Budget 2025: Not seeing the forest or the trees
Budget 2025 comes at a pivotal moment in the face of escalating climate and biodiversity challenges in Canada. From record-breaking wildfires and floods to droughts affecting national food security, the economic and social impacts of environmental decline are undeniable. While the emphasis on the government’s economic vision was anticipated, its lackluster leadership in showing how this vision can be pursued while advancing climate resilience, biodiversity recovery, and Indigenous priorities for nature is disappointing.
Nature Investment Hub Managing Director Priya Bala-Miller said: “With a focus on boosting productivity and reinforcing sovereignty, the budget does little to recognize nature’s potential as a key driver of economic strength and global competitiveness. By not fully realizing the value of natural capital on par with these goals, Canada risks missing a critical opportunity to foster inclusive prosperity and climate resilience.”
While the overall tone on sustainable finance more generally was positive, for instance, noting continued support for a sustainable finance taxonomy which could aid capital allocation for nature positive economic activity, this budget signals a weak enabling policy environment for scaling nature finance.
The areas where nature is mentioned are limited, and mention biodiversity only in the context of limiting harm as part of other economic development goals, rather than as an end unto itself. The budget as it relates to nature includes:
- A focus is on conventional industrial development and accelerating resource extraction, sidelining the urgent need for scaling up investments that support climate resilience, biodiversity loss and diversified community-based economic development. This represents a significant missed opportunity for Canada to demonstrate leadership in nature-positive finance and in unlocking the economic benefits of a thriving natural environment.
- The government will continue to honour existing commitments such as the 2 Billion Trees initiative but is bringing this initiative to an official close rather than up for renewal or expansion.
- Major cuts in spending to Natural Resources Canada (NRCan), Environment and Climate Change Canada (ECCC) and the Department of Fisheries and Oceans (DFO), the emphasis on “streamlining” and fiscal restraint limits nature-related budgets compared to the scale of ambition in some campaign promises.
- Budget 2025 left nature finance and catalytic support in limbo, without specific launches or new funding streams to accelerate nature-based solutions or natural infrastructure.
Particularly troubling with the outlined budget priorities, is that when it comes to nature they fail to mention specific platform priorities. Specifically
- Conservation targets: Recommitting to Canada’s promise to conserve 30% of lands and waters, create new parks, and implement the Global Biodiversity Framework upon being elected, these global and national commitments were not mentioned in the budget.
- Nature Protection: Details on the Canadian Nature Protection Fund were not forthcoming, nor was further information on how existing funds earmarked for conservation are likely to continue or not, presenting continuity challenges for organizations on the ground seeking to restore forests, peatlands, and coastal waters while creating local jobs and strengthening ecosystems.
- Indigenous Guardians: When elected, the government signalled continued investment in the Indigenous Guardians Program, which was not outlined in the budget.
- Natural Infrastructure: Prioritizing nature-based infrastructure and adaptation measures was also not addressed directly.
Opportunities To Integrate Nature into Canada's Economic Priorities
While commitments to nature – in the form of conservation, restoration, or sustainable resource management – were limited in this budget, there are a variety of ways that the economic priorities identified in Budget 2025 connect to nature finance. Integration of nature in these areas enhances the potential to deliver resilient and competitive opportunities for the public and private sectors, alongside Canadian businesses and communities.
- Canada’s Climate Competitiveness. Climate action plays a key role in the 2025 budget, it is called an “economic necessity” to act quickly. Nature-based solutions have an important role to play in any climate strategy, particularly as it relates to Indigenous leadership and reconciliation. Focusing on energy efficiency and technological solutions while not acknowledging the opportunity for cost-effective nature-based solutions in industrial mitigation and adaptation strategies, innovative investment opportunities, as well as the associated social co-benefits that come from healthy ecosystems is a missed opportunity for Canadian leadership.
- Leveraging Private Investment. Across sectors (including natural resources, housing, energy, industrial development, agriculture) the crowding-in of private finance has been a consistent priority of the Carney government. A real missed opportunity here is the absence of federally-backed financial measures and incentives to attract private investment to manage financially material nature risks and leverage opportunities in areas of interest for global capital providers such as nature-based infrastructure. With its emphasis on austerity, it's a no-brainer that much more needs to be done to incent private investment in areas where the government intends to pull back federal dollars
- Sustainable Finance and Green Bonds. Budget commitments to a sustainable finance taxonomy, aligned sustainable bond framework, and working with provinces to improve their climate disclosure are all welcome. We encourage the inclusion of biodiversity and nature-relevant language and metrics to ensure they are appropriately accounted for in these key tools that will underlie and inform investment strategies. We also affirm that Indigenous leadership in establishing ESG standards is urgent and non-negotiable if these instruments are to work for the benefit of all Canadians.
- Large Capital Projects. The new office for Major Projects and proposed streamlining of approvals processes highlights the emphasis on rapid large scale infrastructure development. There are major environmental and social risks that must be safeguarded against to ensure that development proceeds at the rate of trust, particularly in Indigenous communities. When financial benefits of nature are integrated in these processes (e.g. assessing the benefit of ecosystems delivering critical flood, drought, and climate resilience to ensure they are not sacrificed for short term benefit ahead of longer term cost and risk) alternative development pathways may be revealed.
- Access to capital to support innovation and diversified economic opportunity. The budget includes several fiscal strategies to make capital more readily available for innovation and industry (via tax breaks), and aims to double the Indigenous Loan Guarantee program to stimulate economic activity for Indigenous communities and business owners. Access to finance and credit should also be extended to Indigenous communities stewarding nature, enhancing capacity of those already delivering impact.
By not fully accounting for the value of natural capital in major projects and in budget decisions writ large, Canada risks missing a critical opportunity to become a global leader in how to sustainably manage and steward natural resources, while fostering new investment opportunities that increase prosperity and resilience.
