Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
In a care[...]
Category Archives: ESG, Financial Inclusion, Sustainable Finance
Canadian Tech Open Letter to Defend Diversity & Inclusion
Advocacy | Feb 28, 2025
Image: Freepik/rawpixel.com
A Call to Action for Canada’s Tech Industry - Defending DEI
The Canadian tech industry is facing a critical moment in responding to the push back against diversity, equity, and inclusion initiatives otherwise known as 'DEI'. Almost 1000 tech and innovation founders, executives, and investors have signed an open letter titled "Innovation Includes Everyone" in support of DEI, a initiative spearheaded by Laura Gabor (Ecologicca/What in the Tech), Avery Swartz (Camp Tech), Sarah Stockdale (Growclass), Arlene Dickinson (District Ventures Capital), and Amber Mac (AmberMac Media), among many others, to ensure Canada's tech ecosystem remains inclusive by working together to raise awareness, mobilize support, and advocate for stronger DEI commitments in the tech industry. They believe that diversity drives better ideas, stronger businesses, and a more inclusive economy.
See: Why is venture capital still ignoring women? The case for investing is clear.
There have been concerns raised recently about some of Canada’s largest tech companies quietly scaling back support for marginalized communities such as women, 2SLGBTQIA+ individuals, Black and Indigenous professionals, and newcomers. The open letter calls on the tech community and policymakers to reject efforts that undermine inclusion and to stand firm in support of equity. It emphasizes that Canada’s strength lies in its ability to embrace talent from all walks of life and that businesses should not prioritize profit over people.
Global Trend in Scaling Back DEI
Alarm bells are ringing due to a broader global shift towards policies that weaken protections for marginalized groups. The political climate, especially in the U.S. with the new Trump administration, has created uncertainty around corporate DEI initiatives, leading to some Canadian corporations with U.S. operations adjusting their commitments to avoid potential backlash. Corporations are also under economic pressure dealing with budge cuts. Some businesses are deprioritizing DEI programs citing economic survival. There are even social activist movements arguing against DEI initiatives that are causing some companies to reconsider their approach in the face of potential consumer pushback.
However, despite these rollbacks, public sentiment in Canada remains largely in favour of DEI programs. A 2020 Statistics Canada survey found that 92% of Canadians aged 15 and older agreed that ethnic or cultural diversity is a Canadian value. According to Benefits Canada, a 2023 World 50 Group survey revealed that 72% of business leaders increased their organization's investment in DEI over the past year.
The Best Talent Comes from Inclusive Hiring
A common argument against DEI is the idea of hiring the “best person for the job.” However, finding the best talent is impossible without an inclusive hiring approach. By ensuring diverse candidates are considered, businesses in fact expand their talent pool which leads to higher-performing teams. Multiple studies have found that diverse companies outperform their competitors in revenue, innovation, and employee engagement.
NCFA’s Commitment to Inclusion
The National Crowdfunding & Fintech Association of Canada (NCFA) has always championed inclusion and the underrepresented, advocating for opportunities that empower individuals and businesses alike. Through awareness-building, collaboration, and action, NCFA remains committed to closing gaps and fostering an equitable innovation ecosystem.
See: How Fintechs Are Tackling Financial Inclusion in Canada
A common argument against DEI is the idea of hiring the “best person for the job.” However, finding the best talent is impossible without an inclusive hiring approach. By ensuring diverse candidates are considered, businesses in fact expand their talent pool which leads to higher-performing teams. Multiple studies have found that diverse companies outperform their competitors in revenue, innovation, and employee engagement.
Call To Action
Canada must remain a leader in inclusive innovation. If DEI efforts are abandoned, the industry risks losing what makes it a thriving, world-class tech hub. The letter urges all Canadians to take action by supporting businesses that uphold these values and holding those that don’t accountable. The petition remains open for signatures. Join now by adding your name to the growing list of supporters at What in the Tech?, and collectively let's ensure innovation truly remains whole!
