Canadian Chamber Addresses Impact of Climate Change on Canada’s Financial System Before House Committee

On May 23, 2024, our Senior Director, Fiscal and Financial Services Policy, Jessica Brandon-Jepp and Senior Director, Natural Resources, Environment & Sustainability, Bryan Detchou, presented to the House of Commons Standing Committee on Environment and Sustainable Development on the critical impacts of climate change on Canada’s financial system.

They emphasized the urgent need for increased investments in net-zero solutions and highlighted the importance of a competitive investment environment. They advocated for clear guidance and data to accelerate net-zero investments, the adoption of a common definition for net-zero investments, and the standardization of climate-related disclosures.

The video recording and full remarks can be seen below.

Thursday, May 23, 2024, 3:30 p.m. to 5:30 p.m.
Room 425, Wellington Building, 197 Sparks Street
Jessica Brandon-Jepp – Senior Director, Fiscal and Financial Services Policy
Bryan Detchou – Senior Director, Natural Resources, Environment & Sustainability

Mr. Chair and Honourable Members

Je vous remercie de nous donné l’occasion de participer à la discussion d’aujourd’hui au nom de la Chambre de commerce du Canada, afin de parler de l’impact de l’environnement et du climat sur le système financier canadien.

The Canadian Chamber of Commerce represents 200,000 Canadian businesses through more than 400 local, provincial, and territorial chambers and boards of trade, and over 120 trade associations. We represent members in every sector of the economy, all sizes of business, across all regions of the country.

Tout d’abord, permettez-moi de souligner que la Chambre de commerce du Canada et ses membres, d’un océan à l’autre, reconnaissent l’importance primordiale d’atteindre nos objectifs nets zéro et s’engagent à jouer leur rôle dans l’effort collectif de lutte contre le changement climatique. Il est important pour nos membres de réussir la transition vers l’énergie propre, car nous représentons non seulement les secteurs et les entreprises les plus impliqués dans cette transformation, mais aussi les communautés de tout le pays qu’ils soutiennent.

Climate change looms as a significant structural change impacting the economy and the financial system. As one of the most critical issues of our time, it demands collective action across all sectors. According to the SFAC Secretariat, Canada faces an annual investment gap of $115 billion to achieve its net-zero transition goals. While the government has made significant strides in climate investments, this gap persists. With the federal government nearing its fiscal capacity, it is imperative that provinces and municipalities substantially increase their climate-oriented expenditures. Business capital investments in climate and cleantech reached $14 billion last year, as reported by RBC. However, business capital investment needs to increase, as do contributions from public markets, private equity, and venture capital. To fund, scale, and support innovative green technologies, a collaborative effort between government, industry, and investors is essential. This cooperation will equip the Canadian economy with the necessary tools and support to realize its net-zero ambitions.

Increasing investment in net-zero solutions starts by ensuring that Canada is a competitive environment for investment writ large.  New tax increases that foster uncertainty and phase outs of incentives that stifle investment and signal to the world’s innovators to look elsewhere, are not helping to attract or retain the kind of entrepreneurs and investors that are going to advance bleeding edge, made-in-Canada net-zero solutions.

Additionally, investors require clarity, guidance, and data about opportunities to invest in Canada’s net-zero transition to in order to accelerate capital flows, create the jobs of tomorrow and grow our economy.  Without access to this information and these tools, Canada cannot be globally competitive in fueling net-zero investment.

Canada should adopt a common definition for what constitutes investment that supports net-zero. Greater transparency on Canada’s transition plans would help track progress, facilitate accountability and help the private sector plan investment strategies. The Sustainable Finance Action Council set out recommendations on establishing a Canadian Sustainable Finance Taxonomy, which should be uniformly adopted by stakeholders across Canada, including financial institutions to ensure sound capital allocation.

In addition, the development and standardization of climate-related transition and physical risk disclosures, ideally with as much harmonization as possible while accounting for Canada’s unique challenges and opportunities, will enable organizations to track and accelerate their progress and provide information and confidence to investors.  Initial guidance issued by OSFI is a positive step.

It is worth noting that many of Canada’s largest federally-regulated financial institutions participated on the federal government’s Sustainable Finance Action Council, which has made a variety of recommendations to advance progress towards developing a building a strong and successful sustainable finance marketplace. These recommendations have not yet advanced and they require urgent action from government to ensure Canada is not falling behind our peers in attracting investment and driving the economy of tomorrow.

In the absence of standardized, Canadian-specific guidance, a patchwork of various standards and guidance has emerged, within Canada and around the world, leaving businesses and investors frustrated and confused as they try to plan and navigate their net-zero ambitions. All the while, Canada gets farther from achieving its goals and attracting the kind of investment that will grow and sustain our economy for generations to come.

Businesses and investors are eager to partner with government to accelerate Canada’s net-zero ambitions but government leadership is required to advance a standardized, Canadian-made framework for sustainable finance success.  The Canadian Chamber’s Green Transition Finance Council and Net-Zero Council are ready and willing to support.

My colleague Bryan and I will be pleased to answer your questions.