Canada is moving painfully slowly to set the market and regulatory conditions required to transition to a cleaner economy, according to a report by the Institute for Sustainable Finance.

To date, Canada has made “significant” progress in only one of 15 recommendations made by a panel of experts including the current Bank of Canada governor Tiff Macklem in 2019. In another six, progress has been “moderate,” while the remaining eight have shown either a “marginal” or “minimal” advance, the report said. The last group includes a directive to help the oil and gas sector, representing roughly a fifth of Canada’s exports, transition toward cleaner technologies.

“It is clear that progress has been too slow, and there is still a great deal of work to do,” ISF’s Chairman Sean Cleary wrote in the report, along with researcher Andrew Hakes. “The most frequent comment made by interviewees was that Europe and the U.K. have been setting the tone in terms of discussions and actions related to sustainable finance issues, and that Canada has fallen behind.”

Also included in the minimal or marginal progress categories were recommendations to encourage institutional investors to finance Canada’s future energy grid, to align the country’s infrastructure strategy with sustainable growth objectives, and to implement recommendations set by the Task Force on Climate-Related Financial Disclosures, or TCFD.

In March, the European Union established a set of anti-green-washing rules known as Sustainable Finance Disclosure Regulation, or SFDR, for financial market participants. Requirements include providing information about the sustainability of investments. In Canada, the market is still waiting for specific regulations.

The country urgently needs to implement recommendations set by the TCFD, which will help investors allocate capital based on sustainable finance criteria, said the ISF, whose founding contributors are Canada’s largest banks. 

“Canada has its own initiatives underway in terms of looking at improving the disclosure that comes into play with financial products, such as mutual funds. So I think we will see development in that area,” Margaret Childe, head of ESG Canada at Manulife Investment Management Ltd., said in an interview.  “As an asset manager, we are very closely following the EU regulations.”

The TCFD consists of 32 members from across the G-20. Michael Bloomberg, founder and majority owner of Bloomberg LP, chairs the Task Force.

“While some progress has been made and we seem to be heading in the right direction, things simply seem to be moving too slowly on this front,” the report said.