Building Better Investment Infrastructure

The policy brief examines the challenges of sustainable finance, noting that a lack of standardized information and an over-reliance on green bonds for clean energy generation limit the flow of capital. It highlights international examples, such as the European Union's taxonomy and reporting directives, and suggests Canada adopt similar frameworks for transition finance and sustainability-linked finance to support high-emitting sectors and aggregated project investments.

• Investors face significant difficulties identifying sustainable projects due to a lack of standardized metrics; one study of six financial rating agencies revealed the use of 709 different metrics across 64 categories to assess sustainability performance.
• The European Union is leading the development of sustainable finance infrastructure through its taxonomy, which defines 'green finance' and 'transition finance' (the latter for projects without viable low-carbon alternatives that still support a 1.5°C pathway), and the Corporate Sustainability Reporting Directive, which requires most companies to disclose sustainability risks and impacts starting in 2025.
• Sustainable finance in Canada and globally has been dominated by green bonds targeting clean energy generation, which has led to oversubscribed bonds and underutilized capital, while failing to displace fossil fuels or fund downstream projects.
• Sustainability-linked finance (SLF), where investment levels change based on measured outcomes like emissions reductions, is a rapidly growing instrument that reached almost US$500 billion in 2021, though government guidance remains scarce; only Chile and Uruguay created frameworks for and issued sustainability-linked bonds in 2022.
• Aggregation of small projects can create more attractive opportunities for large investors, as seen in the U.S. government's issuance of nearly US$100 billion in mortgage-backed securities as aggregated green bonds.

APA

Canadian Climate Institute (2023). Building Better Investment Infrastructure. https://climateinstitute.ca/building-better-investment-infrastructure/

Chicago

Canadian Climate Institute. Building Better Investment Infrastructure. 2023. https://climateinstitute.ca/building-better-investment-infrastructure/.

Wikipedia

{{cite report |author=Canadian Climate Institute |title=Building Better Investment Infrastructure |date=11 May 2023 |url=https://climateinstitute.ca/building-better-investment-infrastructure/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{canadianclimateinstitute2023building, author = {{Canadian Climate Institute}}, title = {{Building Better Investment Infrastructure}}, institution = {Canadian Climate Institute}, year = {2023}, month = may, url = {https://climateinstitute.ca/building-better-investment-infrastructure/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }