Ever since the global financial crisis in 2008, policymakers around the world have endeavoured to establish a baseline for a resilient economy while creating jobs in a socially and environmentally responsible world. The pandemic has further intensified global policy-making inertia as governments strived to rebuild their economies while reconciling ecological, social equity and growth aspirations against a backdrop of rapid technological change.
Despite Canada’s encouraging economic rebound over the last two years, it continues to face multiple headwinds. Rising geopolitical conflicts, commodity prices soaring to all-time highs, environmental concerns and persistent inflationary trends all weigh heavily on an already fragile world economy.
“The global economy will need to invest around US$9.2 trillion annually in capital spending to achieve the net-zero transition.”
However, climate change remains the most pressing endeavour of our time, with potentially profound socioeconomic impacts in the coming years. Today, the world collectively emits around 50 billion tonnes of carbon dioxide equivalents (CO2e) each year, a rise of 40% compared to 1990. According to McKinsey research, it is estimated that the global economy will need to invest around US$9.2 trillion annually in capital spending to achieve the net-zero transition. Vulnerable populations are also expected to be the hardest hit in this environment, further exacerbating inequities and economic disparities.
The industrial landscape in Canada, nonetheless, reveals a positive trend toward sustained growth for digital and environmental-related sectors. ICTC’s recent research published in the Digital Talent Outlook 2025 – Onward & Upwards report forecasts a sizable increase in employment in cleantech and clean resources by 2025, totalling around 352,000 and 185,000 workers respectively. Food and agri-tech are also seen as growth sectors, given their heightened demand for upwards of 49,000 workers in the next three years.
Canada has an open and enterprising economy, solid innovation capital driven by world-class businesses and academic institutions, a strong financial standing relative to peer countries and highly skilled talent. Add to that Canada’s vibrant culture and diversity of thought, and all these factors contribute to bright future prospects.
“Accelerating the development of a digital strategy as well as an industrial sustainability strategy can further bolster the economy.”
While such trends are encouraging, accelerating the development of a digital strategy as well as an industrial sustainability strategy can further bolster the economy and help us work toward achieving Canada’s commitment to net-zero emissions by 2050. This promising construct can leverage advancements in technology to drive innovation in renewable energy, sustainable transportation, biomaterials, smart agriculture, manufacturing, health, construction and smart cities, among many others.
Canada’s Standing on the World Stage
Canada is generally considered a strong, open and enterprising economy that is well-positioned in the global market.
- A highly skilled and educated workforce
- Strong financial stability
- Innovative businesses
- A commitment to sustainability and social responsibility
Canada is also a diverse and multicultural country that has strong ties to many different parts of the world, which can develop into lasting partnerships and cooperation with other nations.
Canada additionally benefits from many global trade agreements that can be leveraged within the framework of such an industrial sustainability strategy to attract investments, expand trade and shape broader prospects of a sustainable and equitable world.
According to the International Institute for Management Development (IMD), a Swiss-based organization, Canada secured 14th place in the 2022 World Competitiveness Ranking among 63 economies based on 333 criteria such as productivity and efficiency, business legislation, R&D and the environment.
Additionally, the IMD World Digital Competitiveness Ranking, which measures the capacity and readiness of economies to adopt and explore digital technologies as a key driver for economic transformation in business, government and broader society, places Canada in 10th place. While both reports put Canada moderately ahead of other developed economies, the potential to further advance our competitive advantage on the world stage is there for the taking.
The global economy is also rapidly changing, and we need to adjust our economic approach to respond to new and emerging realities while, at the same time, heightening our innovation and competitiveness.
“Setting a roadmap for industrial sustainability in Canada can amplify our strategic advantage in a global market and highlight potential synergies that can be explored with our trading partners.”
Many advanced economies, including the U.S. and Europe, have in recent years formulated a framework for guiding their industrial approach for the next number of years. Setting a roadmap for industrial sustainability in Canada can amplify our strategic advantage in a global market and highlight potential synergies that can be explored with our trading partners. Ultimately, an industrial strategy for Canada can fast-track the development of renewable energy, zero-emission transportation, smart cities, carbon smart agriculture, sustainable construction and many other aspects of the economy.