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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How Canadian Institutional Investors Voted on Climate 2024
Climate Report | Feb 27, 2025
Image: 2024 Canadian Climate Voting Record (Investors for Paris Compliance)
Institutional Investors in Canada Show Mixed Climate Commitments
The organization Investors for Paris Compliance recently published their 2024 Canadian Climate Voting Record (14 page PDF report), which tracks how Canadian institutional investors voted on climate-related shareholder proposals. While Canadian investor support for climate resolutions increased to nearly 65% in 2024, there's a global pullback on ESG reporting, making Canada's voting record stand out.
Global Pullback on ESG/Climate Reporting
Canadian investors have shown more support for climate resolutions but globally opinions on ESG investing are becoming more divided.
In the U.S., some states and asset managers are pulling back from ESG commitments due to political and regulatory pressure. According to Business Insider, BlackRock has softened its stance on ESG by removing diversity, equity, and inclusion (DEI) language from key documents, in response to growing criticism from certain investors, however they continue to emphasize sustainability.
In Europe, regulators are also adjusting their approach by proposing to ease sustainability reporting rules to reduce burdens on businesses and improve their global competitiveness. Despite this, many European institutional investors remain committed to net-zero goals.
What Types of Votes Are Taking Place?
The 2024 Canadian Climate Voting Record analyzed how institutional investors voted on climate-related shareholder proposals such as:
- Requiring companies to disclose how climate risks impact their business
- Encouraging companies to set clear, transparent, and scientifically based goals for reducing emissions
- Pushing for measurable actions to reduce carbon emissions and transition to cleaner energy
See: Planetary Health Check 2024 and Canadian Climate Tech
While only 4 climate resolutions were voted on at Canadian companies, Canadian investors voted on many resolutions at U.S. and global firms where they hold shares.
Who and How They Voted?
Some Canadian institutional investors are leading the charge, while others remain cautious.
Image: Summary of 2024 Climate Votes (Investors for Paris Compliance)
The top investors in support of climate shareholder proposals:
- All voted 100% in favour of climate resolutions: AGF Investments, NB Investments, Canada Post Pension Plan, IMCO, University Pension Plan, and NEI Investments
- Strong support: BCI (88.2%) and CDPQ (90%)
Many of Canada’s largest financial institutions had weaker records:
- Moderate support: TD Asset Management (70.6%), Ontario Teachers’ Pension Plan (75%), and CIBC (64.7%)
- Laggards: Manulife (41.2%), AIMCO (41.2%), and BMO GAM (47.1%)
- Least supportive of climate related resolutions: Canada Pension Plan (29.4%), RBC GAM (11.8%), and Scotia GAM (0%)
Select Takeaways
- While only 4 climate resolutions were voted on at Canadian companies, Canadian investors voted on many resolutions at global firms
- One issue that the report highlights is the lack of a unified policy on climate issues resulting in split votes among large asset managers like RBC GAM, Manulife, and Scotia GAM, where different portfolio managers voted inconsistently on the same resolutions
See: Canada’s Shift to Enhanced Climate Disclosures
- Canadian investors were more likely to support climate proposals at U.S. companies (65.8%) than at Canadian firms (55.5%), raising concerns about domestic engagement
Conclusion
With the 2025 AGM season approaching, will Canadian investors push for stronger climate commitments or continue their cautious approach?
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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AI Energy Score Ratings A Step Towards Transparency in AI
AI | Feb 26, 2025
Image: AI Energy Score Label (salesforce.com)
Canada's Cohere Helps Drive AI Energy Score for Sustainable AI
Electricity, data centers, and energy infrastructure oh my. That's right. As the demand for artificial intelligence (AI) energy grows with adoption, sustainable and transparent AI coalitions like the AI Energy Score initiative could become a critical standard in measuring the energy efficiency of AI models, empowering individuals, businesses, researchers and policymakers make informed decisions on AI usage.
By 2028, AI data center electricity consumption could consume up to 12% of the total electricity in the United States, a hockey stick increase from 4.4% in 2023. While the U.S. is planning to add 46 gigawatts of new natural gas capacity by 2030 to help meet this demand (equivalent to the entire electricity requirements of Norway), industry and governments globally are recognizing the urgency for energy capacity and making AI more energy efficient.
