How to set up the Canada Growth Fund for success

The Canada Growth Fund (CGF), a $15 billion 'green bank' designed to catalyze private investment for Canada's net-zero transition, will be managed by the Public Sector Pension Investment Board (PSP Investments). The author warns that CGF's success depends on avoiding PSP's 'business as usual' focus on private returns, as CGF must prioritize social returns and accept higher risks through concessional finance. To mitigate the risk of conflating these mandates, the document recommends a transparent investment strategy co-written by policy and finance experts, a diverse decision-making committee with expertise in climate policy and low-carbon technology, and clear accountability structures that separate the Fund's policy goals from PSP's fiduciary duties to pension beneficiaries.

• The Canada Growth Fund and PSP Investments have fundamentally different mandates: while PSP Investments seeks to maximize returns for pension contributors and beneficiaries, the Canada Growth Fund is tasked with using $15 billion in public capital to catalyze private sector investment to help Canada reach net-zero.
• To achieve its purpose, the Canada Growth Fund must employ a concessional finance strategy, accepting higher risks and potentially below-market returns to make clean growth projects attractive to private investors who typically avoid high-risk, long-horizon technologies.
• There is a significant risk that the Canada Growth Fund's policy-focused mission could be undermined if it is absorbed into PSP Investments' standard fund management approach, which focuses on private rather than social returns.
• The document recommends that the Canada Growth Fund establish a transparent investment strategy and performance criteria, potentially utilizing a separate subsidiary as suggested in Bill C-47 to ensure a clear separation from PSP's core business.
• Effective decision-making for the Fund requires a diverse set of expertise beyond traditional finance, including knowledge of carbon markets, net-zero transition pathways, and the ability to evaluate positive externalities such as local employment and emissions reductions.
• The author cites Australia's Clean Energy Finance Corporation (CEFC) as a successful model of a green bank that balances a portfolio benchmark return with a mandate to prioritize public policy outcomes and positive externalities.

APA

Canadian Climate Institute (2023). How to set up the Canada Growth Fund for success. https://climateinstitute.ca/publications/how-to-set-up-the-canada-growth-fund-for-success/

Chicago

Canadian Climate Institute. How to set up the Canada Growth Fund for success. 2023. https://climateinstitute.ca/publications/how-to-set-up-the-canada-growth-fund-for-success/.

Wikipedia

{{cite report |author=Canadian Climate Institute |title=How to set up the Canada Growth Fund for success |date=5 July 2023 |url=https://climateinstitute.ca/publications/how-to-set-up-the-canada-growth-fund-for-success/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{canadianclimateinstitute2023how, author = {{Canadian Climate Institute}}, title = {{How to set up the Canada Growth Fund for success}}, institution = {Canadian Climate Institute}, year = {2023}, month = jul, url = {https://climateinstitute.ca/publications/how-to-set-up-the-canada-growth-fund-for-success/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }