Canada to issue green bond including nuclear energy expenditures

Canada announced plans to issue its second Canadian-dollar green bond, becoming the first sovereign issuer to include certain nuclear energy expenditures in a green bond framework. For Indian sustainable finance markets, the move signals broadening sovereign definitions of green-eligible expenditures to include nuclear.

The Government of Canada announced plans to issue its second Canadian-dollar-denominated green bond, subject to market conditions, following its first 7.5-year, 5 billion Canadian dollar green bond in March 2022. This issue is the first under Canada's updated green bond framework, released on November 21, 2023. As announced in the 2023 Fall Economic Statement, certain nuclear energy expenditures are now included in the framework, in line with practices from Ontario energy and the European Union. Canada is the first sovereign issuer to include certain nuclear expenditures in a green bond, supporting its 2030 emissions and 2050 net-zero targets.

Investors seeking green investment opportunities backed by Canada's AAA credit rating are directly affected, gaining a new instrument under the updated framework. The nuclear energy sector benefits from inclusion in green bond eligibility, positioning Canada as a global nuclear leader. The sustainable finance marketplace in Canada stands to grow, joining other sovereign issuers including France, Sweden, Spain, Italy, Germany, and the United Kingdom. Notably, no proceeds from the first green bond issued in March 2022 will be allocated to nuclear-related expenses, so holders of that original bond remain under its parameters.

Investors should monitor the second green bond's issuance, planned for this week subject to market conditions, and review Canada's updated Green Bond Framework released November 21, 2023, which identifies eligible expenditures including certain nuclear costs. Market participants should note that the framework aligns with other recognised sovereign green bond frameworks and was assessed by ESG research firm Sustainalytics as transparent. Stakeholders evaluating green bond standards should watch how Canada's precedent of including nuclear expenditures influences other sovereign issuers and the broader definition of green-eligible expenditures.

Key figure — Updated green bond framework release date: November 21, 2023