Introducing AI Energy Score
A coalition of industry leaders including Salesforce, Hugging Face, Canada's Cohere, and Carnegie Mellon University launched the AI Energy Score initiative, to provide a standardized way to measure and compare the energy efficiency of AI models. AI Energy Score evaluates AI models based on their power consumption when making predictions or generating responses called 'inference' (not when training LLMs) and assigning each a star rating of 1-to-5.
A public leaderboard ranks over 166 AI models across categories such as text generation, image generation, summarization, automatic speech recognition, and object detection, so users can compare energy efficiency across different tasks.
Developers can also submit their models for evaluation through a benchmarking portal.
And as you may expect, similar to ENERGY STAR labels for household appliances, AI models that meet high efficiency standards receive recognizable energy-use labels.
How the Rating System Works
The AI Energy Score evaluates models across ten AI tasks and energy use is measured in watt-hours per 1,000 queries to establish a standardized assessment. Each model is then assigned a star rating based on its efficiency. The top 20% most efficient models receive a five-star rating, while the least efficient 20% receives one star. The leaderboard is updated every six months to reflect new advancements and ensure the ranking system remains relevant.
Cohere’s Involvement and Canada's Action
Toronto based startup Cohere, an AI company specializing in large language models for enterprise is the only known Canadian firm participating in the AI Energy Score initiative at this time, signalling Canada’s growing awareness of the need for AI energy efficiency. Note Canada has built a strong reputation in AI research through institutions like Mila in Montreal, the Vector Institute in Toronto, and Amii in Edmonton.
See: Canada’s AI Competition Report Faces Big Tech Challenges
The Canadian government has started recognizing the challenges posed by AI’s energy consumption. The Standards Council of Canada (SCC) recently emphasized the need to balance AI innovation with sustainability and data integrity. In a 2024 policy brief, SCC warned that AI’s growing energy demand could hinder Canada’s climate commitments if left unchecked. In response, the government has proposed a $15 billion incentive package to attract energy-efficient AI data centers to Canada. It has also aligned with international AI governance efforts, such as the Global Partnership on AI (GPAI), seeking to establish sustainability standards for AI development.
Canada is also moving on legislation. The Artificial Intelligence and Data Act (AIDA, part of Bill C-27), focused on regulating AI transparency and accountability. However, Canada has not yet formally joined initiatives like the AI Energy Score or the Coalition for Sustainable AI.
Implications of AI Energy Rating Standards
If energy ratings for AI models become widely adopted then all stakeholders will start prioritizing efficiency. In practice this might mean companies would begin selecting AI models based on their energy usage (similar to how businesses evaluate their carbon footprint today when deciding certain policies). During the transitional period of adoption to new ratings, companies building AI products while optimizing for energy efficiency could use that as a competitive advantage.
Investors may also begin favouring AI firms that disclose energy consumption data as part of their support for transparency and sustainable AI, unlocking new funding opportunities.
See: Will Nuclear Fuel the Data-Driven Future?
Governments may introduce regulations requiring AI models to meet minimum efficiency benchmarks to ensure AI innovation and development efforts align with broader climate goals.
Will Canada Take a Leadership Role?
Canada must decide whether to help lead in AI energy transparency or risk falling behind. While Cohere’s participation in the AI Energy Score is a positive step, there is currently no national strategy on AI energy ratings. The AI Energy Score represents one of the first major efforts to standardize energy transparency in AI and its adoption would change how businesses, governments, and investors evaluate AI models. It's often said that Canada has the opportunity to lead in sustainable and responsible AI but it will require deeper engagement from policymakers, industry leaders, and research institutions.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Planetary Health Check 2024 and Canadian Climate Tech
ESG | Feb 14, 2025
Image: Planetary Health Check (1st Edition, Planetary Boundaries)
Seizing the Green Economy: The State of the Planet and Fintech Opportunities
Planetary Boundaries Science published the inaugural edition of the 2024 Planetary Health Check, (view 96 page PDF report) that delivers a scientific assessment of the current state of mother earth, revealing urgent environmental challenges that are in need of sustainable finance strategies and investments. All of this points to the growing focus of sustainable finance, green fintech, and climate risk mitigation. Canadian policymakers, institutions, and financial technology startups have a key role in supporting the transition towards a sustainable economy.
