Why sustainable finance?
Canada’s prosperity hinges on building an innovative, low-carbon economy and a climate-resilient workforce. Yet, gaps in our financial system and policy frameworks, and a lack of information architecture to inform decision-making are slowing progress.
To remain competitive in a rapidly transitioning global economy, Canada must act to address climate risks, scale its economic competitiveness and sustainably manage its resources for long-term growth. This means transitioning to a low-carbon, climate-resilient economy in a way that reduces the cost of the transition, leverages workforce productivity and drives clean innovation. Without action, future costs associated with climate change mitigation and adaptation will rise, placing an even greater financial burden on Canadians.
As we seek to address an unpredictable future, a major challenge for decision-makers lies in navigating uncertainty when it comes to the type of policies, frameworks and instruments needed. SPI’s Sustainable Finance team supports decision-makers, including policymakers and financial stakeholders, by providing innovative, interdisciplinary and timely research that embraces complexity to deliver decision-useful insights and analysis.
Our research is structured around two key focus areas:
- Driving innovative financial solutions and market mechanisms to diversify and accelerate capital flows toward a low-carbon future that benefits all Canadians.
- Strengthening the systems and structures that support decision-making and implementation in sustainable finance, focusing on governance, inclusivity (particularly supporting the needs of Indigenous communities in Canada) and transparency.
Diversifying capital flows into green and transition-ready sectors, assets and activities
To date, Canadian taxpayers have shouldered much of the cost of the energy transition, with public commitments to the low-carbon transition totaling C$160 billion. Current investments have reached C$15–25 billion annually (Finance Canada, 2022; CCI, 2023). While this is a worthwhile investment, scaling up the transition requires unlocking deeper private-sector capital to accelerate progress. SPI’s Sustainable Finance team conducts research and convenes stakeholders to advance some key areas of sustainable finance relevant to Canada:
- Standards and frameworks: Informing design considerations for standards and frameworks that inform decision-making, such as taxonomies, disclosure frameworks and guidance across various sectors. These help enhance investor confidence, reduce greenwashing and align private and public investments with long-term sustainability goals.
- Innovative financing approaches: Exploring emerging sustainable finance tools (e.g., green and sustainability-linked bonds) and innovative financing models (e.g., blended finance) to attract diverse private capital by linking returns to environmental and social outcomes.
- Enabling policies and regulations: Identifying policy interventions and incentives that can help reduce investment risk in emerging markets, transition sectors and low-carbon projects supported by sustainable finance.
Improving decision-making and implementation capacity
Scaling up sustainable finance presents significant governance challenges, from addressing greenwashing to defining effective corporate climate transition plans. We seek to equip policymakers, investors and industry leaders with the right tools and data they need to make informed decisions to address problems that are complex and multifaceted.
Some of our previous and ongoing contributions include:
- Taxonomy disclosures and governance: Strengthening the governance structures and reporting standards for taxonomies related to climate, nature and circularity.
- Data governance architecture: Ensuring high-quality, accessible and transparent data for sustainable finance decisions, including in climate, nature and circularity.
- Climate and sustainability-transition plans: Improving corporate- and sector-level accountability through credible transition planning.
- Competition and greenwashing: Addressing greenwashing through better regulation and fair competition policies.
- Clean technology financing ecosystem: Understanding the role of public and private incentives and interventions in financing the clean technology sector in Canada.
Addressing these challenges is not just about driving climate action—it’s about positioning Canada as a global leader in the fast-emerging, low-carbon economy. With the sustainable finance market growth surpassing USD $6.6 trillion in 2023 and only poised to grow further, Canada has an exciting opportunity to lead in this transformation and improve the global competitiveness of its financial sector. At SPI, we are committed to bridging critical knowledge gaps by delivering innovative research and actionable policy insights, ensuring that Canada secures a competitive edge on the world stage while building a more resilient economy. Not only will we be expanding on these highlighted areas of work, but we look to collaborate with relevant stakeholders in Canada to do so.
Meet the team
Our Sustainable Finance team combines deep academic expertise and thought leadership on finance, governance and sustainability to deliver research and strategies that can help institutions, organizations and governments unlock the potential of sustainable finance.
The team is led by Dr. Colleen Kaiser, Program Director and Post-Doctoral Fellow who specializes in agile governance, regulatory innovation and climate policy. Colleen is joined by Dr. Vasundhara Saravade, a Post-Doctoral Fellow who specializes in sustainable finance debt markets (including green bonds) and climate and clean technology policy; Anik Islam, a Senior Research Associate with expertise in sustainable finance policies and innovative financing approaches; and Research Associate, Caelan Welch, who specializes in taxonomies and disclosure regimes. We encourage other researchers and practitioners in this space to reach out to us.
Through the SPI-based Economics and Environment Policy Research Network (EEPRN) we also collaborate with leading academics in Canada and around the world to spotlight cutting-edge research on sustainable finance and the low-carbon transition. Discover our Sustainable Finance EEPRN work.
