Former Liberal climate and environment minister Catherine McKenna, one of the organizers of the action, said a recent decision by market regulators to stop work on mandatory climate reporting stands against the need to transition Canada to a lower-carbon economy. “This is about how we are going to move forward with the world to create the conditions to attract investments that we need to build together,” she told participants yesterday at the annual conference of the Responsible Investment Association (RIA), Canada’s umbrella group for sustainable finance.

Mandatory climate reporting “is not a massively disruptive thing,” McKenna said. “We need disclosure because that’s how the market really focuses.”

The call to action was issued by Women Leading on Climate, a network of women financial, business and civil society executives, in a public letter to the Canadian Securities Administrators (CSA), the umbrella network of provincial securities commissions. The letter was signed by more than 70 women executives along with some male supporters. It noted that jurisdictions representing more than half of the world’s gross domestic product have either adopted or are in the process of adopting globally aligned standards, including the European Union, the United Kingdom, Japan, Australia and Brazil.

“Let’s be clear: the global shift to climate disclosure is happening with or without Canada. Further delay risks capital flight from Canadian firms and degraded global competitiveness for Canadian companies,” said Barbara Zvan, president and CEO of the University Pension Plan, in a statement.

Building on years of work, the International Sustainability Standards Board (ISSB), a global voluntary initiative based in Montreal, and its Canadian branch have developed a set of disclosures on carbon dioxide emissions and climate risks and management policies, which companies can choose to voluntarily implement. Climate-oriented investors expected the CSA to enshrine the ISSB and Canadian Sustainability Standards Board (CSSB) rules into mandatory climate disclosure requirements.

Instead, in April the CSA announced it would “pause” work on its climate reporting plan, citing “recent developments in the U.S. and globally.” Many people in the sustainable finance community saw the pause as a retreat in the face of a widespread pullback in climate targets and goals by companies and financial institutions.

A pause ‘really is a pause’

But Grant Vingoe, CEO of the Ontario Securities Commission, told the RIA conference that the CSA decision is not a rejection of climate reporting, but rather a temporary break in the work to impose mandatory compliance. “It’s really important to emphasize that a pause really is a pause,” he told conference participants.

In his remarks, Vingoe argued that it would have been perilous to announce new mandatory corporate disclosures back in April, when Trump had just imposed global tariffs, creating havoc in financial markets and triggering public anxiety. “If we had gone out with a consultation at that point in time, it might have set back the ISSB and CSSB agenda for a generation, not just for a pause,” he said. “The notion that we’ve abandoned climate disclosure, that disclosure is in the rear window, is inaccurate.”

Vingoe said the CSA will continue to do research work on climate, documenting how Canadian companies are responding to the voluntary ISSB and CSSB standards as well as how Canadian companies operating in California and Europe are responding to mandatory climate-reporting rules in those regions. Vingoe also said the CSA would work on “safe harbour” provisions to protect companies from legal liability as they develop higher disclosure standards.

Vingoe said that, in his own view, CSA will be in a position to revisit mandatory disclosure in “the next couple of years.”

Protest disrupts proceedings

The topic of climate disclosure dominated much of the start of the opening day of the two-day RIA conference, held this year in Toronto. But for the first time in its 30-year history, the conference was punctuated by a protest, as roughly 10 members of a tenants’ association entered the large plenary hall and started chanting slogans against the PSP Investments pension plan during a closing panel. PSP is an investor in a company that owns apartment buildings in the Thorncliffe Park neighbourhood in Toronto, site of disputes over evictions and rent increases. Miranda Hubbs, a PSP board member, was participating on the panel when the disruption occurred.

RIA CEO Patricia Fletcher, moderating the session at the time, permitted the protesters a few minutes to continue and then asked everyone in the room to leave. Security staff escorted the protesters out of the room and the panel proceeded, although Hubbs was removed by a security detail.

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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That’s a key recommendation from a United Nations expert panel led by former federal environment minister Catherine McKenna and comprising 17 business and government leaders from around the world. 

“We must have zero tolerance for net-zero greenwashing,” said UN Secretary-General António Guterres at the launch of a report by the panel, which he called “a how-to guide to ensure credible, accountable net-zero pledges.”  

Notably, the panel is also calling on corporations and financial institutions such as banks and pension funds to end all investment in new fossil fuel supplies – a recommendation that comes as Canada and other oil and gas producers are being urged to increase supply to make up for lost Russian production and help bring stability to global energy prices. 

Guterres established the expert panel to recommend ways of ensuring that climate pledges made by “non-state actors” (corporations, financial institutions and local and regional governments) are implemented.  

The panel’s report, which was released this week at COP27 in Egypt, lays out a truly ambitious prescription that both private sector and lower levels of governments will have to embrace to do their part to limit the increasingly dire impacts of climate change. 