Key Statistics and Fintech Solutions
It's important for financial leaders to recognize the biggest environmental challenges we collectively face today. Below are key statistics derived from the Planet Health Check 2024 report, along with select innovative Canadian fintech and climate tech companies working to solve these problems:
1. Climate Change
- Carbon dioxide levels in the atmosphere have risen to 419 ppm, higher than at any point in the past 15 million years.
- Average global temperatures are now 1.2°C warmer than before the industrial era, leading to more extreme weather events.
- The Earth’s energy balance has been disrupted, with radiative forcing exceeding the safe limit of +1.0 W/m², now at +2.79 W/m², intensifying global warming.
- CarbonCure Technologies turns captured CO₂ into sustainable concrete, reducing emissions in the construction industry. CERT Systems converts CO₂ into valuable fuels and chemicals, supporting a circular carbon economy.
2. Biosphere Integrity and Biodiversity Loss
- Over 75% of the Earth’s land surface has been significantly altered by human activity.
- Loss of species diversity is happening 100 to 1,000 times faster than the natural rate, threatening ecosystems and food security.
- The amount of energy supporting ecosystems has dropped by over 20% worldwide, disrupting the balance of nature and harming wildlife habitats.
- Veritree uses blockchain to track and verify reforestation projects, ensuring transparency in ecosystem restoration investments.
3. Land System Change
- The world's forests are shrinking at an alarming rate, with the Amazon rainforest alone having lost 17% of its total tree cover, pushing forest loss beyond safe limits.
- Every year, more than 10 million hectares of forests are cleared, mainly to make space for farming, infrastructure, and resource extraction, accelerating habitat loss and climate change.
See: The Role of Fintech in the Circular Economy
- Summit Nanotech is pioneering sustainable lithium extraction, reducing the land degradation caused by traditional mining operations.
4. Freshwater Use and Scarcity
- More than half of the world's major rivers now go through severe water shortages at certain times of the year.
- Soil moisture levels have become 15% more unpredictable since the early 1900s, making it harder to grow stable food supplies.
- Farmers Edge uses AI-driven precision agriculture to optimize water usage, reduce waste, and improve yields, helping to secure food supply chains.
5. Nutrient Pollution from Fertilizers
- The amount of nitrogen added to the environment by fertilizers and industry is now 190 million tonnes per year, which is more than twice the natural level.
- Excess phosphorus from farming has created over 500 oxygen-depleted zones in the oceans, covering an area of more than 245,000 square kilometers, harming marine life.
- e-Zinc pioneers zinc-based energy storage, enabling long-duration renewable energy storage and reducing reliance on synthetic fertilizers for energy-intensive farming.
6. Pollution & Waste
- The world produces over 400 million tonnes of plastic every year but only 9% of it gets recycled, leaving the rest to pollute land and oceans.
- More than 350,000 synthetic chemicals are in our environment today, and many of their effects on nature and human health are still unknown.
- Climate Smart and Carbonhound provide carbon management tools for Canadian companies, helping them measure and reduce pollution and waste while improving ESG compliance.
Policy and Regulation
Canada is making it mandatory for businesses and financial institutions to disclose climate-related information. The federal government has introduced new rules based on the Task Force on Climate-related Financial Disclosures (TCFD) guidelines.
- Starting in 2024, banks, insurance companies, and other federally regulated financial institutions must report their climate-related financial risks according to TCFD framework.
- The government is changing the Canada Business Corporations Act (CBCA) to require large private companies to report their climate-related financial impacts.
- Canada is also creating clear guidelines for sustainable investments to prevent greenwashing and set clear standards for climate-related investments.
Climate Tech Investments and Incentives
Canada has committed substantial funds to climate technology innovation, presenting a major investment opportunity:
See: RBC and Carbonhound Partner to Automate Carbon Management
- In 2023, climate tech investment in Canada reached $1.1 billion in cleantech.
