But that standing is now colliding with fundamental market design flaws and governance gaps, raising concerns that what is being sold does not produce real benefits.

In late January, the head of Brazil’s federal audit court called the country’s flagship carbon market program “a true sea of uncertainty.” Vital do Rêgo Filho’s assessment came after auditors found that RenovaBio, created to curb emissions in the fuel sector, has weak metrics and poor oversight, leaving its real climate impact unclear.

“Emissions trading systems are not delivering the impact that was promised,” says Alexandre Prado, WWF-Brazil’s climate change lead.

Carbon markets come in two forms: regulated systems, like RenovaBio, where companies meet government-set targets; and voluntary ones, where participation works on an opt-in basis. Brazil ranks among the top five suppliers in the voluntary market – but integrity concerns are surfacing there, too. In recent years, police investigations have uncovered criminal networks generating millions of carbon credits backed by Amazon land that had been seized illegally.Brazil’s carbon markets are now at a crossroads. “We have a serious problem, one that has to be addressed, because otherwise the whole system loses its purpose,” Prado says.

The next few years will determine whether the country can fix the deep-rooted failures in regulation, land tenure and oversight that have plagued both its regulated and voluntary markets. But how did it come to this and what lessons can be learned?

A powerful green lobby

RenovaBio came into operation in 2020 as a tool to help Brazil meet its Paris Agreement commitments. The program requires fuel distributors to purchase decarbonization credits – called CBIOs – generated by certified biofuel producers, each representing one tonne of avoided carbon dioxide emissions. The theory is that biofuels, derived from organic matter such as sugarcane and soy, are less polluting than fossil fuels because the plants absorb carbon dioxide as they grow.

In its first five cycles, the program transferred around $2.2 billion (all figures in U.S. dollars) from the fossil fuel sector to biofuel producers. But its origins reveal more about industry interests than climate ambition. Lira Luz Benites Lazaro, a postdoctoral researcher at the University of São Paulo, calls RenovaBio a case of “sophisticated green lobbying,” a strategy shaping policy in the industry’s favour while projecting a climate-friendly image.

“RenovaBio was not simply a response to the Paris Agreement, but the result of a long-standing industry push for regulatory certainty and market mechanisms to boost ethanol,” says Lazaro, who researches Brazil’s green lobby.

Lawmakers approved RenovaBio in 28 days, compared to a legislative average of more than three years. Industry groups, including UNICA, the sugarcane sector’s main trade body, dominated public hearings on the bill, while academics and environmentalists were largely absent.

Structural shortcomings

Lazaro credits RenovaBio with a sound technical basis and real climate-policy value but notes that the heavy industry influence, combined with the speed at which the program was approved, “helps explain some of its current shortcomings.” By focusing only on carbon emissions, the program leaves unaddressed the broader dimensions of bioenergy systems, she says. “This is not unique to Brazil; it is a common feature of climate policies built around carbon metrics alone.”

The audit found major structural gaps in RenovaBio: the program relies on a single carbon-intensity indicator that fails to capture net emissions, leaving its actual climate impact unverified. Weak traceability systems allow 60% of the biomass used by certified producers to pass unchecked for deforestation links – and auditors warned that expanding biofuel production could, in some cases, increase emissions as native vegetation is cleared.

The final audit report also showed that just three fuel distributors control 55% of mandatory CBIO purchases. “This report raises deeply shocking findings on the program’s oversight,” Vital do Rêgo Filho told a hearing in January.

Brazil’s National Oil Agency, which oversees the program, tells Corporate Knights the audit was “an important contribution to strengthening RenovaBio,” while acknowledging that CBIO regulation “requires constant updates” to keep pace with the program’s growth and ensure its integrity. The agency says it is working to improve data sharing with certifiers and tighten oversight of auditing firms.

Federal authorities have made adjustments along the way, tightening penalties and updating certification rules. In February, Brazil’s Supreme Court backed the government, lifting injunctions that had shielded non-compliant distributors.

However, RenovaBio’s underlying architecture was left intact. For Prado’s WWF-Brazil, that is the core problem. “The way it is structured, oversight will always be limited,” he says.

The rise of ‘carbon cowboys’

The voluntary carbon market has existed for decades, but the 2015 Paris Agreement laid the groundwork for its rapid expansion in the following decade. Signed by 196 countries, the deal set new emission-reduction targets and introduced Article 6, which allowed countries to trade carbon credits across borders.

Brazil followed suit, though voluntary projects operated largely unchecked. Fuelled by corporate money, the scramble for forest carbon spawned a new class of unregulated brokers known as “carbon cowboys.” These individuals and companies target forest communities and disputed federal lands, forging land documents, misrepresenting credit values, and binding communities to decades-long contracts – before selling the credits to corporate buyers.

In June 2024, federal police launched Operation Greenwashing, the country’s largest carbon-credit investigation, uncovering a carbon-cowboy criminal network that had used forged titles, with help from public officials, to seize more than 500,000 hectares of Amazon land – roughly the size of Canada’s Prince Edward Island – and sell fraudulent credits worth $33 million to multinationals.

Two indictment reports have since been submitted to federal court, with searches spanning 22 companies, land registries and public agencies. Those arrested await a charging decision from federal prosecutors.

A path to credibility

In December that same year, a new law established Brazil’s first regulated carbon market, joining the European Union, China and South Korea among those with mandatory emissions-trading systems. It also brings the voluntary market under a legal framework for the first time, requiring projects to follow methods of the regulated market, yet to be defined.

As of March this year, the government had just held its first meeting to draft the rules that will make the system operational. Critics flagged that heavy lobbying secured an exemption for agriculture, the country’s second-largest source of emissions.

A public consultation by BNDES, Brazil’s development bank, published in early 2026, revealed deep frustration with the country’s voluntary certification, where a single international certifier, Verra, handles more than 90% of forest carbon projects.

Verra tells Corporate Knights that Brazil is a priority market and that it allows methodology adaptations to reflect local social and environmental contexts. The certifier says it requires project developers to demonstrate a legal right to operate in the area and to work with a Verra-approved independent verification body. Projects must obtain free, prior and informed consent from communities affected.

Underlying Brazil’s carbon market ambitions is a structural problem that few international actors are equipped to navigate: the Amazon’s long history of overlapping claims, fraudulent registrations and contested boundaries has created deep land tenure insecurity. “How can you sell credit for avoided deforestation if you don’t know who owns the land?” Prado asks. “There is no way to have carbon credit projects without land regularization first.”

Still, he’s optimistic. “We know the problems, because we learned them along the way. And because we know them, we can see a way forward.”

Flávia Milhorance is a Brazil-based journalist covering the country for international outlets, including The New York Times and The Bureau of Investigative Journalism, and an editor at environmental website Dialogue Earth.

The post Can Brazil save its carbon markets? appeared first on Corporate Knights.

The support, which included both direct lending and underwriting of bonds, shares and loans, was provided by 65 large banks worldwide, according to the annual Banking on Climate Chaos (BOCC) report published June 9. The report is considered the world’s most comprehensive annual assessment of publicly available data on fossil-fuel bank financing.

