Covid-19 has dealt a blow not only to the economy, but to the federal government’s efforts to make the economy more environmentally friendly.
In June 2019, the government-appointed Expert Panel on Sustainable Finance (EPSF) delivered its final report, which included 15 recommendations aimed at helping Canada transition to a low-carbon economy — such as increasing contribution room in RRSPs for “climate-conscious” investments.
At that time, Finance Minister Bill Morneau indicated the government intended to act on the panel’s recommendations.
Barbara Zvan, a member of the EPSF and chief risk and strategy officer at the Ontario Teachers’ Pension Plan, was encouraged. Speaking at the Responsible Investment Association’s 2020 virtual conference on Monday, Zvan recalled that Morneau gave a speech in early March stating the government was still “very supportive” of the panel’s recommendations.
“A week later, Covid was declared a pandemic, and the government turned its focus to the stimulus that was needed to help Canadian families,” Zvan said during a panel discussion on sustainable finance.
Once Canada gets through the Covid-19 crisis, it’s possible the federal government may implement some of the EPSF’s recommendations — although the Liberals, now reduced to a minority government, could have trouble finding support from other parties.
The European Union, which has mandated climate-related financial disclosure, is the “clear leader” in championing sustainable finance, said Roger Beauchemin, president and CEO of Addenda Capital.
“What’s amazing is the political alignment that’s been found in Europe,” Beauchemin said. “European parliament, which typically moves slowly, has actually been very agile in advancing on this issue.”
That, Beauchemin said, is the case because Europeans “accept the science” of climate change.
“There are all sorts of [European] countries with different political schemes, but whether the parties are populist, nationalist, right or left, they all seem to coalesce around sustainability,” Beauchemin said.
But that may not be the case in Canada. Beauchemin warned there is “still lots of science negation going on” here, particularly with the energy sector being a mainstay of the Canadian economy.
“It’s much more politically charged here, and therefore we haven’t been able to advance at anywhere near the speed we need to,” Beauchemin said.
But, even in the midst of Covid-19, there are signs that the government is thinking about sustainable finance.
For example, the Large Employer Emergency Financing Facility, a Covid-19 relief package aimed at large companies, requires recipients to publish climate-related financial disclosure reports.
“In the midst of all of this, that [stipulation] managed to get in there,” Zvan said. “That was a really good indicator that [the EPSF recommendations] were still being thought of by the government.”
Beauchemin said he was hopeful that Canada would take a “leadership role in shaping the transition that needs to take place” in North America.
“You deny science at your peril,” he added.