Challenges for Industrial Sustainability: Different Market Approaches
Over the years, industrial policies have been in play in many countries and are generally viewed as a guided approach that stimulates growth in industry verticals deemed vital for economic competitiveness, job growth or national security. A guided approach can involve subsidies, tariffs and other policy interventions.
An industrial sustainability strategy can help promote the growth of specific industries, but if it is not carefully planned and executed, it can lead to inefficiencies and market distortions in some instances. At the other end of the pendulum swing is the free-market economy, which drives efficiencies primarily through demand and supply. In a perfect setting, this latter approach has merits in stimulating innovation and competition; however, it can also lead to inequity, inefficiencies and market failures and externalities in some circumstances.
“A more intentionally guided industrial approach could stimulate the development of sustainable businesses and leverage the full innovative power of technology.”
Canada has mostly relied on a mixed market-based approach like many other advanced economies: a combination of a free-market economy with some government intervention. Government intervention extends to regulations, competition policy, subsidies and monetary and fiscal policies. While this approach has served Canada well over the years, pressing climate change realities and the disruptive nature of technologies require us to shift the balance in favour of a more deliberate industrial approach for several years. A more intentionally guided industrial approach could stimulate the development of sustainable businesses and leverage the full innovative power of technology while changing consumer behaviour toward greener choices.
Such an industrial approach should nevertheless be flexible and continually adapt to new data and information as new circumstances arise while striving toward three key outcomes:
- Economic development
- Sustainable growth
- A shared and inclusive future for all Canadians
The success of such a strategy would also rely on strong collaboration between industry and policymakers to allow for the close sharing of resources, expertise and information, leading to the development of more effective policies and programs that better support the growth and competitiveness of Canada’s industries.
The Path Forward for Industrial Sustainability in Canada
For Canada to be a leader in a sustainable economy, an all-encompassing approach to government policies, business strategies and market conditions needs to be in place. Such an approach has to address both the market demand and supply side, empowering a corporate shift in favour of environmentally and socially responsible businesses while enabling a change in consumer behaviour toward environmentally conscious choices.
Here are some of the key pillars of an industrial sustainability strategy:
- Favouring Foreign Direct Investment (FDI) inflows that promote sustainable business growth and green jobs in renewable energy, green technology and biodegradable materials.
- Supporting research, development and commercialization of Canadian innovations in climate change mitigation and adaptation solutions.
- Fostering fiscal and financial levers that influence corporate strategies and consumer behaviour toward environmentally conscious choices, as well as fostering greater institutional and private investments in the green economy.
- Introducing a legal and regulatory regime to better address the climate change challenge and measure progress.
- Empowering a circular economy that makes better reuse of Canada’s economy through sharing, recycling and reuse of existing products and finite resources, with a particular focus on critical minerals that are the backbone of a green economy.
- Preparing Canada’s talent for tomorrow’s green and digitally based economy, starting early in schooling right through the continuum of education and employment, with a focus on engaging underserved and underrepresented populations.
Elaborating on an industrial strategy could chart a winning path forward and help Canada lead the way in tomorrow’s global economy. In the next couple of months, ICTC will be exploring the construction of such a sustainable industrial strategy. This will lead to a policy paper and various panel discussions with national and international industry leaders and policymakers, exploring the development, checks and measures and outcomes of such a strategy.
Canada is exceptionally well-placed to leverage this global market shift toward sustainable businesses among peer economies. Our open and innovative marketplace is supported by strong academic and research institutions that are among the best in the world. We are also a well-respected economy that is fiscally responsible compared to some peer nations and we have a strong and highly skilled talent base, making Canada a prime place to do business.
As many economies worldwide continue to build resiliency and economic growth, Canada can benefit from turning the net-zero climate challenge into a net-economic gain in the coming years and strengthening, along the way, the foundations of a sustainable and socially responsible future for generations to come.