# 2017-2020 Departmental Sustainable Development Strategy

April, 2019

## Section 1: Context for the Departmental Sustainable Development Strategy

The 2016–19 Federal Sustainable Development Strategy (FSDS) presents the Government of Canada's sustainable development goals and targets, as required by the Federal Sustainable Development Act. In keeping with the objectives of the Act to integrate environmental, social and economic considerations into decision-making, and make such decisions more transparent and accountable to Parliament, the Department of Finance Canada supports reaching goals laid out in the FSDS through the activities described in this Departmental Sustainable Development Strategy (DSDS).

## Section 2: Sustainable Development in the Department of Finance Canada

The Department of Finance Canada's primary focus is contributing to a strong economy and sound public finances for Canadians. The Department is the Government of Canada's primary source of analysis and advice on the broad economic and financial affairs of Canada. In addition to preparing the budget, the Department plays an important role in the development and implementation of government policy. As a central agency, the Department provides analysis and advice on the economic merit and fiscal implications of policy and program proposals developed by other government departments. In its central agency capacity, departmental officials serve as members of a broader team of federal officials that review options for, and the implications of, proposals that are presented to Cabinet. Policy development also takes place within the Department on those issues and areas of responsibility that fall within the Department's own mandate, including tax and tariff legislation, major federal transfers to provinces and territories, the legislative and regulatory framework for the financial sector, and representing Canada within international financial institutions.

As a policy-oriented department, the Department has limited direct involvement in delivering programs and services to Canadians. Nevertheless, the Department has a clear role to play in contributing to the government's sustainable development efforts. Sustainable development requires the long-term sustainability of the economy, social programs, and the environment. This requirement is consistent with the basic principle of sustainability as set out in the Federal Sustainable Development Act. Although the Department's mandate is most evidently linked to the economic and social dimensions of sustainable development, the Department continuously strives to recognize the implications of its analysis and advice on all aspects of sustainable development and to take into account the linkages between economic, social and environmental sustainability.

The Department focuses on using its resources to contribute to a strong economy and sound public finances for Canadians, with emphasis on sound fiscal management, sustainable economic growth, a sound social policy framework, and effective international engagement. Based on the idea that a healthy economy starts with a strong and growing middle class, the Department will remain focused on creating economic opportunities for all Canadians by promoting strong, sustainable growth. Overall, the Department is committed to a more prosperous, inclusive and sustainable economic future. Detailed information on how the Department of Finance will use its resources to contribute to a strong economy and sound public finances is available in the current Departmental Plan.

The Department of Finance Canada contributes to the following FSDS goals, including:

FSDS Goal: Low-Carbon Government - To advance the commitment, the Department of Finance has targeted actions under the following areas:

Mobilizing employees through the joint "TBS-FIN Green Network"

• The network consists of employees who have a passion for and are committed to ongoing engagement to promote and facilitate concrete environmentally sustainable choices and actions within the Department. For sustained results, the network will continue to concentrate its efforts on ongoing engagement such as the Green Office Challenge, the Enviro Fair, and seeking to bring behavior change in targeted areas. The results will be reported and celebrated in an eco-friendly fashion.

Modernizing the fleet

• Reducing carbon intensity by replacing executive vehicles at the end of their life-cycle with electric vehicles, hybrids, or more fuel efficient vehicles.

Promoting modernization of work practices

• Changing business processes by use of new systems and tools, including WIFI and technology-enabled meeting rooms, to reduce dependency on paper.

Taking action to green procurement

• Integrating environmental considerations into procurement management processes and controls
• Leveraging common-use procurement instruments where available and feasible
• Ensuring decision makers have the necessary training and awareness to support green procurement
• Ensuring key officials include contributions to and support for the Government of Canada Policy on Green Procurement objectives in their performance evaluations.