- Canada introduced tax credits to support clean technology, including the Clean Technology Investment Tax Credit (CT ITC) and the Clean Economy Investment Tax Credits, which offer refundable tax credits for businesses investing in clean energy, clean hydrogen, and carbon capture. (Government of Canada)
- BDC Climate Tech Fund itself is allocated $400 million, however BDC's total clean and climate tech commitment is $1 billion
Outlook
The Planetary Health Check 2024 is (another) wake-up call for the financial industry. Canadian fintechs and investors have an opportuity to make a difference by focusing on climate-focused investments, green financial innovations, and sustainable business models. With billions in investment and grant opportunities already available, financial leaders can take advantage of growing climate tech opportunities and help Canada become a global leader in sustainable finance.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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RBC and Carbonhound Partner to Automate Carbon Management
ESG | Feb 13, 2025
Image: Freepik
RBC and Carbonhound Partner to Bring Automated Carbon Management to Canadian Businesses
On February 20, 2025, RBC announced an ESG collaboration with Carbonhound to provide automated carbon management solutions for Canadian companies. This sounds like a great initiative where businesses of all sizes are increasingly under pressure to track and reduce their carbon footprint. Technology is helping small and medium-sized (SMEs) companies in particular who struggle with the complexities of carbon reporting, empowering how they approach sustainability.
See: How Carbon Pricing Impacts Fintech and Investment Strategies
Niranjan Vivekanandan, EVP and COO, Commercial Banking at RBC:
"We are excited to work with Carbonhound to offer our clients an accessible solution that is designed to manage and report carbon emissions. Together, we aim to enable Canadian businesses to make and measure progress in their transition to a low-carbon economy."
Why Carbon Management Matters for Businesses
The Canadian government pledged to reach net-zero greenhouse gas emissions by 2050 backed by the Canadian Net-Zero Emissions Accountability Act, which became law on June 29, 2021. The law requires government to set emission reduction targets and enable plans to achieve them. Canada is currently aiming to reduce emissions by 40-55% below 2005 levels by 2030.
As governments set goals to reduce carbon emissions and investors focus more on sustainability, businesses are feeling the pinch and the need to step up their game in tracking emissions. However, traditional carbon reporting relies on manual data collection, spreadsheets, and external consultants which can be slow, expensive and subject to errors. For many SMEs, keeping track of their carbon footprint is challenging and takes up too much time.
See: Davos 2025 Themes and Takeaways for Fintech
SMEs account for 99.8% of Canadian businesses and were responsible for 41% of the country’s greenhouse gas emissions in 2020. However, according to a KPMG 2023 business survey while 78% of Canadian SMEs have policies to reduce emissions, the majority of them 70% report that they lack the time and resources to implement them effectively. Compliance costs and lack of expertise often prevents smaller firms from activating sustainable efforts. Automating carbon tracking can help companies overcome these barriers towards making real progress.
Sanders Lazier, CEO and Co-founder of Carbonhound:
"Sustainability reporting has become table-stakes for businesses that want to work in global supply chains and attract top-tier talent. We are excited to work with RBC to help enable Canadian businesses to compete more effectively and expand their margins through sustainability data."
How RBC and Carbonhound’s Partnership Works
The Royal Bank of Canada (RBC), one of Canada’s largest financial institutions, is partnering with Carbonhound a company that makes tracking carbon emissions easier by connecting directly to business data and providing real-time insights into emissions. It also helps businesses create reports that follow major sustainability rules, making it easier to stay compliant and be more transparent.
The partnership brings a set of solutions designed to:
- Track emissions automatically using real business data including Scope 1, 2, and 3 greenhouse gases
- Create carbon reports that meet sustainability reporting standards
- Offer practical steps to help businesses lower their emissions, such as insights to set realistic reduction targets and identify cost-saving strategies
- Ensure compliance with increasing sustainability regulations including the Greenhouse Gas Protocol and ISO 14064
Also worth noting, on February 1, 2025, Carbonhound announced a partnership with Manifest Climate, which uses AI to guide businesses through evolving regulatory landscapes to make climate reporting more accessible and actionable.
Impact on the Canadian Market
Canada’s financial rules are changing to push businesses toward sustainability. With the government and regulators focusing on ESG reporting, companies that don’t adapt could lose funding or face stricter rules.
