As we begin this decade, the need for action to drive Canada’s transition to a low-carbon economy has become an imperative. While we probably didn’t need reminding of the urgency of the climate crisis, last week the World Economic Forum’s 2020 Global Risks Perception Survey revealed that respondents ranked environment and climate-linked events as the top 5 most likely global risks occurring over the next 10 years. The survey respondents also ranked climate action failure as the risk with the greatest impact on the global economy, if it were to occur.
Responsible investors have long been at the forefront of understanding the systemic nature of climate-related risks, and we believe the opportunity to act is now urgent.
In November 2019, we wrote to the Prime Minister and the newly-appointed Ministers of Finance, Environment and Climate Change, and Natural Resources to re-iterate our support for the recommendations of Canada’s Expert Panel on Sustainable Finance, and noted the broad support those recommendations had within the financial sector. We encouraged the government to prioritize the Expert Panel’s recommendations, which would demonstrate its commitment to driving progress towards Canada’s transition to a climate-smart, resilient and prosperous economy.
In the Minister Mandate letters (issued on December 13, 2019), we can see that addressing climate change is definitely a priority for this federal government. The Honourable Jonathan Wilkinson, Minister of Environment and Climate Change, was tasked with leading the government’s “plan for climate action, a cleaner environment and a sustainable economy. This includes exceeding current 2030 targets and developing a plan to achieve a net-zero emissions economy by 2050.” Priorities include the implementation of the Pan-Canadian Framework on Clean Growth and Climate Change along with aspirations for clean tech, zero-emissions vehicles and other initiatives. However, none of the Mandate letters made direct mention of any Expert Panel recommendations.
Our concern that sustainable finance had been overlooked was allayed on January 14, 2020, when Minister Wilkinson wrote to us acknowledging our letter. The message we received is clear: the government acknowledges that sustainable finance initiatives have a key role to play in achieving Canada’s climate objectives. Further, he is “extremely keen to engage the private sector directly in advancing solutions” and will be working with Finance Minister Morneau to review the Expert Panel recommendations.
On January 24, 2020, we were very pleased to receive a letter from The Honourable Seamus O’Regan, Minister of Natural Resources. Minister O’Regan confirmed that he will be working closely with the Ministers of Environment and Climate Change and Finance to consider the Expert Panel’s recommendations. He also assured the government’s commitment to working towards achieving a low-carbon and climate-smart economy in Canada.
We welcome these very positive signals from the federal government. Sustainable finance is on their agenda, and they are open to engaging with the private sector to address the climate crisis. With climate-related risks looming, we are encouraged by this opportunity for responsible investors to collaborate with the federal government to enable Canada’s transition to a climate-smart economy.