Proposed legislation requiring Canadian banks and other federally-regulated financial institutions to line up their investment activities with Canada’s climate commitments has been referred the Senate Banking Committee for study, more than a year after it was first introduced, Sen. Rosa Galvez (ISG-Quebec) announced in a news release June 8.

The release gives no indication of when the committee’s review of the Climate-Aligned Finance Act (CAFA), Bill S-243, will begin, or how quickly it will conclude. All legislation before the Senate or the House of Commons dies on the order paper when Parliament is prorogued or an election is called.

“The wildfires currently burning across Canada are a stark reminder that we have no time to waste in strengthening climate action,” Galvez said. “After more than a year of waiting, the Senate will finally take a hard look at how our money is fueling the climate crisis and how CAFA offers a path towards financial and climate stability. Climate change is a clear and present danger, putting Canadian lives and livelihoods at risk.”

“CAFA is the solution to mobilize Canada’s financial sector for a safe climate and a well-functioning, more affordable economy,” Julie Segal, senior program manager, climate finance at Environmental Defence Canada, told The Energy Mix early Thursday evening. “Now that the bill has been brought in front of the Banking Committee, the Senators on the committee have to act quickly and call climate-informed witnesses to discuss why shifting finance into climate solutions is so important.”

With wildfires “causing severe damage across the country, Senators have to keep advancing CAFA as a key solution to mitigate future climate-related crises,” Segal added.

The Energy Mix has details on the legislative process and why Canadian banks, pension funds, and insurance companies need a “kick-starter” to do better.

The committee review is the next essential step in translating an ambitious piece of legislation into ambitious climate action. From there, it will go to the full Senate for final review, then on to the House of Commons if the Senate adopts it.

And none too soon, Galvez said in her release.

“Canadian banks and pension funds are among the world’s largest investors in fossil fuels, with over a hundred billion dollars of Canadian assets at risk,” she said. “Our banks rank in the bottom third globally for financing clean energy but are amongst the top fossil fuel financiers. Without CAFA, Canada will continue to fall behind in the race to build a clean economy, with our banks and pension funds investing in the past instead of an inclusive economy that can work for all Canadians and future generations.”

Galvez’ legislation got a boost last month when MP Ryan Turnbull (L-Whitby) tabled Motion 84, which calls on the federal government to “use all legislative and regulatory tools at its disposal to align Canada’s financial system” with the 2015 Paris climate agreement. At a May 18 news conference, the motion received cross-party support from MPs Taylor Bachrach (NDP, Skeena-Bulkley Valley), Elizabeth May, (GPC, Saanich-Gulf Islands), and Jean-Denis Garon (BQ, Mirabel). It’s been endorsed by a total of 13 MPs.

“The opportunity here is to signal support of four parties in the House of Commons for a climate-aligned financial system, and for the government to deploy the legislative tools necessary to align the financial system with our climate goals,” Turnbull told The Mix at the time. “What we’re really asking for is a legislative framework and a regulatory environment that bring certainty, credibility, and an assurance to the public that there’s no greenwashing.”

Support for the bill has been building from the moment Galvez introduced it.

In late May, 2022, it got a thumbs up from 89 investment firms, academic organizations, and environmental groups from across Canada and around the world.

Signatories at that time included the Trottier Family Foundation, the Ivey Foundation, The Atmospheric Fund, Investors for Paris Compliance, the City of Montreal, the Vancouver Economic Commission, Corporate Knights, the Fédération des travailleurs et travailleuses du Québec, ActionAid Denmark, the African Coalition for Clean Growth, Banktrack, the Climate Safe Lending Network, the Sustainable Finance Institute, and the Zimbabwe Climate Change Coalition, among others. Today’s release says CAFA now has the backing of 120 organizations.

The letter of support warned that, while “other countries are leapfrogging ahead to regulate climate factors in the financial sector, many of Canada’s biggest financial institutions “continue to worsen the effects of climate change. Voluntary initiatives are not meeting the required level of ambition. We need federal legislation to spur action.”