Canada will require banks and insurance companies to provide disclosures on their climate-related risks and exposures beginning in 2024, according to the federal government’s newly released Budget 2022. The budget also outlines over $9 billion in proposed funding to address climate change, and plans for a new green bond offering in the upcoming year.

The new reporting requirements mark the first step for the country towards a broader set of mandatory climate disclosures, and follows mandate letters sent by Prime Minister Justin Trudeau late last year to cabinet ministers directing them to move towards a system of reporting based on the Task Force on Climate-related Financial Disclosures (TCFD). Regulators and legislators in several countries have introduced plans to require companies and financial institutions to report on climate matters, including the U.S. SEC’s new proposed rules unveiled in March, and the UK government last year.

According to Canada’s new budget, Canada’s financial regulator OSFI will require federally regulated financial institutions to publish climate disclosures aligned with the TCFD framework beginning in 2024, stating that it will use a “phased-in” approach for the requirements. Federally regulated entities in Canada include all of the country’s banks, as well as insurance companies, and federally incorporated or registered trust and loan companies, among others.

While the rules do not yet apply to other companies, OSFI will also expect the financial institutions to collect and assess information on climate risks and emissions from their clients, and the budget notes that the government is committed to move towards mandatory TCFD reporting “across a broad spectrum of the Canadian economy.” The government also expects to require ESG disclosures from federally regulated pension plans.

The budget also outlines plans for over $9 billion in proposed climate-related funding, in line with Canada’s recently released 2030 climate plan. Key areas of investment include over $3 billion to support zero emissions vehicles (ZEV), including purchase incentives and EV charging build-out, more than $1 billion for green buildings and homes, as well as investments in renewable energy, clean agriculture technology, and nature-based climate solutions.

Additionally, the budget includes plans for $5 billion in green bond issuance over the next year. Canada completed its inaugural sovereign green bond offering last month, raising $5 billion to help finance the country’s investments in green infrastructure and other climate and environmental protection-related projects.