Every shock to global oil markets reverberates here through higher costs, capital outflows and a stark reminder that much of the province’s economy still depends on energy Quebecers do not control.

Yet despite being a major exporter of clean electricity, Quebec still runs an international energy trade deficit of roughly $14 billion each year, which ties consumers and businesses directly to volatile and geopolitically unstable markets.

The old energy paradigm was defined by access to oil. The emerging one will be defined by access to clean, reliable electricity and the ability to deploy it strategically.

– Catherine McKenna and Marine Thomas

This is precisely the vulnerability the clean-energy transition is beginning to resolve. Investment in clean energy reached US$2.3 trillion globally in 2025.

In this context, Quebec stands out. More than 90% of its electricity is renewable: primarily hydroelectric, with growing wind capacity. Forty-two percent of total energy consumption comes from local renewable sources. Few jurisdictions can match this combination of low-carbon, reliable, domestically controlled power.

But advantage is not the same as leadership. Despite its strengths, Quebec is falling behind in the new electric revolution. The share of electricity in its energy mix has been stagnant for 35 years. Oil still accounts for roughly 35% of energy use, with natural gas adding another 17%.

And even with broad consensus across opposition parties, experts, industry and environmental groups, the Quebec government has delayed its emissions-reduction target by five years, pushing it to 2035. Even more concerning, after committing in 2022 to end fossil fuel exploration and production, some politicians are reopening the door to natural gas fracking. This would increase emissions, harm the environment and human health, further expose Quebec to volatile energy prices, and run counter to the economic opportunity of the clean-energy transition.

Quebec should instead invest to fully electrify its economy and lock in its clean-power advantage to deliver real energy autonomy. With clean, affordable electricity that belongs to Quebecers, the province can cut reliance on imported fossil fuels, decarbonize key sectors, grow batteries and green aluminum, and export clean power while generating revenue at home.

At the same time, expanding clean power is not straightforward. Building new hydro and wind capacity will require sustained partnerships with Indigenous Peoples and local communities – not just consultation, but shared ownership and benefits. It will require major investment, faster permitting, new transmission infrastructure and potentially deeper interprovincial collaboration, including offshore wind development in Atlantic Canada linked to Quebec’s grid. These are complex challenges, but they are now the central constraints on growth.

Montreal already offers a glimpse of what a more strategic approach could look like. It is emerging as a hub for climate, technology and finance, with strengths in low-emission aluminum, batteries and electrification, but these pieces are not yet fully aligned.

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The old energy paradigm was defined by access to oil. The emerging one will be defined by access to clean, reliable electricity and the ability to deploy it strategically. Quebec has everything needed to become a global clean-energy superpower.

Recent events in the Middle East are a reminder of the costs of the old system. These include geopolitical shocks, volatile prices and external dependence. The new system offers something different: affordability, stability, sovereignty and enduring economic advantage. But it is also competitive. Jurisdictions that move decisively will capture investment, talent and supply chains. Those that hesitate will import the industries others build.

Quebec is unusually well positioned for this shift. It has abundant renewable electricity, critical minerals and industrial capacity and a strong research ecosystem. What it lacks is not public support or natural advantage, but ambition, strategic clarity and speed.

The window is open. But not for long.

Catherine McKenna is the CEO of Climate and Nature Solutions, the founder of Women Leading on Climate, and a former federal minister of environment and climate change and minister of infrastructure.

Marine Thomas is directrice générale at Partenariat Climate Montréal. 

The post Quebec must move fast to retain its clean-power advantage appeared first on Corporate Knights.

While these measures are important, they address only part of the problem. Canada still faces mounting costs and escalating risks from extreme weather, and these steps alone fall far short of what is needed.

Ottawa’s nature strategy is the latest in a series of federal policies that must be turned into concrete programs and actions to address Canada’s vulnerability to extreme weather. Despite the National Adaptation Strategy laid out in 2023, the Trudeau government implemented too little to help Canada adapt to a changing climate. Adaptation has also received insufficient focus under the Carney government beyond what is included in its nature strategy. It has received even less attention across the provinces.

Adaptation is more than protecting natural assets and encouraging greater investment in sustaining natural capital. These measures have undeniable value, but in the absence of robust federal and provincial action, Canada remains exposed to significant risks and escalating costs. Extreme weather can cause loss of life, emergency relocations, widespread property damage and destruction, and lasting health impacts. These economic, financial and health burdens are rising as extreme weather events become more frequent and severe.

Canada can ill afford these increasing losses. Adaptation needs to be a foundational pillar of Canada’s nation-building and economic resilience strategy. This will require much stronger government capacity and sharper policy focus to design and implement effective adaptation programs and practical applications. Meaningful reforms to public-sector budgeting and accounting practices are also essential.

Climate adaptation’s inadequate role in Canada’s policy reset

To understand climate risk policy, it’s helpful to distinguish between mitigation and adaptation. Mitigation means preventing or reducing greenhouse gas emissions that drive climate change. Adaptation refers to protecting or lessening the impacts of climate change and extreme weather on people, communities, businesses and infrastructure.

In practice, mitigation continues to get far more attention and resources than adaptation. Under the Carney government, it remains the main climate focus, even though overall mitigation funding and policy support have fallen compared with the Trudeau era. Since spring 2025, Ottawa’s emphasis has been on carbon capture and electrification, and now on sustaining natural capital, as the primary tools to fight climate change.

In contrast, adaptation spending is much lower, accounting for only a small share of climate-related expenditures in 2025 and early 2026. Despite the compelling merits of more funding and extensive information available to support implementation, adaptation efforts by Ottawa and the provinces remain a fraction of what is needed.

Embedding adaptation as a core pillar of nation-building is essential to support long‑term economic resilience in the face of a changing climate and challenging economic times.

– Kathryn Bakos and James K. Stewart

Inadequate adaptation poses critical risks to the Carney government’s wide-ranging strategy shift on the economy and climate. Improved federal policy, investment and spending in crucial areas such as defence, infrastructure and trade are long overdue and have considerable merit. Yet adaptation has not featured in flagship legislation (e.g., Bill C-5, the One Canadian Economy Act), or in key fiscal policies (e.g., the November 2025 budget and the February 2026 Defence Industrial Strategy).

Without more funding and focus on adaptation, Ottawa and the provinces risk making the impacts of extreme weather even worse. Weak adaptation capabilities and implementation also make it harder to coordinate federal and provincial government programs to boost resilience, attract private investment and improve regulations without harming the environment.

Large and increasing economic and financial costs

Extensive international and Canadian research shows that climate change and catastrophic weather reduce output, or gross domestic product, as well as productivity. Extreme weather events create negative supply-and-demand shocks through multiple interconnected channels. These begin with decreasing an economy’s supply capacity with its existing stock of labour, capital and land. Extreme weather (e.g., floods, wildfires, hail, wind) damages utilities and transportation and communications systems, interrupts and reduces business operations, disrupts product distribution channels, and impedes supply chains.

