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According to the Trudeau government’s emissions reduction plan“Putting a price on pollution is widely recognized as the most effective way to reduce greenhouse gas emissions.” That’s fair enough, but a reasonable person might wonder why the same politicians insisting on a price mechanism (i.e. carbon tax) is the most effective policy recently. announcement relatively ineffective measures such as “sustainable investment guidelines” and “mandatory climate disclosures” for large private companies.

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The government says imposing mandatory climate disclosures “will attract more private capital to Canada’s largest companies and ensure that Canadian businesses can continue to compete effectively as the world moves toward carbon neutrality.” It’s absurd. How would Ottawa politicians know better than business owners how their businesses should attract capital? If disclosing climate information were a good way to help companies attract capital, companies that want to attract capital would make such disclosures voluntarily. There would be no need for a government mandate.

The government has not yet started the regulatory process for climate disclosures, so we don’t know exactly how onerous it will be, but one thing is certain: the disclosures will be expensive and unnecessary, imposing unnecessary costs without any measurable benefit . further discouraging investment in Canada. I repeat: if disclosures were useful and interesting to investors, companies seeking to attract investment would make them voluntarily.

Even the government’s own announcement casts doubt on whether increased corporate investment is the likely result of mandatory climate information disclosure. Even though the government claims that it “sends a clear signal to corporate boards and shareholders, at home and around the world, that Canada is their trusted partner in making private capital grow in the race to carbon neutrality”, most investors do not seek to do so. “put private capital to work” to fight climate change. Most investors want to grow their capital to obtain a good financial return, after adjusting for the risk of the investment.

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This latest announcement should come as no surprise. The Trudeau government has consistently demonstrated that its policies, notably capital gains taxes and a hostile regulatory environment – are completely at odds with what investors want. The head offices of the companies are flee Canada and business investment has decreased significantly since the Trudeau Liberals came to power. Capital per worker in Canada has been declining due to weak business investment since 2015, and new capital per worker in 2024 is barely half what is happening in the United States.

It is also fair to ask, in the face of these expensive policies, where are the environmental benefits? The government says its climate disclosures are necessary for Canada to move toward net zero emissions and “meet the Paris climate goal of limiting global warming to 1.5°C above pre-industrial levels,” but its net zero emissions targets are neither feasible nor realistic and the economic literature does not do so support the lens of 1.5 degrees.

Finally, when announcing the new climate disclosures, Trudeau’s Environment Minister Steven Guilbeault said they were an important stepping stone to a cleaner economy, which constitutes a “major economic opportunity.” Yet even the Canada Energy Regulator (a federal agency) projects Net zero emissions policies would reduce real GDP per capita, increase consumer price inflation, and reduce residential space – in other words, reduce living standards.

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A major economic opportunity that will increase business investment? Certainly not. Mandatory climate disclosures will only further reduce our standards of living and impose unnecessary costs on businesses and investors, with the certain effect of reducing investment.

Matthew Lau is an assistant research fellow at the Fraser Institute.

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