The report estimates that since 2016 – a year after the Paris Agreement on climate change was adopted – $8.7 trillion in fossil fuel financing has been extended by the banks (all figures in U.S. dollars). The report states if these trillions had been used to finance the renewable sector instead, the world energy system of today would be “more affordable, more resilient, more secure and more climate-proof.”

More than half the 2025 total – $508 billion – was for expansion projects, primarily in the United States. These included new oil and gas pipelines, liquefied natural gas facilities for gas exports to Europe and Asia, and gas-fired power plants for a flood of new data centres. Coal-fired power infrastructure was also expanded, largely in China. Expansion financing grew by 27% in 2025 compared with a year earlier.

While overall financing increased, it has also become more concentrated, with a larger share of financing coming from the top 12 banks. In 2025, they provided $474.3 billion to oil, gas and coal companies, nearly 40% of the global total.

In addition to locking in decades of new carbon dioxide emissions, this rapid expansion is having a ripple effect through the global economy. Growing levels of debt by natural gas distributors and pipeline companies are contributing to growing gas-fired power utility costs. These are being passed on to electricity customers, many of whom are low-income people least able to afford higher prices.

“The more debt these fossil-fuel firms have, the more profit they need to service that debt,” says Niko Lusiani, climate and energy research director for Rainforest Action Network, the lead organizer of the report. “This creates constant pressure for short-term returns to shareholders, which has impact on price volatility but also inflation in gas prices and utility prices.”

The report, now in its 17th edition, is compiled by Rainforest Action Network; BankTrack; the Center for Energy, Ecology, and Development; the Indigenous Environmental Network; Oil Change International; Reclaim Finance; the Sierra Club; and Urgewald.

Back to peak financing

The $906 billion in bank fossil-fuel financing in 2025 marks the second year it has increased since reaching a low of $727 billion in 2023. (Organizers restated estimates from last year’s report after adjusting some of the financing criteria last year.)

The 2025 figure is equal to the previous peak in 2021, which was triggered by the post-COVID energy demand recovery. Financing declined in 2022 and 2023, then rebounded in response to the continuing wars in Ukraine and the Middle East. Combined with the recent invasion of Iran and the oil bottleneck caused by the closure of the Strait of Hormuz, the world is now in the largest energy supply disruption in history, according to the International Energy Agency.

“We’re facing a new reality,” Lusiani  says in an interview. “Relying on fossil fuels for our primary energy source globally is no longer reliable, it’s no longer affordable, and it’s no longer actually secure.”

Clean-energy investment is growing faster than fossil fuels despite the rapid expansion in gas infrastructure. The International Energy Agency estimates that clean-energy investment will be $2.2 trillion in 2026, primarily for grids, renewables, storage, nuclear, low-emission fuels, energy efficiency and electrification. Investment in oil, gas and coal is forecast at half that, $1.2 trillion.

Twenty-six out of the 65 banks in the BOCC report appear to agree that fossil fuels are not as attractive as they once were and reduced their oil, gas and coal financing in 2025. These are primarily European banks, led by La Caixa Group, Commerzbank, Groupe BPCE, UBS and BNP Paribas. Canadian-based CIBC, Bank of Montreal and Toronto-Dominion Bank also reduced their oil and gas financing last year. La Banque Postale of France was notable for having zero fossil-fuel financing in 2025.

But the remaining 39 banks ramped up their financing last year. “When you have more of the decision-making happening in smaller circles, it is more prone to group think [and] continuing models that have long surpassed their usefulness,” Lusiani says.

JPMorganChase is top lender

The top fossil-fuel lender and underwriter in 2025 was JPMorganChase, the largest bank in the United States and the world’s largest non-Chinese-owned bank. The New York–based bank extended $58.2 billion in fossil-fuel financing in 2025, a 12.5% increase from 2024. The report estimates that last year JP MorganChase was responsible for 4.7% of global fossil-fuel bank financing, as tallied from about 2,000 banks around the world.

The bank maintains that fossil fuels will be a necessary part of the global energy mix for many years to come and that it has a responsibility to finance both fossil fuels and clean energy. “As one of the world’s largest financiers of energy, we support the full range of energy solutions and technologies, with a focus on reliability, affordability, security and long-term resilience,” a JPMorganChase spokesperson said in an email response to the BOCC report. “We believe our data reflects our activities more comprehensively and accurately than estimates by third parties.”

The bank has committed to financing $1 trillion by 2030 in climate initiatives and sustainable resource management, including low-carbon energy solutions. It issued $309 billion toward this goal between 2021 and 2024. JPMorganChase is also one of the few banks to agree, under pressure from shareholders, to publish its annual energy-supply financing ratio. As of 2024, that ratio was 1.13:1, meaning that for every $1 of fossil fuel financing it provided in 2025, it financed $1.13 in clean energy.

Still, Lusiani argues that JPMorganChase is at the heart of a relatively small number of banks – mostly based in the United States – that are at odds with the energy transition. “Over 4% of global bank fossil-fuel financing is done by JPMorganChase, so they’re the kingpin of what you would call a new oligopoly of fossil-fuel financing.”

The other major U.S. players in this oligopoly are No. 2-ranked Bank of America ($47.3 billion in 2025), No. 5-ranked Citigroup ($45.3 billion) and No. 6-ranked Wells Fargo ($42.5 billion). Japanese banks Mitsubishi UFJ Financial and Mizuho Financial came in at No. 3 ($47.0 billion) and No. 4 ($46.5 billion), respectively. The Royal Bank of Canada stood at No. 7, at $36.6 billion.

Are bailouts coming?

The expansion of fossil-fuel financing in 2025 came as the Net-Zero Banking Alliance closed its doors last year, shutting down the global coalition of banks working toward the industry’s net-zero transition. The BOCC report argues that the NZBA collapse and continued expansion of fossil-fuel financing in 2025 show the limitations of voluntary commitments as a route to meaningful climate action.

The report calls for bank regulators to require comprehensive disclosures and robust testing of climate risks, increased capital requirements for banks extending high-carbon-footprint loans and mandatory climate transition plans.

The banks are entering a period of rising risk, as high oil and gas prices push individuals, companies and countries to seek out cheaper renewable-energy alternatives. This poses a growing risk that the billions of dollars in oil, gas and coal infrastructure now being financed could become stranded assets.

For Lusiani, policymakers need to jump in, even if it seems to cut against the grain of current thinking in the United States and around the world to loosen climate regulation. The alternative could mean multibillion-dollar government bailouts of energy companies in the future, he says.

“The question is going to be: Where are all these massively indebted LNG and pipeline companies going to go, and how are they going to pay back that debt? I worry about public bailouts of some of these companies. They are so over their skis.”

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).

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But like many other developing nations that are feeling the increasing burden of climate change, the main challenge is finding the money. To assemble the financing, Nigeria is turning more and more to a tool that is already yielding results: the green bond. Late last year, the government issued its third and fourth tranche of sovereign green bonds totalling 300 billion naira (US$220 million).

Nigeria started down this path back in 2017 when it became the first African country – and the fourth worldwide – to issue a sovereign green bond, valued at ₦10.69 billion (US$7.85 million). Certified by the London-based nongovernmental organization Climate Bonds Initiative, investor demand outstripped the offer and the bond was oversubscribed.