Extreme weather events also diminish the available supply of capital, land and labour, further constraining output. Weather disasters damage or destroy structures and equipment, reducing both the quantity and quality of facilities, and can accelerate asset depreciation. Events such as major floods and wildfires decrease the labour supply by reducing work hours or preventing work altogether through evacuations, community disruption, increased caregiving demands, and prolonged dislocations to transportation and communications.

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The production and supply repercussions from extreme weather shocks range from major temporary disruptions to devastating harms. The floods in Quebec and Nova Scotia, and the wildfires in Lytton and Jasper, show how communities can be thrown into chaos.

Even when work does not completely stop, extreme heat reduces the effectiveness of workers and their hours worked. Heat stress lowers cognitive and physical capacity, decreasing labour productivity materially starting at temperatures above 25°C. Labour productivity falls more sharply if temperatures rise further, especially at 33°C to 35°C and above. Temperature extremes also boost absenteeism.

Climate disasters also exert a serious toll on the demand side of the economy. They reduce business and household incomes from interruptions to normal activity, damage to physical capital, reduction in labour supply and lower output. In turn, they cause decreased spending by firms and consumers, further reducing GDP.

Longer-term economic and health burdens

While the rebuilding phase after weather emergencies can temporarily – and misleadingly – increase GDP, reconstruction and replacement of damaged infrastructure require funding and resources that could otherwise have been used to maintain operations or expand productive capacity.

Extreme weather also has long-term effects that can persistently reduce productivity. The difficulty of rebuilding can create delays that reduce output for years. Smaller firms are particularly vulnerable. U.S. data show that 40% of small businesses affected by extreme weather do not reopen, and another 25% close within a year of the catastrophe.

Further, extreme weather events place enormous strain on Canada’s healthcare system. As health deteriorates, more people visit hospitals and costs go up. Society’s most vulnerable individuals are disproportionately affected: the elderly, people with pre-existing conditions, pregnant women and those experiencing homelessness. Climate-related disasters are also linked to worsening mental health from the loss of homes, prolonged relocations and financial stresses from costs not covered by insurance.

Escalating fiscal and financial burdens

Governments face rising costs of emergency assistance and infrastructure repairs from extreme weather events, as well as the growing need to invest in resilient infrastructure. However, public-sector budgets distort the substantial net financial and economic benefits of adaptation spending and investment. While budgets capture immediate costs, they fail to reflect much larger future savings. They also overlook key benefits such as more reliable services, fewer delays and reduced productivity losses.

Businesses and households are also facing growing financial pressures from extreme weather. Rising insurance premiums are a huge factor, but they are just the start. Companies must cover costs for immediate repairs, long-term recovery, and investing in more resilient offices, factories, warehouses, and equipment. Households can struggle with limited mortgage options in high-risk areas and out-of-pocket expenses for repairs and rebuilding. These pressures are compounded by time away from home or work, income disruptions and reduced personal productivity.

Extreme weather and insurance losses on the rise

Since 1983, Canada has experienced more than 300 catastrophic weather events – defined as events causing more than $30 million in insured losses ($25 million prior to 2022). In the 1980s, Canada averaged about two catastrophic events per year; today, that figure has climbed to roughly 15 annually.

Adjusted for inflation, annual losses from extreme weather typically ranged from $400 million to $700 million between 1983 and 2008. Over the past 17 years, insured losses from climate-related disasters jumped to average nearly $3 billion annually, with every year but one surpassing $1 billion.

Although total insured losses in 2025 were $2.4 billion, the broader trend of escalating insured losses from extreme weather events is evident – and is accelerating year over year, as shown in the graph below.

Across Canada, the true financial burden of extreme weather extends far beyond insured losses. Uninsured losses, those not covered by insurance, are estimated at roughly three times the amount insurers pay out, reflecting the costs borne by households, businesses and communities.

A select review of major Canadian floods, wildfires and extreme heat events over the past 13 years shows their increasing frequency, severity and rising economic, financial and health costs. Catastrophic weather events have destroyed homes and infrastructure, displaced residents, disrupted transportation and energy networks, and generated billions in economic losses, demonstrating how climate disasters threaten lives, livelihoods and productivity.

Climate adaptation: A core policy need

Despite the urgent need to reduce greenhouse gas emissions – the primary driver of climate change and extreme weather – fossil fuels are expected to remain a central part of the global economy for the foreseeable future, according to analyses by the International Energy Agency (IEA) and the United Nations Environment Programme. Meanwhile, global climate-related losses are rising as shown by catastrophe loss trends over recent decades and are expected to escalate further alongside ongoing fossil fuel use.

Given this reality, climate adaptation is essential to actively manage these risks. According to the Canadian Climate Institute, every dollar invested in adaptation in Canada can generate up to $15 in value – approximately $5 in direct avoided losses (repair and replacement costs) and up to $10 in broader economic benefits, including reduced supply chain disruption and sustained labour productivity.

A 2026 study on proactively upgrading public infrastructure assets to adapt to extreme rainfall and rising heat estimated that Canada could save $10 billion annually in net costs compared to not making these adaptation investments. The savings exceed $5 billion per year relative to a reactive approach, where upgrades are made only at the time of asset replacement.

What Canada should be doing differently

1. Embed adaptation in nation-building and transformational projects
Major projects and infrastructure development are cornerstones of Ottawa’s nation-building strategy. But success critically depends on building right the first time – designing Canadian infrastructure and economic assets to withstand the escalating risks of extreme weather.

Adaptation policies and programs are foundational to Canada’s economic success, resilience and nation-building. Embedding climate resilience into transportation, energy, hospitals, water systems and emergency operations supports public safety and security, growth and incomes. Aligning adaptation investments with Canada’s defence commitments is vital, including upgrading and protecting critical military infrastructure to safeguard it against extreme weather disruptions.

2. Significantly increase government capacity in adaptation
Effective climate adaptation depends on strong, coordinated institutional capacity across both the public and private sectors. The public sector, in particular, needs enhanced capabilities to assess climate risk and design policy that guides investment capital wisely. Greater government expertise is essential to better inform stakeholders and integrate resilience into decision-making across ministries. It is also critical to prevent fragmented and reactive adaptation efforts.

Establishing a National Adaptation Office (NAO), led by a national adaptation director, would enhance leadership and improve coordination and accountability across all levels of government. Incorporating aspects of the Major Projects Office and Defence Investment Agency, an NAO would attract expertise from the non-profit and private sectors. The director of such an office would serve as a clear focal point with authority to provide guidance, deliver analysis and advance national adaptation priorities.

3. Improve fiscal support for adaptation
Investing in resilient infrastructure, strengthening energy grids, and protecting workers can lower future costs from emergencies, repairs and health impacts. Communities and households can be made more resilient through limiting development in high-risk areas, climate-smart construction, and retrofitting existing stock to maintain housing stability.

Fiscal policy can also strengthen public–private collaboration. Ottawa’s nature strategy goal of attracting private and non-profit investment in nature is commendable. Much more can be done to align government budgets with private investment, and encouraging risk-sharing is key. Incentivizing adaptation in business planning will help embed resilience throughout the economy.