FSDS Goal: Effective Action on Climate Change - A central component of the Pan-Canadian Framework on Clean Growth and Climate Change is the commitment to pricing carbon pollution across the country. In October 2016, the Government published a standard for ensuring that carbon pricing applies to a broad set of emission sources throughout Canada with increasing stringency over time. The Government also committed to implement a federal carbon pollution pricing system that would apply in a province or territory that requests it, and in provinces and territories that do not have a carbon pricing system in place that meets the federal standard. The Greenhouse Gas Pollution Pricing Act received Royal Assent on June 21, 2018, and provides the legislative framework to establish the federal system that is composed of a fuel charge and an output-based pricing system for large industrial facilities. On October 23, 2018, the Government announced details regarding the application of the federal carbon pollution pricing system and how the direct proceeds from it will be returned. The Department is responsible for the fuel charge that will be administered by the Canada Revenue Agency component of the federal carbon pollution pricing system and will apply in Ontario, New Brunswick, Manitoba and Saskatchewan starting in April 2019 and in Yukon and Nunavut starting in July 2019. The Department is also responsible for the Climate Action Incentive payments that will return the bulk of the direct proceeds from the fuel charge to individuals and families in Ontario, New Brunswick, Manitoba and Saskatchewan.

The Green Levy applies to passenger vehicles with a weighted (55% city and 45% highway) fuel consumption rating of 13 litres or more per 100 kilometres and is imposed at rates ranging from $1,000 to$4,000. The Green Levy is generally payable by manufacturers or importers of new vehicles, and by importers of used vehicles. The Canada Revenue Agency and the Canada Border Services Agency are responsible for the administration of the Green Levy and work with manufacturers and importers of vehicles to facilitate its application.

FSDS Goal: Clean Energy - An accelerated capital cost allowance (CCA) for income tax purposes is provided under CCA Class 43.2 (50% per year on a declining balance basis) for businesses that invest in clean energy generation and energy conservation equipment. Class 43.2 includes specified equipment that generates energy by using a renewable energy source (e.g., wind, solar and small hydro), using fuels from waste (e.g., landfill gas, wood waste and manure) or conserves energy by making efficient use of fossil fuels (e.g., high efficiency cogeneration systems). Budget 2018 extended Class 43.2 for five years to property acquired before 2025. The 2018 Fall Economic Statement introduced immediate expensing for equipment that qualifies for Class 43.1 or 43.2.

FSDS Goal: Sustainably Managed Lands and Forests - Under the Ecological Gifts Program, Canadian landowners may donate ecologically sensitive land, or easements and covenants on such land, to conservation charities to ensure its preservation in perpetuity. Under this program, donors may benefit from the charitable donations tax credit (for individuals) or the charitable donations deduction (for corporations) on the full value of the gifts of ecologically sensitive land. Donations of ecologically sensitive land, or easements, covenants and servitudes on such land can be carried forward for tax purposes up to 10 years. Budget 2017 strengthened the protection of ecologically sensitive land and expanded slightly the types of gifts that could be made under the program. In addition, capital gains that have accrued on the donated land are eligible for a complete exemption from capital gains tax. To ensure the perpetual protection of the donated land, the Income Tax Act imposes special tax liabilities for recipients of ecologically sensitive land if there are any changes in use without the prior authorization of Environment and Climate Change Canada.

## Section 3: Commitments for the Department of Finance

Low-Carbon Government: The Government of Canada leads by example by making its operations low-carbon
Responsible Minister: All ministers

Low-Carbon Government FSDS target(s)
FSDS Contributing Action(s) Corresponding departmental action(s) Contribution by each departmental action to the FSDS goal and target Support for UN Sustainable Development Goal target Starting point(s) where available, and your choice of performance indicators for departmental actions Program(s) in which the departmental actions will occur

Reduce GHG emissions from federal government buildings and fleets by 40% below 2005 levels by 2030, with an aspiration to achieve this reduction by 2025

Improve the energy efficiency of our buildings/operations

The Department of Finance is a tenant in a LEED Gold certified building that was built to the latest design approaches and building technologies for sustainable development.

The building received the BOMA BEST Platinum certification in 2018. This certification recognizes excellence in energy and environmental management and performance in commercial real estate.

The Department actively works with Public Services and Procurement Canada, the building owner and co-tenant, to promote and support ongoing greening of building operations leading to a reduction in GHG emissions.

12.5

GHG emissions are reported by Public Services and Procurement Canada.

Internal Services

Modernize our fleet

Reduce carbon intensity by replacing executive vehicles at the end of their life-cycle with electric vehicles, hybrids, or more fuel efficient vehicles.

Promote behavior change – e.g. anti-idling campaigns, driver training.

Promoting fleet infrastructure - e.g. charging stations.

Replacing executive vehicles with new electric, hybrid or more fuel efficient vehicles will contribute to GHG reductions.