Two years later, the West African nation issued another sovereign green bond valued at ₦15 billion (US$11.16 million). Like the first, the 2019 sovereign green bond saw a 220% oversubscription, bringing the total value of subscriptions to ₦32.93 billion ($23.57 million).

Like regular bonds, green bonds pay a fixed rate of interest to investors, but they keep the focus on raising capital for environmental and climate-related projects, from renewable-energy and clean-transportation to afforestation and climate-change-adaptation projects. The success of the inaugural 2017 green bond and the subsequent tranche in 2019 “signals growing investor appetite for green assets even in emerging markets,” says Dare Ogunbona, chief executive officer at Green Advisors Limited..

Green bonds gaining traction

Launched in 2007 by the European Investment Bank, the market for green bonds is growing steadily worldwide, reaching US$2,625 billion as of December 2024. In that year alone, $522 billion of new green bonds were issued, up from $135 billion the previous year, according to French asset manager Amundi’s 2024 Green Bond Impact Report. However, Africa is yet to fully tap into this potential. The continent accounts for about US$5.1 billion – less than 1% – of the total $2.2 trillion green bond market. But in recent years, the market on the continent is making major gains. For example, green bond issuances grew by 125%, from $600 million in 2022 to $1.4 billion in 2023.

Other countries on the continent are also picking up on the trend. In 2020, Egypt became the first country in the Middle East and North Africa to issue a sovereign green bond. That bond, too, was oversubscribed, leading the government to increase its initial offering from $500 million to $750 million.

Back in Nigeria, Ogunbona credits green bonds with “meaningful structural progress.” Proceeds from green bonds issuances have helped the Nigerian government to fund projects such as afforestation programs, the 10-megawatt Katsina wind farm power project, and off-grid solar power plants. However, these projects have been severely challenged, including by inadequate monitoring and weak sustainability frameworks. An investigation by a local newspaper also found that green-bond-financed afforestation projects failed largely because of poor implementation.

Given that so many climate projects still need to be funded, Ogunbona believes that green bonds will remain a viable option for the Nigerian government, especially as investors show increasing commitment to sustainability. “As of March 2025, 95.44% of proceeds from the 2019 green bond had been deployed to approved green projects,” he says. “For investors with a medium to long horizon and appetite for emerging market risk, Nigeria’s green space is very much in play.”

Saint Ekpali is a Nigeria-based journalist who covers the environment, health and energy in Africa.

The post A wave of green bonds is reshaping climate finance in Africa appeared first on Corporate Knights.

Rather, the new strategy is to ask companies – often in private – to address the financial risks of short-term profit-seeking in oil and gas while long-term forecasts point to the success of cheaper, cleaner energy alternatives. This puts the focus on corporate transition plans, especially in utilities, oil and gas, and banking, three sectors at the front lines of climate risk.

“Those who are filing shareholder resolutions are keen that the company actually takes a holistic approach to decarbonization and starts undertaking activities that are on a pathway to reducing emissions,” says Felix Nagrawala, senior research manager at U.K.–based non-profit ShareAction.

In an April webinar hosted by the non-profit shareholder action group As You Sow, Annie Sanders, director of shareholder advocacy for U.S.-based sustainable fund company Green Century, said that climate-oriented shareholder proposals are increasingly focused on how companies operationalize credible, science-based transition plans. “The goal here is to create a road map, adjust as you go and be transparent about it for greenhouse gas reduction.”

In the last three years, Green Century has negotiated agreements with five semiconductor companies, including Intel and Nvidia, to disclose key elements of their climate transition strategies. The company has ramped up its work this year, engaging with nine companies on climate and securing two commitments to publish transition plans.

Shareholder campaigns at BP and Shell this spring illustrate this new strategy. Dutch-based shareholder advocate Follow This and 23 investors managing €1.5 trillion filed proposals calling on the London-based fossil fuel giants to publish their plans for managing capital expenditures, oil and gas production, and cash flows under International Energy Agency scenarios of declining fossil fuel demand in the 2030s.

Resistance backfires on BP

BP decided to reject the Follow This resolution from its April 23 annual meeting agenda, saying it didn’t meet legal standards for inclusion. The decision, along with management proposals to scrap existing climate-change reporting requirements and to move from in-person to virtual annual meetings, backfired badly on the company.

Shareholders voted more than 50% against the management proposals in what The Guardian called a climate rebellion by investors. As a result, Follow This was able to preserve valuable climate reporting and in-person meetings and bring considerable attention to BP’s lack of public transition planning.

In marked contrast with BP, investor response to climate issues at the Shell meeting on May 19 was lukewarm as discussion was dominated by the Iran war oil crisis. The climate transition resolution attracted only 13% support, lower than previous years’ proposals from Follow This. Investors “should not be distracted by temporary war profits and lose sight of the medium and long-term,” Follow This founder Mark van Baal said.

In Canada, shareholder attention on climate issues is focused on Canadian banks, which are major lenders and underwriters to the country’s large oil and gas sector. This spring, Royal Bank of Canada, the country’s largest, and third-ranked Scotiabank cancelled their financed emission-reduction targets in a sign of the banking industry’s retreat from climate issues.

In the last two years, the Shareholder Association for Research and Education (SHARE) and a coalition of investors including the large Danish PFA pension fund, shifted their attention, filing resolutions and engaging privately to encourage the banks to publish their energy finance ratios (EFRs). The EFR is a metric comparing each bank’s lending and underwriting in low-carbon and high-carbon energy sources.

This year, Scotiabank became the first Canadian bank to release its ratio, and National Bank said it would disclose its ratio starting next year. At 0.65:1 low-carbon to fossil-fuel financing, Scotiabank’s ratio is a far cry from what’s needed. BloombergNEF estimates that a ratio of 4:1 is needed worldwide to limit global warming to 1.5°C.

SHARE associate director Amanda Carr says disclosure of the EFR can be a useful tool to focus bank management on its role in financing the energy transition. “We know that for many of the banks we are engaging with, this ratio is now reported to the C-suite quarterly,” she says in an email. “It puts the energy transition into dollars and cents, something that all financial institutions work with every day.”

A split between U.S. and European investors

In Europe, support for environmental and social resolutions is still quite strong (about 91% on average in 2025), according to Morningstar. In the United States, average support for ESG resolutions by large investors was 31% on average, down from 42% in 2023.

The number of social and environmental resolutions has also dropped sharply in the United States. According to As You Sow’s recent Proxy Preview report, 184 environmental, social and sustainable-governance-related shareholder resolutions were filed in the United States in 2026, 47% lower than last year.

The drop is due to continued hostility for sustainable investing in the United States created by Republican-led states, members of Congress and right-wing social media celebrities. In 2024, ExxonMobil further intensified the chill on shareholder activism by filing a punishing lawsuit against As You Sow and Arjuna Capital, challenging their right to file ESG proposals.

The Securities and Exchange Commission under the second Trump administration has also made it easier for companies to exclude proposals from their annual meetings. In November, the SEC announced it would no longer rule on the admissibility of shareholder proposals submitted to annual meetings, giving companies the right to reject any proposals except on very narrow grounds.

