If recent events are anything to go by, Canada is about to turbocharge climate finance and responsible investment

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It has been a long time coming, but Canada is getting ready to unveil a new ‘transition taxonomy’ – a list of business activities that market players in the country believe will enable the shift to a low-carbon economy. 

It is one of a number of moves in 2020 that hint at exciting times ahead for sustainable finance in the country.

For one, the Government quietly added green conditions to its Covid bail-out fund; a requirement that has so far been lacking in many other jurisdictions.

The EU and the UK – which have boasted of their climate leadership for years – lost their bottle when drawing up similar stimulus packages.

But when Canadian Prime Minister Justin Trudeau’s office announced its Large Employer Emergency Financing Facility, it said: “recipient companies would be required to commit to publish annual climate-related disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures, including how their future operations will support environmental sustainability and national climate goals”.

And, perhaps even more significantly, Tiff Macklem became Governor of the Bank of Canada this summer. Macklem developed a reputation as Mark Carney’s shrewd and bookish Deputy during his time heading the bank, but – during the intervening years, he has recreated himself as a climate champion, and one of four government advisors focused on fostering green finance. His recent appointment as Governor, therefore, has huge implications for climate change; you only need to look at the work his former boss Carney did at the Bank of England to see what can happen when the head of a central bank decides climate change is a serious financial risk.

And he isn’t the only one of those four government advisors that has a new job. Barb Zvan, ex- Head of Risk at the Ontario Teachers Pension Fund, and another of the Expert Group on Sustainable Finance that advised the government, has taken the reins at a brand new pension fund. The C$10bn University Pension Plan Ontario will be up and running by next summer, replacing five existing university pension plans. Zvan is on just about every panel and committee associated with responsible investment in Canada, and has confirmed to RI that she is looking hard at how to integrate sustainability into the scheme.

Other pension funds are continuing to use their influence to push the agenda, too. The CA$410bn Canada Pension Plan Investment Board (CPPIB) recently overhauled its sustainability policy to urge companies to report in line with SASB and the TCFD.

Recent research by respected outfit Carbon Tracker, titled Pipe Dreams: Why Canada’s proposed pipelines don’t fit in a low carbon world claims that the Canadian government is risking billions of dollars invested into the controversial Keystone XL and Trans Mountain oil pipelines if the country respects its CO2 reduction commitments under the Paris Agreement and global oil demand drops and prices weaken in line with efforts to meet the targets of the international accord. 

RI and Carbon Tracker present a free-to-air webinar on Weds August 26 at 16.00 BST (11.00 ET) to discuss the Pipe Dreams report. Sign up here.

And it isn’t just climate that is focusing Canadian investors’ minds.

At the start of 2020, a landmark decision was made by Canada’s Supreme Court stating that Canadian mining companies could be held accountable for human rights abuses within their operations, regardless of where they are alleged to have occurred. Historically, big firms have wriggled out of taking responsibility for poor treatment of workers in jurisdictions with low human rights rules or governments that will turn a blind eye. The ruling in January has been slowed down because of Covid-19, but it could still have staggering ramifications for Canadian corporations and serve as ‘best practice’ for justice systems everywhere.

In August, Canadian shareholder advocacy group SHARE also warned that energy and mining investments could increasingly be hit by indigenous rights risks in the wake of the high-profile troubles for the $4bn Dakota Access Pipeline, which hit headlines when developers locked horns with indigenous communities over land rights and environmental damage, and was then halted by a court ruling in the US. 

On the back of this incredible burst of sustainable finance activity and debate, we are extremely pleased to be hosting RI Digital: Canada 2020 – two days of on-line discussions, debates and keynotes about the sustainable finance and responsible investment landscape in Canada. 

As things really begin to pick up pace, we hope you can join us to talk about all these developments and more.

Responsible Investor is hosting the free-to-air RI Digital: Canada 2020 conference on September 15/16: Sign up here.