Carney, Capital, and Climate at the G7

Once a rapidly evolving centrepiece of global economic coordination, climate finance is now struggling for airtime. Only two years after the International Sustainability Standards Board (ISSB) published its first voluntary sustainability disclosure standards, a fog of geopolitical tension, inflation anxiety, and political turnover has dissipated momentum across several countries.

It is against this backdrop that the world’s most influential economies will gather in Alberta for the 2025 G7 Summit. The meeting arrives at a pivotal moment, one where climate finance sits precariously between policy fatigue and urgent necessity. Expectations are high, not least because Prime Minister Mark Carney built his global reputation on the premise that finance is the engine of economic reform, particularly in the era of climate change.

But that was then.

Today, Carney leads a government that is still defining its environmental priorities against its ambitious economic agenda. And the G7 Summit may be his first real test: not of technical acumen, but of political will and pragmatism.

The global tone was first reset in the U.S. following the defeat of the Democratic Party; the Securities and Exchange Commission soon paused its long-awaited climate disclosure rule, aligning with the Trump Administration’s deregulatory agenda. In April 2025, the U.K.’s Financial Conduct Authority followed suit, pausing sustainability-related guidance and net-zero obligations for regulated firms. The E.U. has also announced the delay of key aspects of its Corporate Sustainability Reporting Directive. In lockstep, Canada’s securities regulators pressed pause on a new mandatory climate-disclosure rule, citing volatile market conditions and heightened concerns around competitiveness.

The G7 Summit poses a litmus test for whether Canada can catalyze a course correction.

During his time as Governor of the Bank of England, Carney played a key role in bringing climate risks into the realm of financial oversight through the development of climate stress tests and support for the Task Force on Climate-related Financial Disclosures. As UN Special Envoy for Climate Action and Finance, he helped create frameworks for reporting, risk, and returns that integrated climate considerations into mainstream financial decision-making. That work helped lay the groundwork for the eventual creation of the ISSB.

Although Carney largely sidelined climate policy in favour of emphasizing industrial growth and competitiveness during the most recent Canadian federal election, his campaign platform did include two commitments on climate finance: to finalize a voluntary sustainable investment taxonomy and to implement broad climate risk disclosure requirements.

The sustainable taxonomy, first committed under the Trudeau government, aims to define a common language for green and transitional investments. It is a tool that nearly 40 countries are currently designing within their own jurisdictions to unlock global private capital. Canada has pledged to accelerate development across two or three priority sectors. To date, the process has been slow, largely siloed within government, and lacking meaningful consultation with industries.

Without visible progress, Canada risks falling behind in both investor confidence and capital attraction, which in turn impacts competitiveness on the global stage. Carney built his campaign on an economic transformation “on the scale of the industrial revolution, at the speed of the digital transformation.” If a revolution of the financial system is meant to be a fundamental part of that transformation, more must be done.

Compounding matters, Canada’s recently finalized greenwashing provisions have made businesses increasingly reluctant to publicize environmental progress for fear of regulatory scrutiny. At a time when international climate commitments are receding from the global agenda, the ability of Canadian businesses to confidently communicate their sustainability goals is often a critical measure of the effectiveness of governmental climate and decarbonization policies. This hesitancy risks undermining the very policies designed to accelerate our economic ambitions.

With economic growth, climate action, and emerging technologies on the G7 agenda, a majority of the member economies will arrive at the table with climate finance files stalled or drifting. Geopolitical uncertainty remains, but it also leaves a leadership vacuum, one poised to reward any jurisdiction bold enough to step in, but it won’t stay open for long.

Canada has a chance, perhaps the only one in this cycle, to reclaim momentum and lead what could be the defining modern industrial revolution of our time, not just as a participant, but as a builder of the next investment-grade era.