But this doesn’t mean that shareholders have become powerless. Some shareholders have sued companies for their right to be heard after companies rejected their proposals. Other companies have decided to hear shareholders out in private, rather than assume the reputational risk of the courts and a poisonous social media environment.

The future is murky. Forecasters are saying the protracted Iran war means that oil and gas prices will stay higher for longer, creating fossil-fuel-industry demands on government to support expansion of liquefied natural gas projects and oil pipelines, particularly in North America. At the same time, higher prices are also expected to erode global fossil fuel consumption, especially in China and India. This raises long-term risks for investors in fossil fuel companies just as short-term gains appear to be rising.

For Andrew Behar, CEO of As You Sow, the shareholder process will become even more important, although in a behind-the-scenes kind of way to escape growing polarization over fossil fuels and climate.

Shareholder engagement will be conducted “increasingly through private dialogues to avoid the toxicity and unpredictability of the public square,” Behar told the As You Sow webinar in April. “Trust that’s built on long-term relationships serves both parties to get the work done and not be distracted by trolls seeking to inject politics into good business practices.”

CORRECTION: A previous version of this article incorrectly described PFA as a Dutch pension fund. It is a Danish pension fund. The article has been updated to reflect this.

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).

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The Local Power program is “a significant opportunity for the U.K.’s community energy and crowdfunding sectors,” says Lisa Ashford, co-CEO of Ethex, an ethical crowdfunding platform, in an email statement. The policy framework and government support “should help to unlock a larger pipeline of investable local power projects, creating more opportunities for communities to directly invest in renewable energy in their own areas.”

Ethex has pledged to work with Great British Energy (the agency responsible for implementing the Local Power Plan) to bring local communities, individual investors and institutional capital together ​​to help leverage ​the billion-pound grant and loan program ​promised by the government.

“However, we want to emphasize that public funding should complement retail investment, not replace it,” Ashford says, adding that public funding can act as “catalytic capital to get more projects off the ground, reduce risk and co-exist with community and retail finance.”

What is investment crowdfunding?

The purpose of the Local Power Plan is to build community energy projects financed with public funding and crowdfunding, a strategy that proponents see as a way to democratize the capital markets. Distinguished from reward- or donation-based crowdfunding, investment-type crowdfunding is offered with the expectation of financial returns through interest, dividends or rising share values.

In some cases, investment crowdfunding is done through community bonds or innovative investment savings accounts as a way for local people to finance a non-profit or civic project. In others, it can enable investors to buy an equity share in a private company, usually as a start-up but sometimes in a more advanced growth stage.

In either case, the investment is typically locked up for a considerable period – usually five years or more – to prevent participating investors from exiting before the project or company matures to a stage in which investors can get their money out.

​​Capital crowd-surge – and slump​​​

Historically, private investments have been restricted to wealthy sophisticated investors or institutions like pensions and venture capital. Starting in 2014, the U.K. Financial Conduct Authority began to amend the rules, reducing restrictions and setting specific conditions for crowdfunding purchases. Since then, the domestic market has grown considerably​​. In​​​ ​2024 (the most recent figures), the value of the total U.K. crowdfunding market was US$1.06 billion, including loans and bonds, equity and even donation-type offerings.

​​While loans and bonds are gaining ground, m​​​​​arket growth has tapered off in recent years in the equity segment of investment crowdfunding, which involves buying shares in private firms. In the United Kingdom in 2021, there were 569 equity crowdfunding offers that together raised a total of £773 million. By 2024, this had fallen to 297 deals worth £324 million (about US$414 million in 2024 dollars).

​​​Investment markets of all kinds bubbled in 2021 as hundreds of thousands of individual investors – bored and at home during COVID lockdowns – experimented with new ways to make (and lose) money. Along with meme stocks and crypto ownership, equity crowdfunding soared in 2021 and 2022, buoyed by low interest rates, rising global investment markets and established crowdfunding platforms like Crowdcube and Seedrs (later taken over by U.S.-based Republic).

Since then, rising interest rates, growing international conflicts and the chaos of the Trump administration have made investors more cautious. Inevitable losses from fledgling start-ups and long capital lockup periods also dampened some investor enthusiasm for equity crowdfunding.

​​The ‘hybrid model’ for green growth​ ​​

In contrast, investment-type crowdfunding in environmental, socially responsible and ethical offerings has grown steadily, although incrementally. Social enterprise bonds and share offerings have carried less risk than equity shares in start-up and growth companies. It’s customary for renewable-energy projects, for example, to come with reliable income streams or civic infrastructure projects to be backed by municipal borrowing guarantees. Ethex, Abundance and Triodos UK ethical crowdfunding are among the online platforms specializing in this market and are poised to benefit from the £1 billion Local Power strategy.

As well, crowdfunding platforms focusing on the energy transition are expected to benefit from ​an expected annual growth rate of U.K. climate tech of 21% between now and 2030, although this growth won’t happen directly from the Local Power program.​​​​​​ ​ ​Globally, a​ 2024 report by RMI (formerly Colorado-based Rocky Mountain Institute) states that US$2 trillion will be needed globally to finance the industrial, transportation and infrastructural changes needed to shift the global energy system from fossil fuels to electricity.

The RMI report says this opens new opportunities for crowdfunding, which are already appearing in the United Kingdom, where climate tech is attracting attention from individuals as well as venture and private equity investors. British climate-tech transportation company Sunswap raised £17.3 million in 2024 (US$21.8 million in 2024 dollars), partly from crowdfund investors and partly from venture capitalists. The company has developed a ​​​​groundbreaking ​refrigeration unit for trucks powered by a separate battery and solar ​unit to reduce ​fuel costs and ​carbon dioxide emissions from transport trucks. The Republic crowdfund platform hosted the offer along with support from institutional investors such as Shell Ventures, an arm of the Shell oil and gas giant.

Antoine Beine, co-founder of the France-based climate tech crowdfunding network Keenest, says this so-called hybrid model (including both crowdfund and institutional investors) is becoming the norm in the United Kingdom and Europe. “This is where a democratic dimension of investment may emerge within the private sector, not simply for capital access, but in embedding transparency and public scrutiny around issues such as sovereignty, climate transition, privacy, and ethical practices,” he says in an email.

Ethex’s Ashford says that one of the exciting opportunities offered by the Local Power Plan is the prospect to pool government funding with crowdfunding capital. “If implemented effectively, the Local Power Plan could mark a step change in community power investment by combining public support with people-powered finance to accelerate a more democratic energy transition.”

The government’s aim in the Local Power Plan is to build 1,000 community energy projects. In the process, it could also help to deliver a jolt of popular democracy into the United Kingdom’s capital markets.

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).

The post The U.K. has a plan to crowdfund clean energy appeared first on Corporate Knights.

“For the first time in our history, every Canadian will hold a direct stake in what’s built,” he said April 27 in launching the fund, which will be known as the Canada Strong Fund. “We will make it easy for individual Canadians to invest in the fund and therefore own a small piece of nation-building projects and share in their returns.”

