With Canada’s Expert Panel on Sustainable Finance due to report this spring, and a recent national climate assessment showing the country warming at twice the global rate, two community investment strategists say it’s time to catch up with other jurisdictions in requiring companies to disclose their climate-related investment risk.
“In addition to our country being particularly vulnerable to the physical risks of climate change, the nature of our capital markets leaves us exposed to both risks and opportunities inherent in a global energy transition away from fossil fuels,” write Christie Stephenson, executive director of the University of British Columbia’s Dhillon Centre for Business Ethics, and Kevin Quinlan, who served as chief of staff to then-Vancouver mayor Gregor Robertson, in a post for National Observer.
“Canada must be proactive in preparing for climate change transitions and factoring climate risk into our markets.”
The Bank of England and the European Central Bank “are outspoken on the threat that climate change poses to the international financial system”, and 2,250 institutional investors with US$83 trillion in assets are about to adopt mandatory annual reporting of climate-related risk, Stephenson and Quinlan say. That makes the Expert Panel report “an opportunity to put forward a plan to bring Canada’s financial systems into the modern age when it comes to climate risk.”
They say they’ll be looking for “an unambiguous recommendation that Canada’s Office of the Superintendent of Financial Institutions (OSFI) require all financial institutions under its supervision—including the Big Five banks and insurance companies—to report publicly on an annual basis on how they are implementing the TCFD recommendations,” and for the Toronto Stock Exchange to require the companies it lists to do the same.
“Whether they’re individuals saving for retirement or multi-billion-dollar pension funds, Canadians are heavily invested in Canada’s economy,” Stephenson and Quinlan stress. “Efforts to limit greenhouse gas emissions to below 2.0°C will impact not just Canada’s energy sector, but industries like manufacturing, finance, transportation, and agriculture. Canadian investors deserve to know their savings are invested in companies that recognize the threat of climate change and are prudently preparing for the transition to a low-carbon economy.”