It comes at a challenging time for those who want more aggressive climate action. 

With the likely loss of the House of Representatives in the midterm elections, U.S. President Joe Biden will be hamstrung in getting more climate legislation passed, although he can still wield executive powers. 

Calls to end investment in fossil fuels facing challenges

Despite the growing urgency of the climate crisis, the twin spectres of inflation and a looming global economic slowdown will make it politically difficult for governments to impose any emissions-reduction measures on the private sector that are seen as having short-term costs. Europeans are facing a tough winter that will test the notion that the energy crunch resulting from the Russian invasion of Ukraine will accelerate the transition from fossil fuels rather than delay it. 

Some of the panel’s recommendations – like the end to fossil fuel investments – are likely to land with a thud. The world is too focused on elevated fuel prices and their impact on inflation and even democratic stability to foreswear all spending on new supply. And there is too much money to be made to expect that the financial sector will voluntarily end its support for oil and gas companies. Just last month, former Bank of Canada governor Mark Carney’s net-zero banking alliance backtracked on mandatory net-zero requirements as some members balked at the more prescriptive approach. 

A more nuanced message would be to end investment in new fossil fuel infrastructure that would significantly boost supply over the longer term. 

We must have zero tolerance for net-zero greenwashing.

-UN Secretary-General António Guterres

Still, McKenna and her colleagues are laying down some crucial markers. Taken together, their recommendations are a needed blueprint to transform net-zero pledges into fully funded, science-based plans that deliver in the short and long term. 

Corporations, financial institutions and local governments “will either help scale the ambition and action we need to ensure a sustainable planet or else they strongly increase the likelihood of failure,” McKenna said in the foreword to the report. “The planet cannot afford delays, excuses, or more greenwashing.” 

A fundamental point made by the McKenna panel is that we cannot continue to rely on voluntary plans – too often vague, riddled with loopholes and lacking in enforcement mechanisms – to meet our goals.  

“To effectively tackle greenwashing and ensure a level playing field, non‐state actors need to move from voluntary initiatives to regulated requirements for net zero,” McKenna said in the report. 

The expert panel is also categorical about carbon offset credits: companies and local governments should avoid using “cheap credits that often lack integrity” and instead focus on immediately cutting their own emissions. We need to focus on “zero,” not the “net.” 

There are 10 recommendations in all. They all demand big changes, to be implemented quickly: 

Net-zero plans must have short-term targets that are consistent with global emission reductions needed to achieve a 1.5°C target for average global temperature increase – that is, a 50% reduction by 2030.  

They must also:  

• include annual performance reports that report progress in clear language with data that can be compared to other companies in their sector  
• focus on absolute emissions – not “intensity based targets,” which are relative to the portfolio’s size and have been adopted by several Canadian banks  
• lay out how the company or government is aligning its governance, pay structures, capital spending research and development and public advocacy with those goals.  

 As well, companies that claim to be climate leaders should not be lobbying against legislation that would reduce emissions, or supporting industry associations that do so. 

Will Canada regulate corporate net-zero pledges?

The panel’s call for governments to add some regulatory heft to net-zero commitments is particularly germane in the financial sector. In Canada, the federal regulator expects all federally regulated financial institutions to disclose climate-related financial risks. Neither the Office of the Superintendent of Financial Institutions nor Finance Minister Chrystia Freeland have shown any inclination to go beyond mandatory disclosure to regulate the details of the net-zero plans. 

It would be easy to dismiss McKenna’s report as wishful thinking. Canada certainly faces a lengthy list of climate challenges. The Liberal government in which McKenna served as minister is still funding the Trans Mountain pipeline expansion and supporting construction of liquefied natural gas plants on the West Coast.  

The country’s big banks have strenuously opposed federal regulations prescribing the details of their net-zero pledges, or any suggestion that they refrain from financing oil and gas operations. 

And then there’s Alberta. The province’s environment minister, Sonya Savage, is attending COP27 in Egypt, intent on voicing the “views of Albertans” – as she told Toronto Star columnist Graham Thomson – in defence of the province’s oil industry. Six of Canada’s biggest oil producers – who account for 95% of oil sands production – have signed on to the Pathways Alliance, which commits to net-zero production by 2050. However, there are gaping holes in that plan as it does not consider emissions from burning their fuel and will rely heavily on technologies such as carbon capture and storage and on the purchase of carbon offset credits from other industries.  

After the panel’s report was released this week, Pathways Alliance spokesman Mark Cameron said in an email that it “presents a lot of challenges for us since our pledge is about net zero production by 2050 but the report calls for the complete phaseout of oil and gas by 2050.” 

Still, the panel has laid down important markers that will allow us to assess the credibility of net-zero pledges.  It will now be up to the thousands of advocates in business, environmental groups, government and politics to take those criteria and see that they are given some teeth. 

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