4. Adopt natural asset valuation and better accounting
Natural ecosystems – including wetlands, forests and grasslands – provide essential adaptation services such as mitigating floods, moderating heat and aiding water management. The National Infrastructure Council’s 2025 report emphasized their robust economic, fiscal and health benefits. Their role is critical in delivering more resilient infrastructure through nature-based solutions as highlighted in Ottawa’s nature strategy.

For example, upstream wetlands reduce flood damage in urban areas by up to 38%, while expanded tree canopies in cities can reduce heat by as much as 5°C. Swamps and marshes in one watershed alone in Ontario provide stormwater management services that would cost more than $1.7 billion to replace with built infrastructure.

Yet federal, provincial, territorial and most municipal accounts overlook natural assets, facilitating their degradation and overuse. This increases climate risk and boosts disaster and replacement costs for households, businesses and governments. Public-sector financial reporting needs to align with new international standards for climate risk and natural asset accounting.

Canada must act

Looking ahead, greater investment in climate adaptation and long‑overdue government strategy for climate-risk management are vital requirements for Canada’s economic success.

Canada must go much further than its new nature strategy to avoid the tragedy of the horizon, as then Bank of England Governor Mark Carney warned in 2015. Climate risks unfold over much longer timeframes than those typically considered by financial markets, policymakers and businesses. By the time the full impacts of these risks are visible, it may already be too late to avoid severe consequences.

Embedding adaptation as a core pillar of nation-building is essential to support long‑term economic resilience in the face of a changing climate and challenging economic times.

Kathryn Bakos is a biologist, the managing director of finance and resilience at the University of Waterloo’s Intact Centre on Climate Adaptation, and chair of the Ontario Biodiversity Council.

James K. Stewart is an economist, a senior fellow at the C.D. Howe Institute, and a member of the Advisory Committee for the Intact Centre on Climate Adaptation.

The post It’s time to address Canada’s major shortfalls in climate adaptation appeared first on Corporate Knights.

Green hydrogen skeptics correctly observe that the sector has shifted, but they misread what that shift represents. Green hydrogen is moving from early-stage hype to disciplined execution, as capital markets and policymakers concentrate on projects with bankable fundamentals and credible buyers. That winnowing process is not evidence of collapse; it is how clean-energy sectors mature.

Pointing to the cancellation or redesign of a single wind-to-hydrogen project as proof the sector was a fad misses how large infrastructure markets evolve. Projects routinely shift as financing conditions, regulation and demand signals mature, while other proponents continue advancing through permitting, engineering and offtake negotiations. It also overlooks the policy architecture Canada and its trading partners have built to integrate renewable hydrogen into industrial decarbonization, heavy transport and export value chains.

As the sector moves from headlines to creditworthy grid-integrated projects, simplistic narratives risk misleading communities and investors.

Momentum across Canada

Across Atlantic Canada, green hydrogen projects are progressing in a more measured, credible way than early hype suggested. These initiatives are grounded in strong wind resources, proximity to export markets, and provincial strategies that explicitly tie hydrogen to industrial decarbonization and rural economic development.​

Nova Scotia’s Department of Environment and Climate Change has already approved two large‑scale green hydrogen and ammonia projects along the Strait of Canso, designed to use onshore wind power for exports to Europe.​ EverWind and Membertou are also advancing Nova Scotia’s largest wind buildout (more than 650 megawatts) and a multibillion‑dollar export complex, supported by Germany’s interest in Atlantic Canadian green ammonia. These developments signal that serious international buyers still see this region as strategically important.​

Newfoundland and Labrador has selected multiple proponents – including EverWind, Abraxas Power, Toqlukuti’k Wind and Hydrogen, and North Atlantic Refining Limited (NARL) – for multi‑phase green hydrogen and ammonia export projects, underpinned by a dedicated Hydrogen Development Action Plan that positions the province as a “clean energy centre of excellence.”​

Most recently, EverWind secured a major strategic investment of $240 million to advance its Nova Scotia wind portfolio and green fuels platform, reinforcing that capital is still flowing to credible Atlantic Canadian projects.

Quebec alone has mobilized nearly $10 billion in public and private investment over the coming decade, with major projects including TES Canada’s multibillion-dollar green hydrogen facility, Air Liquide’s 20-megawatt PEM (proton exchange membrane) electrolyzer in Bécancour, StormFisher’s Varennes e-methanol plant, and Enbridge’s 20-megawatt Gatineau project injecting hydrogen into the gas grid. The province’s hydrogen road map and “Vallée de la transition énergétique” are anchoring multiple industrial deployments in existing clean-power assets.

Elsewhere, Ontario’s Niagara Hydrogen Centre (Atura Power) will link a 20-megawatt electrolyzer to the Sir Adam Beck hydro station, while federally supported projects – such as Air Products’ net-zero hydrogen energy complex in Edmonton and AVL Fuel Cell Canada’s research and development facility in Burnaby – underscore that hydrogen development is advancing across multiple provinces under coordinated strategies.

International market signals

Globally, the sector’s trajectory is clear: low-carbon hydrogen production is up roughly 60% since 2021, installed electrolyzer capacity has grown ninefold, and investment in electrolyzers and carbon capture has expanded from about $500 million in 2021 to nearly $8 billion in 2025.

At the same time, the European Hydrogen Bank is translating policy into real demand: its first auction awarded roughly €720 million in production-linked support to projects in Spain, Portugal, Finland and Norway, while its second round was four times oversubscribed – 61 bids seeking €4.8 billion against a €1.2 billion budget – supporting plans for 6.3 gigawatts of electrolyzers and 7.3 million tonnes of renewable hydrogen over 10 years.

Moreover, in January 2026, the European Commission approved €200 million in German state aid for Canadian-produced renewable hydrogen exports to the EU: a clear demand signal for Canadian green hydrogen.

Together, these successes make clear that global hydrogen markets are not retreating; they are institutionalizing long-term demand through scaled capital deployment and binding policy frameworks, creating tangible export opportunities for credible Canadian projects.

What serious hydrogen development looks like

Yes, interest in green hydrogen has cooled since the early-2020s hype, and some capital has pulled back. But policy frameworks, climate mandates and declining technology costs continue to underpin long-term demand growth toward 2030 and beyond. To be clear: Canada’s approach is built on that multi-decade horizon – not a short boom cycle.

Green hydrogen will not succeed everywhere, nor should it. Project cancellations are a sign of market discipline, not collapse. What’s actually happening in the green hydrogen sector is a shift from hype-driven, “anywhere, at any cost” projects toward fewer, better-sited hubs that align cheap renewables, strong grids and real customers. Countries that move early in this more disciplined phase will shape future clean-energy trade. Canada has the assets to compete – if it stays the course.

David Billedeau is president and CEO of the Canadian Hydrogen Association. Derek Estabrook is executive director of the Atlantic Hydrogen Alliance. Michèle Landry is directrice générale of Hydrogène Québec.