Drivers of executive vehicles will be advised of anti-idling recommendations to encourage reductions in GHG emissions.

12.7

The Department has two executive vehicles that will be replaced when they reach the end of their life-cycle.

The Department has charging stations for electric vehicles available in the parking garage.

Internal Services

Support the transition to a low-carbon economy through green procurement

Integrate environmental considerations into procurement management purchasing decisions, processes and controls.

Ensure decision-makers have the necessary training and awareness to support green procurement.

Ensure key officials include contributions to and support for the Government of Canada Policy on Green Procurement objectives in their performance evaluations.

The Department will continue to reduce GHG emissions by incorporating environmental considerations into its purchasing decisions.

12.7

Environmental considerations are embedded in the Department's procurement activities. Goods are usually purchased through Public Services and Procurement Canada (PSPC) or Shared Services Canada (SSC) standing offers and supply arrangements that include environmental performance specifications. When contracting for services, procurement to pay processes from electronic solicitation and bidding, use of scanning technology to issue contracts, as well as electronic invoicing and payment by direct deposit are embedded in the process. Of all supplier payments, 90% are made via direct deposit.

The Director of the Corporate Administrative Services Division and the Team Leader of the Procurement and Materiel Management Division will have performance objectives supporting green procurement activities.

• Target: 100%

Departmental functional specialists in procurement and material management will complete the Green Procurement course.

• Target: 100%

The Department will use common-use procurement instruments for IT hardware purchases (desktops, computers laptops and tablets)

• Target: 90%

The Department will purchase copy paper, commercial printing, and/or envelopes containing a minimum of 30% recycled content and be certified to a recognized environmental standard to reduce the environmental impact of its production.

• Target: 90%

Internal Services

Promote sustainable travel practices

Promoting the use of the Department's video conferencing, teleconference and telepresence facilities.

Supporting and promoting sustainable commuting options for employee travel to work such as walking, cycling, public transit and car pools.

Actions taken to reduce travel or switch to less GHG intensive modes of transportation will reduce GHG emissions.

12.5

Internal Services

Promote sustainable workplace operation

Increase the waste diverted from landfill through the promotion and use of recycling centres and composting programs.

Engage employees in greening government operations practices.

Maintain or improve existing approaches to sustainable workplace practices (printer ratios, paper usage, and green meetings).

12.5

Use digital display panels to communicate tips and facts to employees to promote sustainable workplace operations.

Co-host the building's annual Enviro Fair promoting sustainable practices in the office and home.

Internal Services

Effective Action on Climate Change: A low-carbon economy contributes to limiting global average temperature rise to well below two degrees Celsius and supports efforts to limit the increase to 1.5 degrees Celsius
Responsible Minister: Minister of Environment and Climate Change; supported by a whole-of-government approach to implementation
Effective Action on Climate Change
FSDS target(s)
FSDS Contributing Action(s) Corresponding departmental action(s) Contribution by each departmental action to the FSDS goal and target Support for UN Sustainable Development Goal target Starting point(s) where available, and your choice of performance indicators for departmental actions Program(s) in which the departmental actions will occur
By 2030, reduce Canada's total GHG emissions by 30%, relative to 2005 emission levels Support voluntary action to reduce GHG emissions and adapt to climate change Oversee the fuel charge component of the federal carbon pollution pricing system that applies in provinces and territories upon request, and in provinces and territories that do not have in place a carbon pricing system that meets the federal standard. The federal carbon pollution pricing backstop system will ensure that carbon pricing is implemented in all provinces and territories that do not have in place a carbon pricing system that meets the federal standard and thus encourage the use of clean technologies which can reduce the amount of GHG emissions emitted. 13.2 Starting point: The Government released for consultation draft legislative proposals related to the federal carbon pricing system in January 2018.

