In uncertain times, markets look for signals. Leadership is one of them. Canada is sending a strong signal about its policy and investment priorities – one that the impact investing community could heed.
Canada’s impact investing sector has matured. Since 2019, it has doubled assets under management, according to the 2025 State of the Sector report from CAFIID, which GSG Impact commemorated last week.
These impact investments have generated 13% compounded annual growth. At the same time, impact measurement has gained traction and funds are increasingly domiciled locally – all signs of a sophisticated financial architecture.
As traditional superpowers retrench on climate and social issues, the center of gravity for world leadership is shifting to middle powers, rewarding those that take decisions to align policy and capital with values and long-term outcomes, like healthier people and cleaner water.
Prime Minister Mark Carney brings unique authority to this shift. Drawing on his tenure at the Banks of Canada and England, his administration understands systemic risk, resilience, and capital mobilization.
Impact leadership starts with a national strategy
Even before Carney arrived, Canada’s National Social Innovation and Social Finance Strategy established flexible financing for social purpose organizations in food security, affordable housing and the low-carbon transition sector. The country’s CAD 755 million (about USD 550 million) Social Finance Fund seeks to grow and enhance impact through domestic intermediaries.
National impact priorities are further bolstered by transparency, such as disclosure and reporting. In GSG Impact’s Policymaker’s Toolkit, we study the EU’s Corporate Sustainability Reporting Directive and the jurisdictions that have adopted the International Sustainability Standards Board standards into their national regulation.
Canada has followed with its own sustainability disclosures. The forthcoming made-in-Canada taxonomy aims to advance global, science-based investment guidelines and provide definitions necessary to attract capital. Impact transparency reduces implementation risk and aligns incentives across government institutions.
Exporting the ecosystem
Canada’s domestic success is echoed in its role as a global market shaper. Canada’s International Development Research Centre, or IDRC, is investing in knowledge and research in emerging markets, focused on building the evidence base and impact ecosystems.
In my role as CEO of GSG Impact, a global network of partners building impact economies around the world, I have seen Canada’s leadership firsthand. In Colombia, GSG Impact is partnering with IDRC and Impacto Colombia to implement rigorous impact accounting systems across local enterprises. In Peru, IDRC support enabled Aliados de Impacto to integrate impact investing into national development frameworks. Similar work has been done in Ghana, Nigeria and Central America, fostering partnerships between GSG Impact national partners and local researchers.
Global Affairs Canada, the diplomatic and international development office, is leading the global aid agenda. For GSG Impact, Global Affairs provided early funding that supported partners in Central America, Burkina Faso, Vietnam, and Sri Lanka. This support is strengthening local impact ecosystems by connecting Canadian investors to women-led and climate-focused SMEs.
GSG Impact’s national partners in these countries now have the resources to act as focal points. They bring together government, finance and civil society to develop policies and incentives to encourage public and private capital to reward social and environmental outcomes.
Strategic statecraft
Canada’s support does more than strengthen ecosystems. It deepens long-term economic relationships with high-growth emerging markets. Canada is aligning development policy with trade, diplomacy and future economic growth – true strategic statecraft.
For example, FinDev Canada, the development finance institution created by the federal government in 2017, a relative newcomer to the scene, reinforces this through blended finance that mobilizes private capital. FinDev co-founded the GAIA Climate Loan Fund, which reached a USD 600 million first close milestone in late 2025 and proves that Canadian expertise can mobilize institutional capital for climate mitigation and adaptation.
FinDev Canada applies its impact management framework to commercial investments in infrastructure, agribusiness and the financial industry. The exponential growth of its young balance sheet makes up the bulk of the impact assets in CAFIID’s report. This model demonstrates how public and private capital can achieve impact goals and a return for the Canadian taxpayer.
The next frontier lies with Canadian institutional money. For example, the “Maple 8” pension funds include some of the world’s most sophisticated long-term investors already active in emerging markets. Stewarding roughly $3.5 trillion, even a fractional realignment of institutional capital toward impact investing, similar to the Netherlands’ 10% Program, would create further geopolitical leverage.
Separately, Fondaction, a Montreal-based labor pension fund, is spearheading a coalition of investors to scale impact investing by mobilizing Canadian asset owners.
When policy and markets move in sync, trust deepens and the government’s scarce dollars go further. Later this year, GSG Impact will launch an Impact Economy Index to provide a benchmark and practical tool to help policymakers and investors see where enabling conditions are strong, where gaps remain, and what reforms can accelerate progress. Canada offers a blueprint.
In a world searching for steady hands, Canada is showing that pragmatic and values-based leadership is the ultimate economic strategy.
Elizabeth Boggs Davidsen is the CEO of GSG Impact.
Guest posts on ImpactAlpha represent the opinions of their authors and do not necessarily reflect the views of ImpactAlpha.