The idea of a sovereign wealth fund to invest public funds for the public interest is not new, even in Canada. The Heritage Savings Trust Fund operates on this basis in Alberta. The Caisse de dépôt – a public pension fund manager – operates with an economic development mandate in Quebec. Around the world, many governments have established national wealth funds, sometimes investing enormous surplus revenues from their oil and gas assets.

The distinguishing feature of the new Canadian fund is its individual investment mandate. The government is promising to create a retail product to support the fund, which it says will be widely available to average investors.

Green investors beware

On paper, the product sounds like it could be a hit, harkening back to the Canada Savings Bonds that were enormously popular with individual Canadians in the 1960s and 1970s as a way of earning decent returns while supporting the national interest.

The government said projects will be selected from the government’s Major Projects Office and other national-interest projects. The list will likely include port expansions, electric grid improvements, clean-energy facilities and public transit projects, which will have broad support. But the list could also include a whole host of controversial fossil fuel ventures, including liquefied natural gas terminals, pipelines and carbon capture projects, limiting the fund’s appeal.

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Tim Nash, president of Good Investing, a consulting firm that works with individual investors to create sustainable investment plans, says there won’t be much demand for the fund from green investors, who will be put off by its fossil fuel investments. But it could be very popular among investors who are concerned about Canada’s independence and want to support the country’s long-term development and economic security.

“The exciting thing for me is that Mark Carney talked explicitly about a retail offering, which to me is phenomenal,” Nash says. “I think this is targeted at a wider swath of Canadians who are really interested in Canadian sovereignty.”

A door to more?

According to the government’s spring economic statement, the product will be easy to purchase, hold and transact, and will provide investors with protection for their initial capital. The fund will be an independent Crown corporation, professionally managed and operating on an arm’s-length basis from the federal government, investing in national projects on a fully commercial basis.

This is good politics, this is good economics. Across the board, we need a retail offering. I think there’s going to be a lot of energy around this.

– Tim Nash, president, Good Investing

Initial seed capital for the fund will come from a three-year, $25-billion commitment from the federal government. Carney said he expects the fund to grow over time as investments are sold and capital is reinvested.

Nash says he hopes the fund will inspire other retail investment products with government support. An investment product based on the Canada Growth Fund – similar to the Canada Strong Fund but with a clearer cleantech focus – would be very attractive to green and conventional investors, he says. Similarly, he says a Canada green bond widely available to individual investors would have strong demand.

Many questions remain

The background materials provided by the government are light on details, and a consultation is now proposed to iron out the many remaining questions. It’s not clear how the investment product will be structured, or whether it will be available through bank branches, financial advisers or directly from the government. It’s also not known how the principal investment guarantee will work or how much access investors will have to their funds given the long-term nature of the underlying investments.

Nash also says a top question is whether the fund will be eligible for tax-advantaged accounts, such as registered retirement savings plans. He calls this an absolute necessity to avoid the modest returns from the fund being depleted by income taxes.

If the government can get the basics right, however, Nash says, it could be very popular and replicated across other government programs to help bolster private investment. He says investment offerings in public programs could help to create popular support for them by giving people a direct stake in their success.

“This is good politics, this is good economics,” he says. “Across the board, we need a retail offering. I think there’s going to be a lot of energy around this.”

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).

The post Mark Carney’s ‘people’s fund’ puts small investors on the front lines of economic defence appeared first on Corporate Knights.

One of the main opportunities AI presents for financial oversight and regulation is analyzing large data sets and identifying new opportunities. Several research projects have explored how AI can assess climate risk cases from text, and how it can be used to track and disclose the environmental impact of supply chains.

But questions remain about its effectiveness and whether its energy use is worth the cost.

Central banks are experimenting with AI

Central banks are already exploring how AI can be used in their own work, including for understanding climate risks.

A Banque de France research note explores how AI could help estimate corporate carbon emissions and finds that it predicts carbon intensity in 69% of cases but struggles with extremes such as heavily polluting emitters. And in Vietnam, the deputy governor at the State Bank of Vietnam has said that AI could be used to improve ESG reporting.

Meanwhile, the Bank for International Settlements (BIS) has two projects in its innovation hub focused on AI use around climate: Project Gaia and Project Symbiosis. Project Gaia uses a large language model (LLM) to automatically extract climate-related indicators from publicly available reports. The objective, BIS says, is to overcome a lack of global reporting standards in order to compare information on climate-related risks. The Gaia project is still ongoing with additional use cases and “is relevant in a much broader context than climate-related data analysis,” a BIS summary of the project states.

Project Symbiosis builds on the work done in Gaia by using various machine-learning subsets like LLM, deep learning and natural language. The collaboration looks at how AI can be used to collect, interpret and calculate Scope 3 emissions, identify opportunities to reduce emissions, and use the data to match suppliers with funding sources to decarbonize the supply chain.

With 95% of financial sector emissions falling within Scope 3, the project aims “to showcase how novel technologies offer a viable technical pathway to positively impact core stakeholders . . . by reducing critical information gaps impeding the climate transition.”

The findings from the project are in line with other AI and risk work and could set the basis for more standardized emissions and help improve issues around standardizing Scope 3 calculations.

AI’s usefulness for assessing climate risk

Interest in the use of AI for climate risk mitigation goes beyond central banks.

Several projects are exploring how to apply AI to imagery data, such as satellites, and advancing multi-input models that compile data points from imagery and text together.

This includes aspects like using image segmentation to look at the carbon footprints of certain areas, or classifications based on which plants are known to grow in those areas, says Peter Schwendner, a machine-learning expert at the Zurich University of Applied Sciences.

If done with intention, and if the levers are applied in a focused manner using AI production, the impact can be really, really meaningful and positive.

 – Mattia Romani, partner, Systemiq

From a regulatory perspective, he says, such AI use is “about improving market transparency, and then the financial market should improve the asset allocation with the objective of allocating more capital to, say, sustainable assets. This should work both in investing and in lending.”

It’s exactly the type of project that spaceborne AI firm Kuva Space hopes to expand on. The Finnish company has partnered with WWF Indonesia to explore how AI can be applied to hyperspectral imaging to understand changes to the region’s coastal ecosystem.

Hyperspectral imaging uses advanced satellite cameras to capture images in areas that are often difficult to reach. Kuva Space’s AI system is able to signal potential changes or anomalies, such as changes in the status of seagrass, an important marine carbon store, which can then be confirmed by scientists on the ground.

While the program is in a pilot stage, the project could have a larger impact for not only tracking ecosystems; it could also help regulators and investors identify and track project areas for sectors like blue carbon.

Investors and regulators are asking for this information, but they don’t have it, says Malathy Eskola, commercial director at Kuva Space. “We’re actually going to be making it more science-based or evidence-based, and provide that information so that the decision-makers can be confident.”

Needed: better data (and more of it)

But for AI to be truly effective in understanding climate risk and nature loss, more data is needed, especially from companies, Schwendner says.

Companies themselves do not need to crunch the numbers or create the models, but they do need to provide the raw data for analysis. “Academics and data providers are very eager to work with this data, so I don’t think it’s necessary for the public to invest a lot here,” he says. “This can be done by, say, collaborations between scientists and data providers, but the raw data on the company’s operations needs to be available.” 