Target(s)/performance indicator(s): The Greenhouse Gas Pollution Pricing Act is maintained and Fuel Charge Regulations are implemented.
1.1.: Economic and Fiscal Policy Framework
By 2030, reduce Canada's total GHG emissions by 30%, relative to 2005 emission levels Support voluntary action to reduce GHG emissions and adapt to climate change Continue to impose a Green Levy on certain fuel-inefficient passenger vehicles sold in Canada The Green Levy encourages the development, production and purchase of more fuel efficient vehicles by making it more expensive to buy less fuel efficient vehicles 13.2 Starting point: The Green Levy raised revenues of around $12 million in 2016-2017 Target(s)/performance indicator(s): Performance will be evaluated in terms of the revenues generated by the Green Levy each year (these revenues will tend to decline over time if the levy helps incentivize consumers to purchase fewer fuel-inefficient vehicles) 1.1.: Economic and Fiscal Policy Framework Clean Energy: All Canadians have access to affordable, reliable and sustainable energy. Responsible Minister: Minister of Natural Resources Clean Energy FSDS target(s) FSDS Contributing Action(s) Corresponding departmental action(s) Contribution by each departmental action to the FSDS goal and target Support for UN Sustainable Development Goal target Starting point(s) where available, and your choice of performance indicators for departmental actions Program(s) in which the departmental actions will occur By 2030, 90% and in the long term, 100% of Canada's electricity is generated from renewable and non-emitting sources Support voluntary action to reduce GHG and air pollutant emissions through clean energy generation and consumption Provide an incentive for investment in clean energy equipment available through the accelerated capital cost allowance for clean energy and energy conservation equipment (Class 43.1/43.2). Equipment that qualifies for Class 43.1 or 43.2 currently receives immediate expensing treatment. The accelerated capital cost allowance and immediate expensing for clean energy equipment makes investments in clean energy generation equipment less expensive by providing a tax incentive. 7.2, 7.3 Starting point: In 2016,1$3.9 billion was invested in Class 43.1/43.2 equipment

Target(s)/performance indicator(s): Performance will be evaluated on the basis of the amount of new investment in Class 43.1/43.2 equipment relative to 2016.
1.1.: Economic and Fiscal Policy Framework
Sustainably Managed Lands and Forests: Lands and forests support biodiversity and provide a variety of ecosystem services for generations to come.
Responsible Minister: Minister of Environment and Climate Change; Minister of Natural Resources

Sustainably Managed Lands and Forests
FSDS target(s)
FSDS Contributing Action(s) Corresponding departmental action(s) Contribution by each departmental action to the FSDS goal and target Support for UN Sustainable Development Goal target Starting point(s) where available, and your choice of performance indicators for departmental actions Program(s) in which the departmental actions will occur
By 2020, at least 17% of terrestrial areas and inland water are conserved through networks of protected areas and other effective area-based conservation measures Conserve natural spaces Maintain the incentives for the protection of Canada's ecologically sensitive land, including habitat used by species at risk, through ongoing tax assistance for donations of ecologically sensitive land under the Ecological Gifts Program, and the continued protection of land which has been donated. The Ecological Gifts Program encourages the conservation of ecologically sensitive land by providing a tax incentive for the donation of such land. 15.1 Starting point: To measure our success in conserving ecologically-sensitive land, we track the area protected by the Ecological Gifts Program. As of March 2018, 190,393 hectares of land were under protection.

Target(s)/performance indicator(s): Performance will be evaluated on the basis of the amount of increase to the total cumulative land area that is conserved under the Ecological Gifts Program.
1.1.: Economic and Fiscal Policy Framework

## Section 4. Integrating sustainable development

The Department of Finance Canada's vision for sustainable development —"economic and fiscal policy frameworks and decisions that promote equity and enhance the economic, social and environmental wellbeing of current and future generations"— is consistent with its mandate to foster a strong economy. The Department's most important contribution to sustainable development lies in the development of advice and policies that ensure fiscal sustainability, that contribute to a high standard of living for future generations, and that help build strong social foundations. Through its work relating to tax policy and financial sector policy and in its central agency role, the Department contributes to efforts to integrate sustainable development considerations into policy making. In addition, the Department sets an example for other organizations through a commitment to sustainable development in its operations.

The Department of Finance Canada will continue to ensure that its decision-making process includes consideration of FSDS goals and targets through its strategic environmental assessment (SEA) process. An SEA for policy, plan or program proposals includes an analysis of the impacts of the given proposal on the environment, including on FSDS goals and targets.

Public statements on the results of the Department of Finance Canada's assessments are released when an initiative that has undergone a detailed SEA is announced (see here). The purpose of the public statement is to demonstrate that the environmental effects, including the impacts on achieving the FSDS goals and targets, of the approved policy, plan or program have been considered during proposal development and decision making.

1 The fiscal period of a business may overlap more than one calendar year; when this is the case, the value of the investment is allocated to the calendar year in which the business' fiscal period ends.