing blended finance. Early experience from the Canada Infrastructure Bank and the Canada Growth Fund shows how clear mandates, governance frameworks and financing approaches can attract investment at scale. But its effectiveness ultimately depends on the broader ecosystem—particularly policy alignment, institutional coordination and decision-useful information—conditions that transition planning and disclosures help to establish.

Climate-related transition planning strengthens organizational decision-making

Like traditional strategic planning, transition planning looks at markets, operations and growth, but with a focus on climate-related drivers of risk and opportunities that are often overlooked or underpriced. For example, a transportation and warehousing company’s traditional planning might focus on fuel costs and supply chains, while overlooking physical climate risks. Transition planning can surface these exposures—for instance, if warehouses are located on floodplains facing more frequent storms—prompting decisions such as relocation or investment in flood protection. This reflects a shift toward forward-looking, decision-useful information captured in transition plans that support investors, lenders and policymakers in assessing business performance and system-wide risk.

While transition planning and disclosures make climate-related risks more visible, they also underscore that these risks are shaped by natural systems that are not yet consistently or explicitly accounted for.

Climate and nature must be addressed together

There are, however, reasons to begin engaging with nature-related risks now, especially in Canada’s nature-dependent, resource-based economy. A significant share of economic activity depends directly on natural systems. Their degradation can disrupt operations, increase costs and create risks that are not always visible through a climate lens alone. Climate and nature are deeply interconnected, with changes in one often intensifying risk in the other through shared drivers and feedback effects.

Developing a baseline understanding of these dependencies and impacts can help businesses build a more complete picture of risk and resilience over time. Building this capacity, often referred to as “nature intelligence”, is also a strategic move. These risks are already financially material and increasingly visible to investors, regulators and insurers. Early action can help businesses manage emerging exposures, identify efficiency and innovation opportunities, and maintain access to capital as investor expectations evolve.

We’re moving from frameworks to implementation

Canada can draw on a growing set of frameworks and best practices to advance blended finance, transition planning and nature-related financial disclosures. While these tools are improving, implementation remains uneven. Institutions need support to build capacity, translate fragmented data into decision-useful information and apply these tools. At the same time, the broader ecosystem must evolve. This includes better alignment of policy and market signals, stronger data infrastructure, improved coordination across stakeholders and clearer, more consistent information.

Closing these implementation gaps will require a stronger and more targeted evidence base. Targeted research can help clarify what credible implementation looks like, identify practical paths for businesses and institutions, and support more consistent application across the system.

Ultimately, this is not just about developing new tools; it's about creating the conditions that enable those tools to work, so capital can flow at the scale needed to support a more resilient and competitive low-carbon economy. Addressing these gaps will require a more targeted and practical research agenda.

SPI’s future work will focus on:

• refining what credible transition planning looks like and how implementation can be effectively sequenced
• examining the performance of public financial institutions to better understand what drives effectiveness in blended finance
• developing an “information value chain” to clarify how organizations can move from raw, imperfect data to decision-useful, nature-related information, even in the context of persistent data gaps.

Like what you’ve read? Please visit our sustainable finance team’s page for more related information. Stay up to date on our latest research findings by signing up for our newsletter and following us on LinkedIn.

This project was undertaken with the financial support of the Government of Canada.