This includes information such as which companies are sourcing raw materials, at what volumes and from which locations. “At the moment, we only know this in very rough terms, and we need to know exact numbers . . . If we know that, and if we know the production volumes, if we know the energy, where it comes from at this local production facility, then we can estimate . . . the environmental consequences. Then we can estimate the climate impact.”

While more data was expected this year as a result of the European Union’s climate disclosure rules, the bloc’s sustainable omnibus measures have meant there may be less information available than anticipated.

Will AI be positive or negative for the environment?

The other burning question around using AI to mitigate climate-change risk is whether it’s worth the energy use and environmental impacts.

AI consumes a lot of energy and water, and those working on AI projects in the climate space are aware of the contradiction in using something for environmental aims that itself uses a lot of natural resources.

The biggest issue with AI consumption, experts say, is the type of models being used and how they are being applied. Training models requires a lot of energy, increasing the electricity demand for data centres. It accounted for 1.5% of all demand in 2024, but is projected to account for 10% of energy demand growth by 2030.

Even researchers from the BIS innovation hub noted in their report on Project Symbiosis that “any use of AI is likely to generate significant emissions, even as electricity grids worldwide continue to slowly decarbonise at different paces.”

But some say AI could have a positive environmental impact.

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A study from the London School of Economics finds that AI could reduce global emissions by 3.2 to 5.4 billion tonnes of carbon dioxide equivalent by 2035 if applied in key areas such as innovating resource efficiency, nudging behavioural change, modelling climate and policy system interventions, and managing resilience and adaptation. “If done with intention, and if the levers are applied in a focused manner using AI production, the impact can be really, really meaningful and positive,” says Mattia Romani, a partner at Systemiq and one of the authors of the report.

AI could also be used to help streamline the collection and accessibility of company data. There is an issue around responsible data sharing, Romani says, which is where regulators can step in to ensure safe data practices to “enable private actors to contribute data without risking a competitive or legal exposure.”

If AI is used for practical applications like emissions reductions, then its intentional use could justify the added cost of energy, Romani says. “If you continue to use AI to sell you more stuff on Instagram, then the emissions associated with the additional power, I’m afraid, are going to be substantial.”

Moriah Costa is an award-winning U.S. journalist based in Paris.

This article was originally published by Green Central Banking. It has been edited to conform with Corporate Knights style. View the original here. 

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“Our pension funds are amongst the world’s largest and most sophisticated investors,” Carney told the World Economic Forum in Switzerland. The funds are one of Canada’s prized assets, along with the country’s educated workforce and its sizable reserves of energy and critical minerals. “We have capital, talent and a government with the immense fiscal capacity to act decisively.”

But some key questions were left unasked: If Canada’s pension funds are so powerful, why aren’t they investing more in their home country? Is it possible for these behemoths of global finance to commit more of their multitrillion-dollar assets to the Canadian economy in this time of need?

In the past, most of Canada’s major pension funds have pushed back against even a whiff of political interference. Yet recently, some pension CEOs are saying they are open to investing more in Canada, especially in strategic sectors of national interest. Deals like the recent Caisse de dépôt et placement du Québec (CDP) investment in renewable-energy company Boralex show that some of the funds are already moving in this direction.

Are these sleeping giants getting ready to pony up the capital needed to kick-start Canada’s critical industries? Here are the central issues in this debate.

The Maple 8’s global reach

Canada’s major pension funds rank among the top in the world. The eight largest, known as the Maple 8, manage more than $2.5 trillion in assets. The largest of these, the Canada Pension Plan Investment Board (CPPIB), is the seventh-largest pension fund in the world. At the end of 2025, CPPIB held $781 billion in assets for the CPP, which serves 22 million Canadian workers and retirees.

CDP, which manages funds for the Québec Pension Plan and other public funds and investors in Quebec, is number two in Canada at $517 billion. The Ontario contingent includes three large public-sector funds: the Ontario Teachers’ Pension Plan (OTPP), the Healthcare of Ontario Pension Plan (HOOPP) and the Ontario Municipal Employees Retirement System (OMERS). The Maple 8 also includes British Columbia Investment Management Corp. (BCI) and Alberta Investment Management Corp. (AIMCo), investing funds in B.C. and Alberta, and Public Sector Pension Investments (PSP), managing federal public-service pension funds.

The funds have developed a management style known as the Canadian model, marked by independence from the governments that established them, internal professional management (rather than outside managers) and global investment in stocks and bonds and alternative assets such as real estate. The formula has mostly been successful. The annual average return of Canadian pensions has outperformed all but a few countries since the financial crash of 2008, although gains have slipped in the last two years as a result of declining real estate and private equity assets.

Pensions already invest in Canadian stock markets. Could they invest more?

The global profile of these funds has sparked calls to invest more in Canada. A CBC investigation in February showed that most of the Maple 8 invest far more in the United States than in Canada. CPPIB, for example, has $366 billion invested in the United States (47% of its total) and only $98 billion in Canada (13%). OMERS’s portfolio is 55% American, and PSP is 41% invested in the United States.

The level of U.S. investment seems shocking, bordering on unpatriotic, considering the recent economic pain inflicted by the United States. Only three of the Maple 8 funds have more assets invested in Canada than in the United States – HOOPP, OTPP and AIMCo.

We have the capital available right now to make those investments. We’re just waiting for those opportunities to manifest themselves.

– Michael Wissell, CIO, HOOPP

But compared with Canada’s share of global markets, the pensions are actually over-invested in their home country. According to the MSCI World Index (a broad-based investment index holding companies across the globe), the United States represents 70% of total world investment markets. Canada’s share is tiny at only 3.6%.

The funds argue that their mandate is to invest across the world in markets, sectors and companies that will deliver the best returns at acceptable risk to ensure that they can meet their long-term pension payouts.

Paul Calluzzo, a professor at the Smith School of Business at Queen’s University and a researcher for the Institute for Sustainable Finance, points out that pension funds have a legal and ethical obligation to invest in the best interests of their beneficiaries. “If a pension fund was to invest more in Canada, or support strategic industries, or just invest in infrastructure that was strategically important, that would be a cross-subsidy where the pension holders are footing the bill for something that benefits everyone,” he says.

The pension funds contend that it’s prudent to over-invest somewhat in Canada because of their “home-field advantage” through their detailed knowledge of local companies and cultures. But governments should resist the urge to think of pension funds as a national piggy bank, Calluzzo says. “There’s a temptation to say, ‘We have these huge pools of capital; let’s do something with them that helps Canada,’” he says, adding that it’s important to be mindful that pensions don’t belong to governments. “Those huge pools of capital are from the people who have been paying into their pension all those years. That’s something that should be respected.”

Pension CEOs open the door, but just a crack

Nevertheless, over the last few months, several pension fund CEOs have said they are open to investing more in Canada.

“As a nation, we have a significant opportunity to build a stronger and more resilient future, and OMERS wants to be part of that,” CEO Blake Hutcheson said in February. “We like the advantage that our relationships and on-the-ground expertise offer.” OMERS is looking for deals that support the fund’s financial objectives and Canada’s growth, he said.

“We have the capital available right now to make those investments,” Michael Wissell, chief investment officer at HOOPP, told Reuters on March 10. “We’re just waiting for those opportunities to manifest themselves.”

