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Quarterly Financial Report, quarter ended June 30, 2025

Statement outlining results, risks and significant changes in operations, personnel and programs

                                                                                                                           

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Introduction

This first quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board (TB). This quarterly report should be read in conjunction with the 2025-26 Main Estimates.

This quarterly report has not been subject to an external audit or review.

Authority, mandate and program activities

Environment and Climate Change Canada (ECCC) leads and supports a wide range of environmental issues, including taking action on clean growth and climate change, pollution, conserving nature, and predicting weather and environmental conditions. The Department addresses these issues through various actions and initiatives including leading Canada’s efforts to transition to a net-zero economy and strengthening resilience to climate change, protecting more of our lands and waters, strengthening protection and recovery for species at risk and their habitats, and providing environmental and weather information to Canadians. To achieve its mandate, the Department works with provinces, territories, Indigenous peoples, civil society, industry, and international partners, and undertakes monitoring, science-based research, policy and regulatory development, and enforcement of environmental laws and regulations.

The Department’s program focus reflects the interdependence between environmental sustainability and economic well-being.

Under the Department of the Environment Act, the powers, duties and functions of the Minister of Environment and Climate Change extend to matters such as:

A summary description of the ECCC Raison d’être and core responsibilities can be found in Part II of the Main Estimates and the Departmental Plan.

Basis of presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes the ECCC’s spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates for the 2025-26 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

When Parliament is dissolved for the purposes of a general election, section 30 of the Financial Administration Act authorizes the Governor General, under certain conditions, to issue a special warrant authorizing the Government to withdraw funds from the Consolidated Revenue Fund. A special warrant is deemed an appropriation for the fiscal year in which it is issued.

The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental results reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of the fiscal quarter and the fiscal year-to-date (YTD) results

Authority analysis

The Statement of Authorities presented in this quarterly financial report (see Table 1) reflects the authorities that were approved as of June 30, 2025. The funding available for use includes the 2025-26 Main Estimates.

ECCC’s total available authorities for use for the year ending March 31, 2026 is higher by approximately $366.2M ($3,127.2M - $2,761.0M)Footnote 1  when compared to the same quarter of the previous year. This difference is explained by an increase in Budgetary Statutory authorities of $739.9M ($862.3M - $122.4M) offset by decreases in Vote 5 – Capital of $11.5M ($80.7M - $92.2M), in Vote 1 – Net Operating of $30.5M ($1,133.5M - $1,164.0M) and in Vote 10 – Grants and Contributions of $331.7M ($1,050.7M - $1,382.4M).

Vote 1 – Net Operating authorities

The $30.5M decrease compared to last fiscal year in the net Operating authorities is mainly due to the following decreases:

Offset by the following increases:

Operating Authorities are netted of respendable revenues. Revenues at ECCC come from sales of goods and information products and services of a non-regulatory nature. Major revenue items include, for example: Oil Sands monitoring activities, Ocean disposal permit applications, Hydrometric services, Ocean disposal monitoring fees, and Weather and environmental services.

Vote 5 – Capital authorities

The $11.5M decrease compared to last fiscal year in the Capital authorities is mainly due to the following decreases:

Vote 10 – Grants and contributions authorities

The $331.7M decrease compared to last fiscal year in the Grants and Contributions authorities is mainly due to the following decreases:

Offset by the following increases:

Statutory authorities

The $739.9M increase compared to last fiscal year in the budgetary statutory authorities is due to the following increases:

In order to align with best practices, planned spending against statutory authorities have been included in the 2025-26 ECCC Main Estimates which explains the significant increases in statutory authorities for distribution of revenues from Fuel Charge Proceeds Fund for Indigenous Governments and from excess emission charge payments under the Output-Based Pricing System.

Expenditures analysis by vote

Details of expenditures by vote are presented in Tables 1 and 2.

In the first quarter of 2025-26, total budgetary expenditures were $442.7M compared to $923.8M reported for the same period in 2024-25, resulting in a decrease of $481.1M.

Vote 1 – Net Operating Authorities used during the first quarter of 2025-26 totalled $239.8M, which represents a decrease of $28.6M ($239.8M - $268.4M) compared to the same period last year. This variance is mainly due to a decrease in personnel and professional and special services expenditures.

Vote 5 – Capital Authorities used during the first quarter of 2025-26 totalled $7.7M, which represents an increase of $0.9M ($7.7M – $6.8M) compared to the same period last year. This variance is mainly due to an increase in personnel expenditures, offset by a decrease in professional and special services expenditures.

