TD Economics names pension funds and asset managers among institutions placed to finance Europe’s energy, defence, and critical mineral build-out
Financial services sits among the sectors carrying the largest long-term opportunities in a deeper Canada-EU economic relationship, alongside defence, energy, critical minerals, and digital markets.
TD Economics set out that assessment in a report published last Wednesday, a day before the 21st EU-Canada summit opened in Montreal, where leaders were expected to launch an “alliance for the future” covering trade, critical raw materials, defence, and digital cooperation, according to the European Council.
Europe’s energy, defence, critical mineral, and digital projects will need financing and risk management, areas where “Canadian banks, insurers, pension funds, asset managers and fintech firms have expertise,” wrote Vikram Rai, senior economist at TD Economics in Toronto, and Rishi Sondhi, economist at TD Economics in Toronto.
The opportunity “is less about displacing European institutions than partnering with them in project finance, asset management, insurance, payments and specialized advisory services,” they wrote.
The stock of EU foreign direct investment in Canada reached about $350bn in 2025, up roughly 70 percent from 2017, while Canadian investment in the EU totalled $286bn, up 90 percent.
Canada exported $22bn in services to the EU in 2024, including roughly $13bn in commercial services.
CETA’s Financial Services Committee gives regulators a venue to address cross-border issues and the recognition of prudential rules, TD said, and closer cooperation on licensing and supervision could reduce duplicate compliance requirements, although formal recognition and market-access decisions remain with the relevant authorities.
An EU diplomat has already named exploration of pension-fund investment with Brussels as one measure of Canadian progress.
Product-level analysis across nearly 5,000 categories pointed to demand for nearly $60bn in additional goods exports under certain conditions, including roughly $50bn in energy, TD found.
Canada paused work on mandatory climate disclosure requirements in 2025, shortly after the US federal government signalled a retreat from sustainable investment initiatives, SHARE said in a report published on October 27.
International sustainable mutual funds and ETFs underweighted Canadian companies by an estimated $44bn as of the first quarter of 2026, the Vancouver-based group said, with 81.8 percent of global sustainable investment funds underweighting Canadian investment.
Thirteen of Canada’s fifteen largest trading partners already require climate disclosure data.
“The competitive risk is no longer in moving forward; it is in standing still,” the report said, recommending that lawmakers and regulators require Canadian-incorporated and listed companies to report under the framework prepared by the Canadian Sustainability Standards Board.
Reuters reported on Thursday that a joint declaration it had seen commits the two sides to “ever closer association” and drops the idea of associate EU membership, with work to define the relationship continuing until a further summit in 2027.
AP reported the same day that Prime Minister Mark Carney and European Commission President Ursula von der Leyen pushed to make Canada the bloc’s first associate member.
“The good news is it doesn’t matter about specific names or nomenclature,” Carney told reporters on Monday, according to Reuters.
EU imports of Canadian critical raw materials, including lithium, cobalt, nickel, and graphite, rose 62 percent in 2025 to €3.3bn ($5.18bn), von der Leyen said, as quoted by AP.
Canada is the only non-European country taking part in the EU’s €150bn Security Action for Europe instrument, the European Council said, a programme running alongside Ottawa’s domestic push to draw institutional capital into nation-building projects.