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Of course we need to achieve net-zero by 2050: it’s a chemical necessity for the atmosphere. But this is hardly a goal that your average person can see and touch and wrap their arms around.

Compounding the difficulty is that 2050 is a quarter century away. What do the signposts of success look like between now and then? How do we make sure we’re on track? Where do we course-correct if we’re not?

One way that countries have tried to define progress is by measuring the reduction of greenhouse gas emissions.

The landmark Paris Agreement, signed a decade ago, aims to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels. Countries determine themselves what contributions they should make to achieve the aims of the agreement. These plans, called nationally determined contributions (NDCs), are required to be “ambitious efforts” toward “achieving the purpose of this Agreement” and to “represent a progression over time.” The contributions are to be set every five years and registered with the United Nations.

Similar to many other nations, Canada has enshrined its Paris Agreement commitments in a national law, the Canada Net-Zero Emissions Accountability Act, adopted by Parliament in 2021. Under this act, the federal government has rolled out its Emissions Reduction Plan that it regularly updates.

For Canadians, decarbonization is a patriotic act

Unsurprisingly, given that the global community has consciously structured the climate change issue around these yearly measurements of emissions reduction, that’s the primary lens through which the public now views the discussion. A significant proportion of climate change media headlines relate to emissions targets being met, or not met.

Don’t get me wrong: I think this Paris Agreement approach has been useful. Like Canada, most countries in the world have methodically catalogued every scrap of carbon emissions and created policy architectures to start knocking them back. That’s led to a substantial reduction in projected future warming – close to one full degree Celsius by century’s end.

But a decade on from the Paris Agreement, I don’t think that communicating to the public the success or failure of climate progress in terms of megatonnes of carbon reduced – putting this in the metaphorical window every chance we get – is the best we can do.

For one thing, and as I’ve already observed above, it’s not really comprehensible or tangible for most people.

For another, there are better, more compelling stories of success or failure to tell. Let’s take electric vehicles as one example. When the Paris Agreement was signed, electric vehicles were less than 1% of new vehicle sales around the world. Today, they are more than 25% and rising fast. The boom in electric vehicles is actually resulting in less demand for oil and less greenhouse gas emissions. The International Energy Agency, for example, pegged the total number of barrels of oil displaced by EV adoption at more than 1.3 million barrels per day in 2024. The agency expects that number to rise to more than five million barrels per day by 2030.

Most compelling of all, EVs are just better machines than gasoline-powered cars. Anyone who drives one loves them and saves money in the long term (especially when the price of oil skyrockets because of the type of international conflicts we’re seeing at the moment).

Heat pumps are another example. In 2015, globally, heat pumps were generally a marginal technology. Now: heat pumps outsell gas furnaces in the United States and in many markets. And because they are more efficient than natural gas furnaces, and run by electricity, they are starting to measurably reduce carbon emissions.

A fork in the road for the Canadian climate change discussion

The rate of uptake of electric vehicles and heat pumps is an extremely important measure of climate change progress. As opposed to emission reductions, they are visible, tangible things.

So as a way of refocusing the climate change discussion in a positive direction, the Canadian Climate Institute is going to start tracking these indicators of progress such as EV and heat pump sales data in the months ahead.

This is also a way of holding governments to account. The recent announcement by Prime Minister Mark Carney that the federal government is aiming for 75% of new cars sold by 2035 to be EVs is a clear commitment. And it’s an opportunity to ensure that the package of policies he has released will get us to that goal.

As I’ve said before in this space, the climate change discussion is a marathon, not a sprint. It has evolved over decades and will continue to do so. The way we talk about the issue in order to ensure that it gets the attention it needs in a volatile world requires constant reinvention to ensure that we’re connecting with our audiences.

Rick Smith is president of the Canadian Climate Institute, the co-author of two bestselling books on the effects of pollution on human health, and the executive producer of Plastic People, a 2024 documentary chronicling the damage done by microplastics in the human body.

The post What does climate change progress look like? appeared first on Corporate Knights.

With the book, Watsa partly wanted to ensure that outsiders understood Fairfax’s culture well enough not to dismantle it after he’s gone. I was drawn to the book not only because Watsa and I share an alma mater, the Ivey Business School, but also because of the curious gap between Watsa’s philosophy and the application of it when it comes to climate risk. 

The irony is that by carefully documenting why Fairfax is designed for permanence, the book also exposes how ill-prepared it is for the most significant long-term risk facing the insurance industry from which it derives most of its revenue. Fairfax prioritizes reducing long-term losses over achieving short-term gains, led by a founder who cares about doing good and having a positive impact on the world. Yet it is the world’s third-largest insurer of fossil fuel projects and has little to no plan on how it manages climate risk. 

I’ve spent the last two years trying to approach both Fairfax and its shareholders to address the climate risk that is facing their industry and business. This includes two shareholder resolutions, a bunch of letters – they refuse to meet – and even a complaint to the Ontario Securities Commission over lack of disclosure. 

A long-term philosophy meets a long-term risk

Watsa’s value-investing philosophy favours patience, downside protection and trust over market fashions and short-term profits. This long-term orientation makes Fairfax’s position on climate risk harder to reconcile than for companies that justify inaction by pointing to short-term shareholder pressure. 

“Our favourite holding period is forever” is a Warren Buffett line that Watsa returns to often. In the abstract, this is a refreshing counterweight to short-termism. In practice, it raises uncomfortable questions about the kinds of assets Fairfax intends to hold indefinitely. Those holdings include oil and gas investments, and “forever” is a long time to finance industries whose business models depend on expanding physical risk across the global economy, thereby biting the insurance industry.

Climate change barely appears in The Fairfax Way. A short section acknowledges that catastrophe losses are increasing and that Watsa finds watching the weather channel nerve-racking. Missing is any explanation of how accelerating climate damage fits into Fairfax’s commitment to downside protection, sound underwriting and enduring value creation. The company is simultaneously betting on long-term stability while underwriting and financing industries that undermine it.

Watsa has also said that “everything we do as a company rests on the strength of our insurance assets. Without them, there is no Fairfax.” The value of those assets depends on their ability to generate underwriting profits over long periods. Climate change directly weakens that equation. Insured wildfire losses in Canada have risen more than 1,000% in a little more than a decade, reflecting not a temporary spike in claims but a structural shift in the loss profile facing insurers. Fairfax itself reported approximately US$1.1 billion in catastrophe losses in 2024.

Why climate risk may be getting misclassified

One is left wondering whether climate risk simply does not arrive in the categories Fairfax is accustomed to managing. Fairfax can handle specific shocks that show up as short‑term volatility in a particular stock or line of business. Climate risk is different. It is systemic, cumulative and physical – the kind of risk that compounds quietly, until it doesn’t.

Watsa has repeatedly demonstrated an ability to navigate stress. Fairfax has anticipated multiple market shocks and had to navigate an attack by a U.S. hedge fund. That experience likely reinforced an institutional instinct that external pressure, whether from markets, media or activists, will not determine the company’s direction. Fairfax’s success in resisting noise became part of its identity.