Vote 10 – Grants and Contributions Authorities used during the first quarter of 2025-26 totalled $22.0M, which represents a decrease of $595.6M ($22.0M - $617.6M) compared to the same period last year. This variance is mainly due to:

Budgetary Statutory Authorities – Budgetary Statutory Authorities used during the first quarter of 2025-26 totalled $173.2M, which represents an increase of $142.2M ($173.2M - $31.0M) compared to the same period last year. This variance is mainly due to an increase related to the Fuel Charge Proceeds Fund for Indigenous Governments.

Expenditures analysis by Standard Object

Details of expenditures by Standard Object are presented in Tables 3 and 4.

Personnel expenditures decreased by $8.4M ($259.8M - $268.2M) compared to the same period last year. This variance is mainly due to the disbursements, in 2024-25, of salary retroactive payments following the ratification and signing of some collective agreements and the transfer of human resources to the Canada Water Agency on October 15, 2024.

Professional and special services expenditures decreased by $15.5M ($10.9M - $26.4M) compared to the same period last year. This variance is mainly due to the timing of payment of expenditures related to legal services, information technology consulting fees, remediation of contaminated sites and engineering consulting fees. The variance is also explained by some cloud services which are now funded through Shared Services Canada.

Transfer payments expenditures decreased by $456.0M ($161.6M - $617.6M) compared to the same period last year. This variance is mainly due to decreases listed under Vote 10 – Grants and Contributions Authorities used listed above, offset by an increase related to the Fuel Charge Proceeds Fund for Indigenous Governments.

The negative amount presented as expended during the first quarter under other subsidies and payments represent the rebate received from our acquisition card service provider for making timely payments.

Risks and Uncertainties

ECCC operates in a dynamic environment subject to several internal and external risk factors that, if not properly managed, could affect the Department's ability to deliver optimal and timely results for Canadians. As part of its overall management, the Department considers various corporate risks, including those related to managing complex stakeholder relationships and adopting sound management practices, particularly in the administration of grants and contributions. The Department also considers potential vulnerabilities associated with its data and digital and physical infrastructure. The Department provides additional information on key risk areas in its Departmental Plan 2025-2026.

Financial management systems, investment planning, cost estimation, real estate, and business continuity are exposed to risks such as those stemming from personnel (experience, knowledge, skills, and turnover), systems, data integration, economic factors and changes in requirements. Due to its inherent nature in transactions, fraud remains a risk for the Department. The Department’s financial position is also sensitive to socio-economic and geopolitical shifts. Cost fluctuations or partnership transformations stemming from these changes can affect multiple program delivery areas across the Department and are especially significant due to the Department’s reliance on partnerships to deliver on cross-border wildlife and wetlands programs and joint research. Likewise, there is a risk that shifting budget and policy priorities may impede the sustainability of some departmental programs and services. Should they materialize, fraud, cost fluctuations, disruptions in collaborations or difficulties in ensuring long-term sustainability could lead to loss of critical data or reputational damage, interruptions in the supply of services or goods needed for operations, delays or higher expenses in procuring specialized equipment, as well as increased costs for or suspension of research or programs.

To minimize these risks, the Department maintains and monitors a risk-based departmental system of internal controls over financial management, including fraud detection controls, and has established an audit function for grants and contributions recipients. The Department also seeks to continuously strengthen its resilience through diversifying its sources of data and supply and rigorous program and resource management. To mitigate cost risk, estimates for inflation and contingency are included in cost estimates to cover any deviations from anticipated amounts. In addition, to support the long-term financial sustainability of core and priority departmental programming, the Department is also enhancing its multi-year financial analysis and reporting functions.

Significant changes in relation to operations, personnel and programs

The following major changes in relation to operations, personnel and programs occurred since the last quarterly report:

Approved by:

(the original version was signed by)

Mollie Johnson
Deputy Minister
Gatineau, Canada
Date: 25 August 2025

(the original version was signed by)

Linda Drainville
Chief Financial Officer
Gatineau, Canada
Date: 18 August 2025

 

Statement of Authorities (unaudited) – Table 1

Fiscal year 2025-26 (in thousands of dollars)
- Total available for use for the year ending March 31, 2026* Used during the quarter ended June 30, 2025 Year-to-date used at quarter end
Vote 1 – Net Operating Expenditures 1,133,558 239,866 239,866
Vote 5 – Capital Expenditures 80,696 7,662 7,662
Vote 10 – Grants and Contributions 1,050,757 22,014 22,014
Budgetary Statutory – Employee Benefit Plans 134,470 33,618 33,618
Budgetary Statutory – Minister’s Salary and Motor Car Allowance 102 25 25
Budgetary Statutory - Climate Action Support Payments (Greenhouse Gas Pollution Pricing Act) 466,490 139,548 139,548
Budgetary Statutory – Distribution of Fuel and Excess Emission Charges 261,198 0 0
Total Budgetary Authorities 3,127,271 442,733 442,733
Non-Budgetary Authorities - - -
Total Authorities 3,127,271 442,733 442,733

* The funding available for use includes the 2025-26 Main Estimates.