See: Tech Leaders Launch Build Canada for Innovation Policy Reform
RBC has been a leader in sustainable finance, first pledging $100 billion by 2025 but after reaching that goal ahead of schedule the bank increased its commitment to $500 billion by 2025, showing continued dedication to help companies adopt more sustainable practices (learn about RBCs climate commitments).
The RBC-Carbonhound partnership helps all Canadian businesses especially SMEs, which often lack the resources for sustainability efforts and carbon reporting. As more businesses use these tools, Canada’s economy will be better prepared to compete in a world that values sustainability.
Conclusion
As Canada pushes toward its net-zero goals, partnerships like RBC and Carbonhound can help companies turn sustainability from a challenge into an opportunity and competitive advantage while staying compliant, attracting investment, and reducing their environmental impact.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Rachel Reeves: UK’s Financial Innovation Blueprint
Fintech Policy | Nov 19, 2024
Image: Chancellor of the Exchequer Rachel Reeves
Financial Innovation Vision from the UK's New Chancellor of the Exchequer, Rachel Reeves
The UK has a new Chancellor of the Exchequer, Rachel Reeves, who took office four months ago, delivered her first Mansion House speech on November 14, 2024 to set out her vision for the UK economy. The Chancellor is seen as the second most powerful position in the UK government after the Prime Minister, and has significant control over the country's economic direction and priorities, and works closely with businesses, financial institutions, and global partners to protect and grow the economy.
See: UK Digital Securities Sandbox to Drive Fintech Innovation
In her first major speech, the UK is doubling down with a mix of new technology and financial innovation including the creation of a stock exchange for growing businesses to using blockchain to issue government bonds. Her innovative plans reach pensions, green finance, open banking, and capital markets all to boost growth, attract investment, and make the UK a global leader in financial innovation. Here's a closer look at some of the key announced initiatives and why they matter.
1. A New Stock Exchange Called PISCES
Her speech announced the launch a new stock exchange by May 2025 called Platform for Innovation, Scaling Companies, and Emerging Sectors (PISCES) (Platform for Innovation, Scaling Companies, and Emerging Sectors) designed to help fast growing companies secure the scale-up funding they need to grow and succeed. Part of the idea is to shift capital markets to better support smaller companies with high potential that often face challenges in raising funds or going public.
See: Corporate Venture Capital in Canada: Insights and Challenges
A specialized exchange like this could help attract global investors and provide more liquidity for these companies to access. In Canada, there's the TSXV and CSE both of designed to benefit attractive startups in accessing public markets.
2. Government Bonds on Blockchain
Reeves also announced the pilot launch of a blockchain-based platform to issue government bonds called Digital Gilt Instruments (DIGIT). By using the latest distributed ledger technology (DLT), the UK hopes to improve bond issuance by making it faster, cheaper, and more transparent. For decades, the bond issuance process has largely been untouched. A pilot like this could help transform public finance, offering insights and valuable lessons for governments globally looking to modernize their systems.
Rachel Reeves, UK Chancellor of the Exchequer
“Using distributed ledger technology for DIGIT marks a step change in how we issue government debt, making the process more efficient while maintaining investor confidence.”
3. Creating Pension Megafunds
Reeves announced plans to consolidate local government and work pension plans into Canadian or Australian style 'megafunds' to grow the UK economy. In doing so, she anticipates it to unlock about £80 billion for investment for infrastructure, housing, high growth initiatives. She makes it clear that this is a new strategy in how retirement savings are managed and prioritized in the UK, and such megafunds should be designed to benefit British savers instead of the Canada Pension Plan Investment Board profiting from UK assets.
See: Public Market Challenges and Equity Crowdfunding Capital
Rachel Reeves, UK Chancellor of the Exchequer
"We must ensure that British savers benefit from the returns on productive assets, not just Canadian teachers and Australian professors investing in the UK."
4. Lead the Energy Transition
In her speech, Reeves positioned the United Kingdom as a pioneer in sustainable finance and announced a framework for raising private capital for green projects such as wind farms and solar energy. The plan is to launch the Transition Finance Council in partnership with the City of London Corporation and industry leaders that will work to ensure companies have access to decarbonization finance.