Last June, PSP CEO Deborah Orida said her fund is actively looking for additional Canadian investments. After years searching for global alternative investments, she told Bloomberg, “at PSP we’re asking ourselves: Have we been underleveraging our home-ice advantage.”

And in a speech last September, John Graham, CEO of CPPIB, cheered what appears to be a new spirit of cooperation by federal and provincial policymakers. “Unity and coordination will initiate the nation-building projects Canada requires. And those are exactly the projects that international and domestic investors, including us, are eager to invest in.”

Two years ago, it was a different story. The funds vigorously pushed back against a letter signed by 90 Canadian business and financial leaders, calling for rules to require pension funds to invest more domestically.

But last year’s Trump tariffs have created an elbows-up mood among Canadians, including millions of members of the plans the funds manage. The funds are also confident that Carney – former central banker and Bay Street executive – will seek ways for them to finance national projects without increasing risk or jeopardizing returns. “We can do more together, respecting that they [pension funds] are independent but at the same time looking at opportunities,” Finance Minister François-Phillippe Champagne told CBC in February.

Key sectors: Energy, critical minerals, defence and infrastructure

So what are the strategic sectors that could be targeted for additional investment?

Certainly energy – especially electrification – is one promising area. According to a list of proposals by the Major Projects Office (MPO), the federal agency is looking at a number of clean-energy proposals, including small modular reactors in Ontario, northern hydro projects and a British Columbia transmission line. The Shareholder Association for Research and Education recently released a report saying $220 billion in proposed new investment is threatened unless Canada’s power grid is urgently modernized, a need expected to be a focus of the upcoming federal electrification strategy. Support for clean energy has also been triggered by the recent spike in oil and gas prices caused by the U.S.-Israel invasion of Iran.

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Last week’s $3.8-billion acquisition of Boralex by CDP and Brookfield Asset Management is a sign of growing pension interest in clean energy. The investment “aligns with our commitment to the energy transition and our determination to help build Quebec-based champions,” said CDP executive vice president Kim Thomassin. The investment follows the fund’s $10-billion takeover last year of Innergex Renewable Energy. (CDP is unique among the Maple 8, however, operating with both financial and Quebec development mandates).

Rising oil and gas prices from the Iran war also means that liquified natural gas projects and Alberta’s proposed Western oil pipeline could also be a focus for pension funds. Oil and gas investment hinges on how long the price hikes will last and whether they will minimize the future glut in fossil fuels caused by the global renewable-energy transition. AIMCo is a large investor in Alberta’s oil and gas industry, including a major holding in the Coastal GasLink pipeline. There have been suggestions that the Alberta government may pressure AIMCo to ramp up its provincial oil and gas investments. To date, though, AIMCo has not expressed interest in the proposed oil pipeline.

Critical-mineral projects have also been identified as priorities for the MPO. The federal government adopted a national critical-minerals strategy in 2022, aimed at promoting domestic production and processing. According to the most recent strategy update, there are 140 mining projects planned for development by 2034, worth $72.4 billion in potential investment.

The Carney government’s Defence Industrial Strategy could also create investment possibilities. No defence-related proposals have yet been identified by the MPO. However, the government’s “buy Canadian” approach aligning defence purchases to the battery and critical-minerals sectors, as well as its upcoming electrification strategy, has potential to generate additional defence-sector investment, said New Economy Canada, a coalition of 60 business, Indigenous and labour organizations.

Infrastructure including transport projects, data centres, waste and water facilities, and agriculture also hold future investment potential. CPPIB has already identified data centres as a key area, pointing to its $225-million data-centre investment in Cambridge, Ontario. Transportation, such as the Alto high-speed rail project, also holds potential. CDP is already taking a lead role in this proposal, joining the consortium developing the project.

Reaching out for help from Australia

With such a long list of potential projects, the funds have called on some of their colleagues in Australia to lend a hand.

Representatives of the Maple 8 funds (plus the Investment Management Corporation of Ontario, manager of Ontario government pensions) signed an agreement with a group of large Australian pension funds to foster joint investments. They pointed to “a shared heritage, open and resource-rich economies, strong credit worthiness” and legal institutions as solid terrain on which to build.

Like Canada, Australia has a group of fast-growing pension funds with a relatively small domestic investment market, prompting it to look for partners around the world, particularly for infrastructure investments. IFM Investors, one of the Australian signatories, already invests in two Canadian infrastructure companies, Global Container Terminals in Vancouver and Enwave Energy in Toronto. IFM said it intends to invest up to $10 billion in Canada over the next decade “with the right policy settings in place.”

With this agreement, the funds are exploring possibilities for a larger pool of infrastructure investors, a strategy that would reduce risk for any individual fund.

It’s all about the projects

In the federal budget in November, the government set a target of enabling $1 trillion in total new investments over the next five years in Canada. The government’s charm offensive is aimed at persuading pension funds and other investors to open their wallets to help meet this ambitious target.

Ultimately, it will come down to whether the right projects can be put on the table. Proposals will need to meet three requirements: they’ll need to be in the national interest, demonstrate a high probability of returns that meet or exceed fund benchmarks, and represent an acceptable level of risk. Governments, project proponents and pension funds are looking for investments that check all three of these boxes.

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now the Responsible Investment Association).

The post Can Ottawa convince Canada’s pension giants to invest at home? appeared first on Corporate Knights.

That’s the term given to industries based around the oceans, which cover more than 70% of the Earth’s surface and generate trillions to the global economy. In Canada alone, the blue economy contributes north of $30 billion to annual GDP, a figure that could jump to $220 billion by 2035 in shipping, fishing, energy and other sectors.

But not everyone benefits equally: local communities and underrepresented groups often bear the brunt of the impacts from these economic activities while receiving little of the benefit. The Ocean Equity Index was developed to correct this imbalance.

“There are so many inequities on many different levels” in global ocean governance, says University of Victoria professor Natalie Ban, an index co-author. “The real impetus behind the [creation of] the index is not to assess the inequity, but to assess it and come up with new steps” to improve equity across different dimensions.

The Ocean Equity Index is based on six principles of ocean equity: the promotion of Indigenous rights; respecting all relevant actors and their diverse knowledge systems; supporting a transparent and efficient decision-making process; promoting accountability; mitigating harms; and ensuring equitable sharing of benefits to all members of the ocean community.

The report authors say the index creates an objective assessment of who benefits from ocean initiatives, which can include economic development, ocean conservation or other programs, and also provides an opportunity for communities to improve the balance by acting on the findings.

Do quantified methods apply?

The initiative has come under scrutiny from some ocean equity scholars. “To me, the index is deeply problematic, because it’s not taking into account . . . the historical context of how people are being oppressed, and how people are dealing with the actual injustice,” says Cinda Scott, a marine biologist and co-director of Ocean Nexus. “When you create an index, I personally don’t feel that it’s necessarily the best way to represent issues such as human rights abuses, legacies of colonialism, racism, sexism and genderism.”

Other equity scholars are uneasy with the use of quantitative methods for such an expansive concept. “The first rule of equity work in general is never come up with a quantitative method for it,” says Simon Fraser University’s Andrés Cisneros-Montemayor. “I have a lot of respect for the authors, and this is the first-ever global index of ocean equity – but there’s a reason for that.”