Statement of Authorities (unaudited) – Table 2

Fiscal year 2024-25 (in thousands of dollars)
- Total available for use for the year ending March 31, 2025* Used during the quarter ended June 30, 2024 Year-to-date used at quarter end
Vote 1 – Net Operating Expenditures 1,164,015 268,424 268,424
Vote 5 – Capital Expenditures 92,163 6,792 6,792
Vote 10 – Grants and Contributions 1,382,418 617,607 617,607
Budgetary Statutory – Employee Benefit Plans 122,274 30,568 30,568
Budgetary Statutory – Minister’s Salary and Motor Car Allowance 99 25 25
Budgetary Statutory – Distribution of Fuel and Excess Emission Charges - - -
Budgetary Statutory – Refund of previous years revenue - 365 365
Total Budgetary Authorities 2,760,969 923,781 923,781
Non-Budgetary Authorities - - -
Total Authorities 2,760,969 923,781 923,781

* The funding available for use includes the 2024-25 Main Estimates.
** Pursuant to the Transitional Provisions, section 16 of the Canada Water Agency Act and effective October 15, 2024, deemed appropriations were established and reduced from Environment and Climate Change Canada’s appropriations only in Q3 of 2024-25

Departmental budgetary expenditures by Standard Object (unaudited) – Table 3

Fiscal year 2025-26 (in thousands of dollars)
- Planned expenditures for the year ending March 31, 2026* Expended during the quarter ended June 30,2025 Year-to-date used at quarter end
Expenditures: - - -
Personnel 1,013,462 259,823 259,823
Transportation and communications 30,824 5,301 5,301
Information 15,170 386 386
Professional and special services 236,406 10,865 10,865
Rentals 33,898 6,359 6,359
Repair and maintenance 17,768 2,218 2,218
Utilities, materials and supplies 32,911 5,195 5,195
Acquisition of land, buildings and works 3,903 1,228 1,228
Acquisition of machinery and equipment 38,269 2,808 2,808
Transfer payments 1,778,445 161,562 161,562
Public debt charges 212 - -
Other subsidies and payments 4,215 (31) (31)
Total gross budgetary expenditures 3,205,483 455,714 455,714
Less Revenues netted against expenditures: - - -
Revenues 78,212 12,981 12,981
Total Revenues netted against expenditures: 78,212 12,981 12,981
Total net budgetary expenditures 3,127,271 442,733 442,733

* The planned expenditures are based on funding available for use from the 2025-26 Main Estimates.

Departmental budgetary expenditures by Standard Object (unaudited) – Table 4

Fiscal year 2024-25 (in thousands of dollars)
- Planned expenditures for the year ending March 31, 2025* Expended during the quarter ended June 30, 2024 Year-to-date used at quarter end
Expenditures: - - -
Personnel 1,008,420 268,168 268,168
Transportation and communications 34,362 6,398 6,398
Information 13,980 1,257 1,257
Professional and special services 216,239 26,363 26,363
Rentals 50,489 5,674 5,674
Repair and maintenance 19,631 2,295 2,295
Utilities, materials and supplies 50,803 5,868 5,868
Acquisition of land, buildings and works 1,669 213 213
Acquisition of machinery and equipment 51,417 4,174 4,174
Transfer payments 1,382,418 617,608 617,608
Public debt charges 306 - -
Other subsidies and payments 5,790 (28) (28)
Total gross budgetary expenditures 2,835,524 937,990 937,990
Less Revenues netted against expenditures: - - -
Revenues 74,555 14,209 14,209
Total Revenues netted against expenditures: 74,555 14,209 14,209
Total net budgetary expenditures 2,760,969 923,781 923,781

* The planned expenditures are based on funding available for use from the 2024-25 Main Estimates.
** Pursuant to the Transitional Provisions, section 16 of the Canada Water Agency Act and effective October 15, 2024, deemed appropriations were established and reduced from Environment and Climate Change Canada’s appropriations only in Q3 of 2024-25.

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