That same instinct may have led Fairfax to misclassify climate risk as politics, as fashion or as ESG rhetoric rather than as signal. 

Fairfax’s decentralized structure does not prevent clear direction from the top. Watsa is described as values-driven rather than prescriptive but decisive when principles are involved. That combination could support a serious response to climate risk if leadership chose to name it as such.

There is also a moral tension that feels unusually relevant because Watsa has made values central to Fairfax’s identity. He speaks often about honesty, integrity, humility, loyalty and the Golden Rule. He capped his own salary, donates hundreds of millions of dollars annually, and has said that success carries an obligation to give back and that “to whom much is given, much is expected.” Insurance, at its core, exists to help people recover when things go wrong. 

Profiting from activities that intensify those harms is in direct competition with that purpose.

Even so, reading The Fairfax Way left me cautiously optimistic. If Fairfax is truly a contrarian institution focused on multi-generational success, then addressing climate risk is not optional; it is necessary. Trust, in a world of accelerating physical damage, means not funding the forces that undermine collective resilience.

The book presents the Fairfax approach as a shared agreement about how to live and operate, followed by the courage to act accordingly. Our collective response to climate change is based on the same thing.

Kiera Taylor is a senior policy analyst at Investors for Paris Compliance.

The post The giant oversight in Prem Watsa’s long-term investing strategy appeared first on Corporate Knights.

It’s energy efficiency.

Energy efficiency is the cheapest source of new energy because every kilowatt-hour that I save on the grid is one that someone else can use.

Within the world of computers, the price-performance efficiency is even more pronounced. A 2023 iPhone 15 is 60,000 times cheaper than a 1976 Cray-1 supercomputer. It’s also 180,000 times more energy efficient and 5,000 times more powerful.

Kevin Weil, chief product officer at OpenAI, says that OpenAI’s models are improving 10-fold every year in energy efficiency. Deferring compute-heavy tasks such as AI training to times when data-centre energy use loads are light and assigning loads across many data centres – in essence adjusting when and where power is used – could have the same benefit of building 200 gigawatts of new capacity, argues Amory Lovins, one of the cofounders of the Rocky Mountain Institute, which is on a mission the transform global energy systems. That’s far more than enough to power all projected new data centres from existing utility assets.

AI driving efficiency in buildings

Computers aren’t the only arena where efficiency is making giant leaps. Buildings represent roughly 40% of global energy consumption and 75% of U.S. electricity use, making them an enormous target for efficiency improvements. Research published in Nature Communications found that AI applications could reduce building energy consumption by 8% to 19% by 2050, and up to 40% when combined with other policies such as retrofits and low-carbon power generation. Building efficiency can free up more electricity use than AI will ever require.

This creates a fascinating dynamic: while AI consumes energy, it also enables efficiency gains across the broader economy. The key is ensuring that AI deployment is strategic and coupled with robust measurement and verification protocols. AI for buildings isn’t theoretical; companies like BrainBox AI and others are already deploying systems that optimize HVAC (heating, ventilation, air conditioning), lighting, and energy storage in real time based on occupancy, weather and grid conditions.

“Artificial intelligence is the latest development in a long-standing megatrend in which information, analysis and innovation have been replacing the waste of energy and materials that characterize the overbuilt technologies of the 20th-century fossil economy,” notes Ralph Torrie, director of research at Corporate Knights. “Of course it uses electricity, but not nearly as much as it displaces.”

There are many examples of rapid, unexpected gains in energy efficiency. In 2021, all the blockchain-based cryptocurrencies combined used somewhere between 190 and 250 terawatt-hours of electricity, which is just about 1% of global electricity demand that year, or roughly the same as Taiwan’s consumption. Critics called blockchain technology fundamentally unsustainable.

Then in September 2022, Ethereum underwent a major transformation it called “The Merge,” shifting its consensus mechanism from “proof of work” to “proof of stake.” This cut the network’s energy consumption by 99.9%. The network’s annual energy use dropped from 80 terawatt-hours – the same amount of electricity that Austria or Finland uses in a year – to just 0.01 terawatt-hours.

Proof of stake achieved these gains by eliminating wasteful competition. Instead of miners racing to solve puzzles, Ethereum now relies on validators who are chosen to create new blocks and confirm transactions based on the amount of Ether (Ethereum’s native currency) they have staked as collateral. This method secures the network through financial commitment rather than raw computational power.

When real limits appear, innovation often accelerates in unexpected ways. Constraints can become the spark for new possibilities.

— Anthony Di Iorio, Ethereum co-founder

The shift to proof of stake also enhanced its security, scalability and environmental sustainability. This landmark move positioned Ethereum as a leader in sustainable blockchain innovation and demonstrated that large-scale decentralized systems can evolve to meet global energy and climate goals without compromising performance or decentralization.

Ethereum co-founder Anthony Di Iorio says that Ethereum’s massive efficiency gain is part of a broader pattern of disruptive innovation across technologies: “When real limits appear, innovation often accelerates in unexpected ways. Constraints can become the spark for new possibilities.”

For Di Iorio, the key lesson is that “fundamental architectural redesign beats incremental optimization. When you eliminate structural inefficiency rather than just making a system slightly less inefficient, you unlock orders-of-magnitude improvements.”

DeepSeek, a Chinese AI company, also showed that algorithmic innovation can cut costs – in its case by 97% even under severe hardware constraints. Meanwhile, SETI@home coordinated millions of personal computers to create a huge virtual supercomputer to power its search for extra terrestrial intelligence.

Better orchestration, multi-tenant GPU sharing (in which multiple users share computational resources) and carbon-aware scheduling could push AI infrastructure use from today’s 25% to 40% to 55% to 60%, effectively doubling capacity without building any new facilities.

“The question isn’t whether AI will consume catastrophic amounts of energy,” Di Iorio notes. “The question is whether we will apply what we’ve already learned about radical efficiency gains.” That means implementing the measurement and transparency frameworks that enable market discipline and establishing the policy guardrails that ensure that efficiency serves sustainability rather than just enabling endless expansion.

The path forward: Three essential actions

Three near-term actions could save 15 to 70 terawatt-hours by 2028:

Default to efficiency. Major cloud platforms and AI frameworks should make lean, right-sized models the default choice rather than requiring developers to opt in. When efficiency becomes the path of least resistance rather than an extra step, adoption accelerates dramatically.

Focus on hardware use. Better workload-management software can increase effective use from today’s 40% to 55 to 60%.

Mandate transparency. Energy consumption per task should be as visible as price and latency. When enterprises and governments demand kilowatt-hours-per-million-tokens disclosure in their AI procurement, providers will compete on efficiency. Market mechanisms work, but they require information.

The projections of AI’s looming energy crisis aren’t wrong if we assume nothing changes. But stasis isn’t how technology works when talented people face hard constraints with clear incentives to solve them.

Jim Harris is a #1 international bestselling author writing on AI, disruption and innovation. He speaks at 50+ events a year.

The post The single greatest tool for reducing greenhouse gas emissions is energy efficiency appeared first on Corporate Knights.