See: AI Leaders and White House Discuss Energy Infrastructure
Given Canada's renewable energy potential, Canada could establish a similar task force focused on attracting private capital for clean energy projects. Collaboration with the UK's Transition Finance Council could help accelerate global efforts to support the energy transition.
5. Regulatory Reform for Growth
Reeves speech mentioned a few ways to recalibrate financial regulations to encourage innovation and growth without compromising stability such as overhauling consumer financial advice rules, and reducing banker pay deferral periods to attract top talent.
See: Insights from the UK’s Pro-Innovation Regulation Review
Rachel Reeves, UK Chancellor of the Exchequer:
“We’ve been regulating for risk, but now it’s time to regulate for growth.”
6. Open Banking and Fintech
She doubled down on the UK's National Payments Vision reaffirming the UKs commitment to open banking, ensuring that customers benefit from improved services from safe data exchange.
Rachel Reeves, UK Chancellor of the Exchequer:
"We are laying the groundwork for London to remain the global hub for financial technology."
Open banking is still developing here in Canada but adoption and growth lessons from the UK can help Canada accelerate the implementation of the initiative which is called 'consumer-driven finance'.
Why It Matters
Rachel Reeve's speech lays out a solid blueprint for using technology and smart policies to drive economic growth for the UK. It's a clear message that says in order to stay competitive, the country has to take bold steps and be open to change. Lessons that Canada should learn from.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Support NCFA by Following us on Twitter!Follow @NCFACanada |
Accelerating Financial Innovation and Access in Canada
Canadian Innovation | Nov 13, 2024
Image: Freepik/www.slon.pics
How Canada Can Speed Up Financial Innovation and Serve More People
At Elevate FinTech Stage 2024, BetaKit hosted two conversations that highlight both the challenges and opportunities Canada faces in its financial sector. Together, these sessions reveal an urgent need for Canada to catch up on financial innovation. Here’s a look at what was discussed and some fresh ideas Canada can look to adopt if interested in driving real progress.
- The first session with Koho’s Daniel Eberhard and Peter Aceto focused on the obstacles of becoming a licensed bank and balancing speed with regulation.
- In the second, Josh Scott from BetaKit discussed barriers to financial inclusion with Eva Wong of Borrowell, Manzil’s Mohammed Sawwaf, and Julien Brazeau from the Department of Finance.
Session 1: Koho’s Banking License Journey and Balancing Product Innovation
Koho CEO Daniel Eberhard and Chief Banking Officer Peter Aceto shared how becoming a licensed bank would help Koho to lower costs, control its financial products, and offer benefits directly to its customers. But the process has been long and complicated with the Office of the Superintendent of Financial Institutions (OSFI) imposing unpredictable timelines and criteria.
See: Canada Post Expands into Financial Services with KOHO
To protect their ability to innovate quickly Koho split off into two divisions: one for tech and one for banking. This setup allows them continue building new features while managing the regulatory demands of becoming a bank.
Daniel Eberhard, CEO Koho:
“We’d be really foolish to bet the business on something as unpredictable as the bank license process.”
He stressed that Koho would pivot if the banking license path became too restrictive, doubling down on Koho's commitment to innovation.
Panel Takeaways:
- Securing a bank license comes with significant regulatory hurdles and compliance requirements. Koho is carefully weighing the costs/risks with the benefits.
- Koho is continuing to innovate without waiting on regulatory approval by cleverly separating tech and banking into separate divisions.
- Koho’s story highlights how difficult it is for Canadian fintechs to break into the traditional banking sector. Without a clear path, companies like Koho must decide how much time and money they’re willing to risk.
Session 2: Financial Inclusion and Barriers to Access
In the second panel, Josh Scott led a conversation on financial inclusion with Eva Wong (Borrowell), Mohammed Sawwaf (Manzil), and Julien Brazeau (Department of Finance). The discussion focused on why many Canadians, especially those in niche communities, remain underserved by the traditional banking system. Wong pointed out that, although most Canadians have a bank account, many are “underbanked”—lacking access to the range of services they need. Sawwaf explained that for Canada’s 2 million Muslim citizens, the absence of halal banking options has excluded a large group from mainstream financial services.
