ESG and Sustainability: Key Trends in Canada 2025

What key ESG and sustainability developments shaped Canada’s legal and regulatory landscape in 2025 — and what do they signal for the year ahead?

Economic uncertainty, technological disruption and growing pressure from governments, investors, regulators and civil society are rapidly reshaping ESG and sustainability expectations in Canada. Organizations must stay closely attuned to emerging legal, policy and market developments to manage risk, identify opportunity and advance credible ESG strategies.

ESG and Sustainability: Key Trends in Canada brings together timely insights from 2025 alongside analysis of the developments shaping 2026. From climate change obligations and greenwashing enforcement to supply chain due diligence, project acceleration, clean‑economy tax incentives, shareholder engagement and AI governance, this publication provides practical, forward‑looking guidance for navigating Canada’s evolving ESG landscape.

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ESG and Sustainability: Key Trends in Canada

Clear, practical insights to help organizations navigate Canada’s fast‑moving ESG and sustainability landscape — and prepare for what’s ahead.

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A Preview of the Topics We Explore

Our ESG and Sustainability: Key Trends in Canada publication explores how legal, regulatory and market signals are reshaping ESG expectations across sectors.

Institutional Proxy-Voting Practices: Who Are Your Shareholders?

Why are proxy‑voting outcomes becoming harder to predict?

Institutional investors are moving away from standardized proxy‑advisor recommendations toward customized and pass‑through voting frameworks, fundamentally changing how shareholder priorities are expressed at annual meetings. As a result, voting outcomes are becoming less predictable, increasing the importance of informed, proactive shareholder engagement and a deeper understanding of investor‑specific policies and priorities.

Clean Economy Tax Credits: Winter 2026 Update

How is Canada’s clean‑economy incentive landscape evolving for 2026 projects?

Recent federal budget measures and draft legislation continue to reshape Canada’s clean‑economy tax incentive framework, including the Clean Electricity, Clean Technology, Clean Hydrogen, Clean Technology Manufacturing and Carbon Capture, Utilization and Storage (CCUS) investment tax credits. As eligibility criteria and policy signals evolve, understanding how these incentives apply is increasingly important for organizations making long‑term investment and project‑planning decisions.

More Enforcement Clarity and Legislative Ambiguity: 2025 Developments in Greenwashing under the Competition Act

What does 2025 signal about the future of environmental claims enforcement?

Competition Bureau guidance and enforcement trends have brought greater clarity to how environmental claims are assessed under the Competition Act, even as proposed legislative amendments introduce new uncertainty. Despite potential easing of certain requirements, scrutiny remains high, and inaccurate or poorly substantiated claims continue to carry significant regulatory, litigation and reputational risk.

ICJ Clarifies States’ Legal Duties to Prevent Climate Change’s Harmful Impacts

Could an international court opinion reshape climate obligations in Canada?

The International Court of Justice’s landmark advisory opinion reframes states’ obligations to prevent environmental harm and cooperate on climate change. While not legally binding, the opinion may influence Canadian climate policy, regulatory expectations and future climate‑related claims, with potential spillover effects for both public decision‑making and private‑sector projects.

Black Boxes and Board Duties: AI as the Next ESG Flashpoint

How are shareholders reframing AI as an ESG and governance issue?

Artificial intelligence is emerging as a new ESG pressure point as shareholders push boards to adopt Canada’s Voluntary Code of Conduct on the Responsible Development and Management of Advanced Generative AI Systems and strengthen oversight of high‑risk applications. As AI adoption accelerates, boards are increasingly expected to treat AI governance as a core ESG and fiduciary responsibility, particularly given the material risks associated with bias, privacy, transparency and public trust in the absence of binding legislation.

Public Safety Canada Issues Updated Guidance Ahead of the 2026 Reporting Cycle For the Supply Chains Act

Are your supply‑chain disclosures aligned with evolving expectations?

Updated guidance clarifies reporting scope, “very minor dealings,” and content expectations under the Fighting Against Forced Labour and Child Labour in Supply Chains Act. These refinements help organizations calibrate disclosures appropriately, reducing unnecessary reporting while strengthening governance, transparency and accountability where obligations apply.

The Need for Speed: Major-Project Development Set to Accelerate Across Canada

How are governments accelerating major projects while managing ESG risk?

Federal and provincial governments are rolling out streamlined permitting and “one project, one decision” frameworks to accelerate major energy, infrastructure and critical‑minerals projects. These reforms aim to reduce regulatory bottlenecks and increase certainty for proponents, while reshaping consultation processes, ESG risk management and project‑delivery expectations.

Key Trends in Canadian Water Sovereignty: Governance, Scarcity, and International Pressures

Why is water emerging as a strategic ESG and economic issue?

Rising water scarcity, evolving Indigenous co‑governance expectations and intensifying international pressure are elevating water as a national priority. Organizations reliant on freshwater resources face growing operational, legal and reputational risk as water governance tightens and competition for access increases.

OSFI Releases Updated Guideline on Climate Risk Management

How is climate risk becoming a core prudential issue for financial institutions?

The Office of the Superintendent of Financial Institutions’s (OSFI) updated version of Guideline B‑15: Climate Risk Management strengthens expectations around climate‑related governance, risk management, scenario analysis and disclosure for federally regulated financial institutions. Climate risk is now firmly embedded in prudential oversight, with direct implications for board accountability, capital and liquidity planning, and the quality and timing of public disclosures.

About McCarthy Tétrault’s ESG and Sustainability Group

Our Firm’s multidisciplinary ESG and Sustainability Group is uniquely equipped to give you the full suite of advice and support to integrate ESG thinking into your organizational DNA. We have a robust understanding of the business, industry, and market factors driving change, and our holistic, enterprise-wide approach covers a wide range of areas – from board governance to human rights to climate change risk – giving you innovative solutions to meet your business priorities. Learn more about our services.

About McCarthy Tétrault

McCarthy Tétrault LLP provides a broad range of legal services, providing strategic and industry-focused advice and solutions for Canadian and international interests. The Firm has a substantial presence in all of Canada’s major commercial centres as well as in New York and London.

Built on an integrated approach to the practice of law and delivery of innovative client services, the Firm brings its legal talent, industry insight and practice experience to help clients achieve the results that are important to them.

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For further information on McCarthy Tétrault or any of the above, please contact media@mccarthy.ca