For environmentalists, it means acknowledging that end-of-pipe solutions like carbon dioxide capture and storage (CCS) do have a role after all. And for the fossil fuel industry, it means accepting that they need to decarbonize not just their own processes, but also the products they sell – and without expecting the Canadian taxpayer to foot the bill. In the short term, this might make those products less profitable – although it might also give them a more secure, if less exciting, long-term future.

Dismissing the notion of “decarbonized oil” as a myth is equivalent to saying that stopping climate change is a myth: but it has to mean genuinely decarbonized oil. Safe and permanent disposal of all – yes, all – the carbon dioxide they generate is the only way to stop fossil fuels from causing further global warming before the world stops using fossil fuels. And if anyone believes the world will stop using fossil fuels altogether in time to prevent dangerous climate change, we suggest that they look at recent events in Venezuela and think again.

A matter of timing

Make no mistake, we need to reduce our dependence on fossil fuels as far and as fast as possible. But every year that goes by makes it clearer that won’t be far or fast enough. Carbon dioxide accumulates in the climate system like lead in the bloodstream. We can slow warming by emitting less, but it won’t stop until we stop emissions entirely, or balance any residual emissions with active carbon dioxide removal.

It’s conceivable, albeit unlikely, that renewable or nuclear energy are about to become so cheap that everyone, everywhere, will lose all interest in using fossil fuels, even in “hard to abate” sectors like aviation, within the next few decades. It is also conceivable, albeit even more unlikely, that everyone, everywhere, will agree on carbon prices so high that they amount to a de facto worldwide ban on continued fossil fuel extraction and use. But it would be folly to bet the future on either of these things happening.

Everyone talking about “decarbonized oil” needs to level with Canadians about what it means. Capturing the carbon dioxide generated in the production and refining of fossil fuels is the obvious place to start – but it is only a start.

In the absence of that worldwide ban, or fossil-free energy that is cheaper than natural gas in Qatar, the only other way to stop fossil fuels from causing further global warming is to capture every tonne of carbon dioxide they generate and pump it back underground. This means capturing as much as possible at source, with CCS, and taking the rest back out of the atmosphere, through active carbon dioxide removal (CDR). The industry is already doing both: the challenges are not technical, but economic. CDR is still very expensive, and lots of CCS projects run over budget – often because operators have no incentive to control costs as someone else is footing the bill.

There are other, potentially equally permanent, disposal options, like reacting carbon dioxide with rocks or storing it in the oceans, but geological disposal is the only one proven on a multi-million-tonnes-per-year scale. And even that needs scaling up by at least a factor of 100 to have any hope of balancing all remaining fossil fuel use even in the most optimistic scenarios for renewable-energy deployment.

A pragmatic solution

Environmentalists should be actively promoting CCS, not trying to block it.

This balance, between ongoing production of carbon dioxide from geological sources with disposal of carbon dioxide into geological sinks, is what we called “geological net-zero” in a paper published last year involving all the authors of the six papers that established, back in 2009, what it would take to stop carbon dioxide from causing global warming.

Mark Carney trades climate allies for controversial oil-patch solutions

The carbon dioxide we are emitting today was locked away in fossil fuel reserves formed from ancient forests, marine organisms and plant material that accumulated over tens to hundreds of millions of years. In just a few decades, we are reversing that geological process, returning carbon to the atmosphere at a pace without precedent in the recent history of the Earth system. Atmospheric greenhouse gas concentrations are heading toward levels last seen in the Jurassic period. And while it is sometimes said that “the dinosaurs lived with that much carbon dioxide,” it is worth remembering that they are no longer around.

The geological record reminds us that high-carbon worlds are not hypothetical, but neither are they environments in which human civilization has ever existed. The question is not whether the planet endures – it will – but whether the climatic conditions that allowed our societies, economies and food systems to develop can be maintained as we unleash, in decades, what nature took millions of years to put safely away.

Every hundred billion tonnes of carbon dioxide we release from the “geosphere,” or solid Earth, ratchets up global temperatures by one-twentieth of a degree – and we are currently releasing 400 billion tonnes per decade, so our carbon dioxide emissions alone are causing roughly a degree of warming every 50 years. That’s well-understood climate physics.

Can Mark Carney fight climate change while supporting oil and gas?

We can delay that warming for a decade or two by planting trees or cutting methane emissions, but once carbon is released from the geosphere, it’s out, propping up global temperatures until we, or our long-suffering descendants, can pump it back out of the atmosphere and into the geosphere again. And if there was a chance that we would stop using fossil fuels in time to meet our climate goals back in 2015, that chance is long gone. We are going to generate too much carbon dioxide, so we must work out how to get rid of it, permanently and at scale, through a combination of CCS and CDR. Anyone who still thinks otherwise is in a level of denial akin to those who dismiss global warming as a hoax.

Make polluters pay

All that said, everyone talking about “decarbonized oil” needs to level with Canadians about what it means. Capturing the carbon dioxide generated in the production and refining of fossil fuels is the obvious place to start – but it is only a start. We will also need to dispose of the carbon dioxide generated when fossil fuels are used. If that use is for road transport or aviation, that means recapturing it back out of the atmosphere. Technologies exist to do this, but they need to be scaled up.

Disposing of carbon dioxide responsibly is more expensive than just dumping it into the atmosphere: which is why the Pathways CCS project in Alberta is costing $16 billion dollars. But part of the reason CCS is so expensive is the way it is funded: through taxpayer subsidies. If the government asks an industry how much they need to get rid of carbon dioxide, what company would say they can do it cheaply?

There is another way of funding CCS, which is to package the cost of carbon dioxide disposal in with the cost of fossil fuels themselves. We don’t have to dispose of 100% of that carbon dioxide right away, but we must make a start: in our geological net-zero paper, we suggested 10% in the early 2030s, rising to 100% by or soon after mid-century. A mandate to capture and store 10% of the carbon dioxide generated by its production and use would add just a few dollars to the cost of producing a barrel of oil – less than typical taxes and royalties. If companies are mandated to capture and store carbon dioxide as a licensing condition for continuing to sell fossil fuels, they have much more incentive to do it cost-effectively than if they are simply subsidized to install CCS. And as CCS becomes more widely adopted, its price tag plummets.

The world needs fossil fuels that don’t cause global warming. So, whoever works out how to supply the cheapest and most reliable fossil fuels that don’t cause global warming is going to clean up, literally, on a planetary scale.

Canada’s risky gamble on carbon capture and storage

That supplier could be Canada, blessed with an almost unique combination of three vital ingredients: abundant fossil fuels, even more abundant capacity for geological carbon dioxide disposal, and, crucially, a world-beating reputation for climate and geological sciences and responsible resource governance.

The Canadian label

Mark Carney emphasizes that Canada’s oil should be “low risk, low cost and low carbon.” There will come a time when the only low-risk oil is not just low-carbon, but net-zero carbon. One day, no one will want to risk using fossil fuels at all unless either they or their fuel supplier has taken care of all the carbon dioxide those fuels generate, for fear of being held liable for the impact of dumping it into the atmosphere. We cannot predict when that time will come, but as climate impacts accumulate along with public outrage, it may come sooner than even we would have predicted 20 years ago.