Julien Brazeau commenting on Canada's slow approach to open banking:
“Six years is far too long for anyone to consider fast.”
Panel Takeaways:
- There’s a growing need for financial services that address the needs of specific groups like new Canadians, remote communities, and religious groups.
- Brazeau admitted that the government has been slow to work directly with fintechs, a gap that has delayed innovation and frustrated financial startups. There's a lack of collaboration.
See: Canada’s SMBs Deserve Better Banking. Lessons from US Fintechs
- After 6 years, Canada’s open banking implementation is still incomplete and the delays are stifling competition and are making it harder for Canadians to get the services they need.
Image: Freepik/Canada day
Ways Canada Can Drive Financial Innovation in Canada
Here are just a few innovative approaches that could propel Canada's financial ecosystem forward.
1. Fast track the implementation of open banking and enable the sharing of credit data from the start
For open banking to have an impact right from the start in Canada, credit data portability should be possible from the initial launch. This would enable customers to transfer their credit history between institutions smoothly thus minimizing obstacles and simplifying the process of changing service providers.
See: Open Banking: Revolutionizing Financial Data Sharing
Such an approach would establish a best practice where fintech companies could provide services to individuals encountering difficulties in accessing credit, such as those with unconventional or limited credit backgrounds (that are underserved by the banks).
2. Make it necessary for government financial programs to be compatible with Open Banking standards
When open banking is fully implemented in Canada the government could promote its usage by making it a requirement for government initiatives like business loans and housing support to be compatible with open banking standards. By enforcing this rule, banks and financial technology companies would have to follow banking protocols making it easier for Canadians to access these services no matter which institution they are with. This approach aims to increase collaboration within the industry without relying on voluntary adoption by private entities.
3. Create a "Digital Financial Inclusion Fund" to broaden access, for interest groups
Canada could establish a "Digital Financial Inclusion Fund" similar to initiatives in Singapore and the EU to address the financial needs of marginalized communities by supporting fintech companies in developing specialized products for groups such as rural residents and underserved populations with limited access to traditional banking services. This would be a collaborative effort involving the government of Canada and the private sector and its partners.
4. Tiered licensing system could help smaller fintech companies enter the market more smoothly
Canada could consider implementing a strategy like in Australia with a restricted banking license regime which permits fintech firms to offer services as they grow. This approach would enable startups to connect with customers on and gradually meet full qualifications without sacrificing security or consumer safety.
5. Establishing a Unified Digital Identification System for financial services
Influenced by India's Aadhaar and Estonia's e-residency initiatives a government supported digital identification system could enhance Know Your Customer (KYC) procedures within Canada's institutions. With a digital identity Canadian citizens could safely use financial services reducing the time consuming and frequently repetitive account setup processes.
See: The Trifecta of India’s Digital Transformation is Turning Heads Globally
The government management of a digital ID system would streamline access for Canadians living in underprivileged areas and potentially link with open banking to ensure secure data sharing practices. Data privacy may be a concern however.
6. Establish a program for fostering partnerships between Fintechs and Banks to offer financial solutions
Canada could create a program to encourage partnerships between banks and fintech companies to focus on financial inclusion projects. Inspired by Brazil where banks and fintechs have teamed up to serve underserved communities, this program would encourage similar collaboration in Canada for initiatives like microloans, financial education, and better digital banking services in remote areas. Rather than mandating these partnerships, the government could offer incentives, such as tax benefits or lighter regulatory requirements to banks and fintechs that meet goals for reaching underbanked populations. This would allow both sectors to work together to create practical solutions that benefit consumers and support Canada’s financial inclusion goals.
Closing Thought
Creating a faster, more competitive, and more accessible financial ecosystem requires bold action, a risk-taking mindset (with the benefits in sight) and proactive partnerships between the government, banks, and fintechs.
See: Canada’s Innovation Paradox – Strong Start, Missing Impact
By embracing innovative approaches and learning from global successes, Canada can move beyond slow timelines and limited access and work towards becoming a leader in financial inclusion.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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