Great Bear Sea’s blueprint for doing business with nature

Assigning numerical values for the index criteria, and then combining them, does not lead to clarity, Cisneros-Montemayor says. He gave a hypothetical example where “everyone was listening to everyone, except for women . . . Are you equitable now?” While he agreed on the fundamental need for ocean equity, “transitioning that to a quantitative index does much more harm than good,” he adds. “That’s not a meaningful way to address equity.”

Lead Ocean Equity Index author Jessica Blythe, of Ontario’s Brock University, says it “is designed to support community engagement by creating space to discuss context, reflect on divergent perspectives and identify actionable steps to improve equity.” She adds, “In our experience trialling the index, many organizations reported that completing an assessment broadened their understanding of equity.”

Market application

The use of indices to improve corporate behaviour has been attempted before with mixed results, says Adel Guitouni, a business professor at the University of Victoria. “When sustainability was seen as very important, Wall Street introduced the Sustainability Index,” he says. Companies received surveys and questionnaires, which were then compiled as guides for investors looking for greener investments. However, the problem with indices is that they are not objectively assessed, Guitouni says, which led to distortions in how companies were perceived, which did not align with their climate performance. “There’s no objective system,” he says. “Even when you try to include these metrics and criteria, there’s a lot of variability in how we measure, how we aggregate, what to exclude and include.”

The tool’s effectiveness will depend on political realities on the ground, Guitouni adds. An index of ocean equity could help move equity along, if the political and social reality is already moving in that direction, he says.

Effectiveness of such indices depend “on the political and regulatory framework that exists,” Guitouni says. However, if a country or region is firmly against practices of inclusion and equity, the index won’t help much, he says.

Jax Jacobsen is a Montreal-based journalist who specializes in mining, business and climate.

The post A new ocean equity tool seeks to give communities more power. Will it work? appeared first on Corporate Knights.

Enabling that goal is the objective behind the Business and Biodiversity Assessment report, a first-of-its-kind publication released on February 9 by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES), an independent organization created in 2012.

A product of nearly three years’ work by 80 scientists and private-sector experts, the report was endorsed this month by representatives of the more than 150 IPBES member countries at a week-long plenary session in Manchester, United Kingdom. It is intended to serve as a key reference on nature-related risks for business – and how alleviating those risks hinges on policy change by governments.

“From my perspective, it plays a role for nature similar to what the [Intergovernmental Panel on Climate Change] has played for climate change,” says Thomas Walker, special projects lead at the Institute for Sustainable Finance at the Smith School of Business, Queen’s University, in an interview with Corporate Knights. “Canadian business leaders should pay attention because of Canada’s resource-based economy and because nature underpins the productive capacity of said economy.”

Stark warning

The report begins with a stark warning to businesses: they can either lead transformative change or “risk extinction.” The authors cite evidence of significant declines over the last 50 years in many categories of the natural “ecosystems services” on which business and economies depend. This includes things like raw materials from nature, pollination and seed dispersal, air and water quality, soil fertility, and amenities for tourism and recreation. Altogether, they underscore just how much business is at risk from nature’s collapse. The report presents a detailed guidebook of more than 130 actions that companies, along with policymakers and other enabling actors, can take to reverse it.

“What’s really fundamental here is that our experts looked at the methods and approaches that are available to understand what [risk from biodiversity loss] means in an individual business context. How you can, as a business, understand your exposure to that. How you measure your impacts and dependencies and therefore how you can understand your risks,” said Matt Jones, one of three report co-chairs and a senior officer at the UN Environment Programme, at the launch press conference.

The report’s release (for now, just the policy summary, with remaining chapters to follow in a few weeks) was well-timed, coming just one week before governments convened in Rome from February 16 to 19 to begin the first global review of nature action under the Kunming-Montreal Global Biodiversity Framework (GBF) since it was created in 2022. Mark Carney’s Liberal government is also expected to soon unveil its revised 2030 Nature Strategy, replacing the previous Nature Accountability Bill that failed to pass before the last election. The new strategy will spell out how Canada intends to meet its commitments under the GBF to halt and reverse biodiversity loss and protect 30% of lands and waters by 2030.

In an email to Corporate Knights, Samantha Bayard, a spokesperson for Environment and Climate Change Canada, emphasized the role of nature disclosure in addressing the role of business in biodiversity loss. “While adoption of nature-related disclosures is still at an early stage in Canada – hindered by, for example, capacity, expertise, and data limitations – a growing number of companies and municipalities have begun to address nature-related risks in their portfolios and integrate natural assets (e.g., wetlands) into their financial disclosures.”

Delivering transformative change

A core tenet of the GBF is that reversing biodiversity loss requires the “involvement of all society,” including companies. Significantly, among the GBF’s 23 targets is a call for government action to encourage and enable companies to better manage their impacts on nature and more accurately assess – and disclose – their risks and dependencies. Both sides of that equation are squarely addressed in the new IPBES report.

For businesses, it lays out actions at four decision-making levels: corporate, operational, value chain and portfolio. Asked to suggest some critical first steps, report co-chair Ximena Rueda, dean of the School of Management at Universidad de los Andes in Bogotá, Colombia, urged companies to choose their battles. “What is their highest dependency [on nature] or highest impact? Start from that.”

Government’s responsibility

However, the report also makes clear that voluntary efforts alone won’t be enough to deliver the kind of “transformative change that will halt and reverse biodiversity loss,” added co-chair Stephen Polasky, professor of ecological and environmental economics at the University of Minnesota. That will occur only if governments also step in “to change the set of conditions in which businesses operate.”

A key target here are the massive subsidies currently directed toward business activities that drive biodiversity loss. In 2023, according to the report, subsidies of US$2.4 trillion contributed to the estimated US$7.3 trillion in public and private finance flows that had direct negative impacts on nature. In contrast, just US$220 billion in private and public funds were directed to the conservation and restoration of biodiversity. “There is a big role here for governments and the financial system to provide incentives for business to do actions that are beneficial for biodiversity and to take away incentives to business to do actions which are harmful,” Polasky said.

The challenge of subsidy reform

According to the ISF’s Walker, the report’s concern about harmful subsidies “resonates” in Canada. Government fiscal and tax policies designed to encourage resource development and production have often failed to reflect environmental externalities or cumulative ecological impacts, he says.

While reforming subsidies will be “politically complex,” Walker says there is nothing to stop Canadian companies, which have “ample experience with climate disclosure frameworks,” to immediately start considering biodiversity in corporate decisions and disclosures. The disclosure framework established by the Task Force on Nature-Related Financial Disclosures in 2023, which is now being implemented through the work of the International Sustainability Standards Board, provides a blueprint for companies and their boards to follow.

“Structured disclosure can help integrate biodiversity into enterprise raisk management,” Walker explains. “Once nature dependencies are identified and quantified . . . they can be considered alongside climate, market and operational risks.”

Brian Banks is a writer in Cobourg, Ontario, who specializes in environment, business and sustainability.

The post A landmark study on biodiversity loss takes aim at harmful government subsidies appeared first on Corporate Knights.