If, in the second half of this century, Europe or China or an environmentally conscious U.S. airline wants to buy a barrel of fully decarbonized oil – that is, oil bundled with a commitment to take back and dispose of all the carbon dioxide generated by its production and use, either directly through a pipeline or back out of the atmosphere – who will they want to buy it from? Not from Russia, surely, absent some truly dramatic changes in Russia’s reputation for waste management. Probably not from Venezuela either. Possibly not even from Texas, if the U.S. administration continues to gut the Environmental Protection Agency’s capacity to monitor leaks from potential carbon dioxide storage sites.

They will want to buy it from a country with a proven track record, respect for property rights and the rule of law; a country that, back in the 2020s, made history by being the first to make geological carbon dioxide disposal a licensing condition of extracting fossil fuels and has been progressively scaling up her carbon dioxide disposal industry ever since; a country whose customers can be 100% confident that decarbonized oil really does what it says on the label. The Canadian label.

Myles R. Allen teaches at the University of Oxford in the Department of Physics. Andrew J. Weaver teaches at the University of Victoria in the School of Earth and Ocean Sciences.

The post There’s a simple way to fix the economics of carbon capture appeared first on Corporate Knights.

I’ve never bought a Canadian flag before. But I surprised myself when the daily Trump “51st state” insults ignited a desire in me to fly our country’s colours. Given how long the flag and flagpole I wanted were out of stock at Canadian Tire, it seems that many other Canadians felt the same.

This month’s avalanche of “year in review” articles on the Trump presidency (one down, three to go!) was a reminder of just how unprecedented this past year has been. And judging by the reaction to the prime minister’s speech in Davos, much of the Western world has had similar feelings.

Twelve months ago, would any of us have guessed that the very existence of our country would be regularly belittled by our alleged closest ally – our national sovereignty threatened by a late-night social media post? Or that some of our key industries, like steel and cars, would be fighting for their survival because of crushing Trump-imposed tariffs, or that European countries – NATO members – would be moving troops to Greenland in a not-so-subtle attempt to dissuade a U.S. invasion, with Canada under pressure to join too?

In 2026, there is every indication that Trump’s unhinged behaviour will get worse, not better.

He’s already referring to the Canada-U.S.-Mexico free trade agreement (CUSMA) – the renegotiation of which kicks off this year – as “irrelevant” to the United States and has targeted the Canadian automobile industry for extinction. He seems deadly serious about undermining the independence of the U.S. Federal Reserve and using his politicized Department of Justice to silence any criticisms.

Nothing about this is “business as usual.” And it has prompted an unprecedented degree of anxiety: roughly three-quarters of Canadians now believe the United States poses an economic threat, and 53% say it poses a national security threat as well.

Climate change policy is caught right in the middle of all of this.

As he explained at length in a speech at the United Nations in September of last year, Trump believes that climate change is a “con job” and that renewable energy, such as wind and solar, is a “scam” that should be eliminated. Instead, he is focused on dramatically expanding oil and gas production and recently demonstrated he is even prepared to forcibly depose foreign leaders to achieve this.

2025 was defined by uncertainty on climate policy in Canada that needs quick resolution

Meanwhile, in the rest of the world, decarbonization is accelerating, not slowing down. We’ve seen it with electric vehicles, with renewable power, with global investment in clean technologies and with carbon border tariffs, to name just a few. And these trends are accelerating in the countries Canada needs to diversify its trade and strengthen its economic prospects.

Bottom line: things powered with fossil fuels are the technologies of the past. (And I mean this literally: sales of gasoline-powered cars peaked globally in 2018.) Things powered by electricity are the technologies of the future. Those countries that produce the building blocks of a decarbonized economy – including critical minerals, batteries, clean electricity, and electrical machines like heat pumps and EVs – will prosper. Those that don’t will be left behind.

The challenge for Canada is to escape the evil tractor beam of Trump’s bad ideas. To set a course of our own for the benefit of all Canadians.

Doing everything we can to decarbonize Canada isn’t just something we’re doing to reduce emissions. It’s a contribution to a better future for our country.

Yes, we need to deal with the clear threats posed by Trump in the short term, but at the same time we need to lay track for a decarbonized economy that is rapidly gaining momentum.

Decarbonization is an act of patriotism.

In amongst the recent “Trump year in review” media this month was a healthy dose of polling. Trump’s popularity is down. Way down. It turns out a U.S. electorate that supported him in hopes that he’d make their lives more affordable isn’t warming to his quixotic and destabilizing foreign policy interventions.

I don’t know exactly when, but sometime in the next few years – at this rate, starting with November’s U.S. midterm elections – the forces of MAGA are going to start losing. At that point, the damage from climate change will be more evident than ever, and the economic gravity of cheaper solar, batteries and EVs will be impossible to resist. Climate action will ramp up even stronger than before.

Canada needs strong climate policy to be competitive in countries beyond the U.S.

Our goal has to be to ensure that we have leapfrogged the United States by then to ensure that our economy is positioned to prosper.

We see the first inklings of what’s possible in this regard with recent news that the Trump administration’s unlawful quashing of New England offshore wind projects is increasing investment interest in Canadian projects. And the recent deal with China on EV tariffs is being positioned by our federal government as the first move in a strategy for Canada to build North American leadership in electric vehicles: smart.

In 2026, arguments for climate progress need to keep these global dynamics front and centre. The transition to a cleaner economy isn’t just the answer to the atmosphere’s chemical challenges, but to Canada’s economic ones as well.

In short, decarbonization should come wrapped in a Canadian flag.

Rick Smith is president of the Canadian Climate Institute, the co-author of two bestselling books on the effects of pollution on human health, and the executive producer of Plastic People, a 2024 documentary chronicling the damage done by microplastics in the human body.

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In December, U.S. Senator Ted Cruz introduced legislation that would block voting on environmental, social and governance (ESG) and diversity, equity and inclusion (DEI) matters for the federal pension fund. The bill would prohibit BlackRock and State Street from exercising their voting rights as shareholders on matters related to the Thrift Savings Plan – the $1-trillion retirement plan for U.S. federal employees.

This legislation strengthens Republican efforts to limit asset manager participation in ESG and climate coalitions, occurring alongside lawsuits alleging antitrust violations related to sustainability initiatives. Shareholders should be deeply concerned.

Despite the government’s rhetoric, climate risks are not abstract concerns. The financial losses from climate-related disasters are already staggering and directly affect corporate balance sheets, insurance costs, supply chain stability and asset values. When wildfires destroy infrastructures, when extreme weather events force business closures, these become material financial risks that any prudent investor must consider.

Yet this legislation would forbid asset managers from voting directors off boards when they underperform as a result of failing to manage these risks. Nor would they be able to vote against CEO pay packages that incentivize short-term thinking over long-term climate resilience. Voting for or against mergers and acquisitions based on the climate-related risks or opportunities they present would also be off the table.

