Capital Demands Clarity: ESG as a Prerequisite for Investment in Canada

This blog was provided by Millani

In just over 100 days, the global landscape has shifted dramatically – and so too has the reality for Canadian businesses. Amid geopolitical tensions, economic uncertainty, and leadership changes at home, the question confronting Canadian companies is no longer if the world has changed, but how we will respond.

What has become clear is this: access to capital – at scale, and at speed – will be critical to building Canada’s future economy. However, capital comes with conditions, and investors are looking for clarity and commitment to long-term value creation. This is where ESG is no longer a checkbox or a communications exercise; it has become a core indicator of a company’s resilience and investment potential.

At Millani, we have spent over 16 years engaging directly with institutional investors, and the message we hear, consistently and unequivocally, is this: ESG matters because capital providers use it to assess risk, opportunity, and long-term value creation. Whether you call it ESG, sustainability, or responsible business strategy, the fundamentals are the same – investors want evidence that businesses understand the landscape they operate in and have a credible plan to manage through uncertainty.

Some may misinterpret regulatory delays, like the Canadian Securities Administrators’ pause on mandatory climate and DEI (diversity, equity and inclusion) disclosures, as a signal that ESG no longer matters. However, in our regular conversations with financial stakeholders, it is clear that the desire for decision-useful disclosures has not gone away. If anything, it has intensified.

Canadian banks are still required to assess climate risk under OSFI’s guidelines. Credit rating agencies still factor ESG into their evaluations. Insurers, lenders, and large asset managers continue to demand transparency, consistency, and measurable progress. Disclosing is not about optics – it is about capital preservation and allocation, and in today’s investment climate, clarity around ESG strongly supports capital confidence.

This becomes even more important when we consider the shifting priorities of Canada’s economic strategy. With a new Prime Minister leading a minority government and energy security dominating national conversations, the path forward demands a careful balance. Canada’s resource wealth – whether oil and gas, critical minerals, renewables, or nuclear – remains a strategic advantage, and the expectation is that they will be developed responsibly and transparently.

What investors want to see is not a political debate over “either/or” energy choices, but a portfolio approach – one that incorporates a full spectrum of energy options, alongside a credible plan to transition toward a lower-carbon economy. That is what can unlock capital at scale. That is what can build trust.

As global markets realign, Canada has an opportunity to position itself as a destination for investment, and businesses need to be able to demonstrate that they are future-ready. That means clarity on ESG risks and opportunities, and alignment between strategy, disclosure, and execution. In turbulent times, we often default to reactive thinking, yet this is the moment for bold, forward-looking leadership. Canada’s businesses must take the long view and that includes understanding that sustainability can be used as a core lever for resilience and relevance.

Capital demands clarity and ESG provides it. We do not need to choose between growth and responsibility, or between energy and environment. The future of capital lies in the “and”, not the “or”. The businesses that understand this will be well positioned to thrive, and lead Canada into its next era of prosperity.