The doublespeak has been striking. The bill’s proponents frame it as protecting shareholder interests and ensuring fiduciary duty, yet it proposes the wholesale elimination of voting rights on a broad category of financially material issues. Shareholders – including the federal employees whose retirement savings are at stake – are being told that their interests are best served by having fewer voting rights and reduced ability to hold management accountable. The underlying assumption appears to be that asset managers considering climate risks, social factors, or practices such as ESG and DEI are inherently acting against shareholder interests, an assertion that ignores decades of research demonstrating the financial materiality of these factors and the value of active ownership in protecting long-term returns. The evidence is clear.

Yet the implications of Senator Cruz’s bill extend far beyond this single piece of legislation. Once governments establish the precedent that they can selectively prohibit voting on certain categories of proposals, what is the next target? The legislation effectively creates a two-tiered system of shareholder rights: some topics are deemed acceptable for investor engagement, while others, despite their potential financial materiality, are placed beyond the reach of fiduciary oversight. This is not market-based decision-making; it is state intervention determining which corporate governance matters shareholders may address through their ownership rights.

Cruz’s proposal is part of a broader pattern. Important changes are reshaping the U.S. corporate governance landscape, with particularly significant implications for the 2026 proxy season, which is upon us. The Securities and Exchange Commission (SEC), citing lack of resources, has dramatically limited no-action letter requests, now focusing only on resolutions not being a “proper subject” for shareholders under state law.

Paradoxically, despite these claimed resource limitations, President Donald Trump has issued an executive order directing the SEC – along with the Federal Trade Commission and the Department of Labor – to undertake a comprehensive review of regulations governing proxy advisers, particularly those involving DEI and ESG considerations. The executive order specifically targets Institutional Shareholder Services and Glass Lewis, which together control more than 90% of the proxy adviser market, asserting that these firms prioritize politically motivated agendas over investor returns.

Furthermore, Texas has implemented legislation that restricts both derivative actions and shareholder proposals, effectively narrowing the pathways through which investors can hold corporations accountable. Perhaps most telling is ExxonMobil’s move last year to sue shareholders who filed a climate-related proposal – a stark indication that the corporation–shareholder relationship has shifted from the realm of business and markets into legal warfare.

We should be concerned not just about ESG or DEI specifically, but about the precedent being established for all shareholder rights. If companies can sue shareholders into silence, what incentive remains for investors to exercise stewardship and active ownership? And if the SEC withdraws from its role in maintaining a fair and orderly process for shareholder proposals, who will protect investors’ fundamental rights? These are not hypothetical concerns; they are materializing in real time and at, what I would consider, light speed in the United States.

The right to vote as a shareholder is at risk of becoming a hollow privilege, restricted to only those matters deemed politically acceptable to the government of the day. The irony is that those claiming to protect free markets and shareholder interests are systematically dismantling the very mechanisms that allow markets to function and shareholders to exercise their ownership rights. Whether this erosion can be reversed will depend on whether investors recognize what is at stake before it is too late.

Julie Bernard is a research fellow with the Institute for Sustainable Finance at Smith School of Business, Queen’s University, and an assistant professor of sustainable finance at the School of Environment, Enterprise and Development at the University of Waterloo.

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Ella, the chief sustainability officer of a multinational corporation, was hired to lead the organization toward ambitious net-zero emissions goals that the CEO is intent on delivering – despite political indications that it’s no longer a priority. Ella joined the company believing in its stated commitment to environmental responsibility. However, she discovers a troubling reality: key company stakeholders are prioritizing short-term profits over long-term sustainability, sabotaging both the CEO’s mandate and her work.

Ella is experiencing moral injury – a “first cousin” to trauma. Moral injury, as a concept, was first introduced in the 1990s by psychiatrist Jonathan Shay, who defined it as profound psychological distress resulting from actions that violate one’s moral or ethical code, particularly in high-stakes situations involving betrayal by authority figures.

In the “AfterShock era” [the polycrisis period following what Alvin Toffler described as “future shock“], characterized by rapid technological advancements and societal shifts, organizations are thrust into environments of intense change, volatility and ethical ambiguity. For employees like Ella, the emotional and psychological toll of this shift is profound. As decision-making becomes erratic and public commitments ring hollow, moral injury emerges as a silent but powerful force shaping both her experience and how she performs her work.

How moral injury restructures work

Moral injury isn’t a label anyone wakes up with, and it doesn’t just sit in Ella’s mind – it reshapes how she performs her role, how she interacts with others and whether she believes in the work at all.

She experiences decision paralysis and second-guesses herself constantly. The ethical contradictions in leadership create a fog of uncertainty, making even routine decisions feel fraught.

Innovation suffocates. Where she once pushed for new sustainability solutions, she now self-censors, knowing they’ll be blocked by leadership. The company doesn’t just lose her engagement – it loses her creativity. She becomes so demotivated that she becomes helpless and angry. She’s likely to move to whistleblowing mode, burn out or quit.

Mistrust becomes contagious. She stops believing leadership’s messaging, and soon, so do her colleagues. Moral injury spreads like an emotional contagion, affecting teams beyond her own.

The risk for organizations

Unchecked moral injury doesn’t just affect one employee; it changes the culture, decision-making, communication, trust and the ethical foundation of the entire company. Employees become risk-averse, unwilling to challenge the status quo. Talented people leave, often quietly, draining institutional knowledge. The work itself degrades – products, policies and strategies become hollow, shaped more by survivalism than purpose.

This is why moral injury is not just a human issue; it is an operational crisis.

What it means for leaders

The chances are that you recognize Ella either in yourself or in others that you’ve worked with. If you’re feeling overwhelmed with this realization, you’re not alone.

As a CEO, executive or senior leader, you might be experiencing helplessness: “This is too big to fix. We’ll never get there.” Frustration, too: “Even when we try, external forces make it impossible to get this right.” Or, “Let’s hire someone else to do this who understands our business.”

These reactions are natural, but they’re also signals. They point to the ethical weight of leadership in today’s world. If you’re feeling this way, it doesn’t mean you’re failing – it means you want to find a solution.

But here’s the hard truth: leaders who ignore this discomfort risk making moral injury worse, not just for employees, but for themselves.

The cost of doing nothing

In our AfterShock era, we need systems thinking where we go beyond all the crises.

Across these domains, individuals experience a profound sense of powerlessness, ethical compromise and inaction fatigue, eroding their sense of moral integrity. This makes addressing moral injury not just a matter of individual well-being but a critical component of long-term organizational survival and ethical leadership.

By genuinely aligning values and actions, organizations can transform the hidden sabotage of moral injury into a catalyst for growth, integrity and long-term success. These traits are not just beneficial but essential by 2030. The alternatives – burnout, presenteeism, attrition and diminished innovation – will persist, eroding trust, morale and organizational resilience.

Caroline Stokes is a leadership strategist, author and certified executive coach. She is based in Vancouver. 

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