Canada’s “sustainable finance taxonomy” – named after a similar classification system in the European Union – will function as a label for green and climate-transition investments. Approximately 60 countries around the world have implemented similar taxonomies or are in the process of developing them.

“To stay competitive and attract investment, Canada needs to send clear signals of our climate-readiness to capital markets,” said Marlene Puffer, chair of a new governance council that is overseeing the initiative. Announcing the council last week, she said the goal is to help Canada attract an additional $115 billion annually in capital needed to finance its low-carbon transition.

The council – made up of representatives from the financial industry, universities and climate advocacy groups – will be federally funded but will operate on an arm’s-length basis from Ottawa. It’s scheduled to finalize taxonomy details for three as-yet-unnamed economic sectors by the end of 2026, and three more next year.

The two-year timeline means the taxonomy likely won’t have significant impact in the immediate future, including for investment decisions on infrastructure projects under review by the federal government’s Major Projects Office. But its usefulness is expected to grow as the climate and energy transition takes hold in the late 2020s and early 2030s.

Patricia Fletcher, chief executive officer of the Responsible Investment Association, the Canadian trade group for sustainable investment, says the taxonomy will help to ease greenwashing suspicions over climate claims by investment funds and asset managers. “It will make it easier for Canadian investors to understand what is green, what is not, and what is transition,” she says. “It’s ultimately going to be one of the tools that dispel concerns about greenwashing.”

Mitigation for oil and gas [such as carbon capture and storage] is almost by definition carbon lock-in.

– Matt Price, executive director, Investors for Paris Compliance

The European experience shows that taxonomies can help to raise climate-friendly capital. EU taxonomy–aligned investment reached €273 billion in 2024, bringing total capital to €742 billion since 2022. An academic study published last year found “robust evidence” that European stock of taxonomy-aligned companies traded at a premium over non-aligned companies.

The Canadian taxonomy was first proposed in 2019 by the Trudeau government’s expert panel on sustainable finance. A second consultative group produced a taxonomy road map in 2022. Two years later, the government completed preliminary work and last December handed over the project to the non-profit Canadian Climate Institute and the independent council. It was that council that was named last week.

How will the taxonomy work?

According to a 2024 Canadian government backgrounder, green-labelled investments would include low- or zero-emitting activities aligned with a 1.5°C increase in global warming as mandated by the Paris Agreement. Examples would include green hydrogen, wind and solar projects, electricity transmission lines and hydrogen pipelines. Transition-labelled investments would include activities that are currently emission-intensive but can convert to low-carbon technologies. Steel plants moving from coal-based production to natural gas, hydrogen or electricity would be an example.

The backgrounder cited six sectors crucial for the Canadian low-carbon transition: electricity, transportation, buildings, agriculture and forestry, manufacturing, and extractives (mining, processing and natural gas).

The new council is not bound by these green and transition definitions or specific sectors, although it’s expected it will use these sectors as the basis for its taxonomy.

Natural gas has been a contentious area. The EU taxonomy treats natural gas and nuclear energy as transitional investments if they meet certain conditions. It deems gas as a transition fuel because it is an alternative to higher-emission fuels such as coal. The EU taxonomy has assigned a transitional label to gas projects with the proviso that there are established phase-out periods for gas plants.

In an interview with Canada’s National Observer, Puffer said she would not speculate on whether the Canadian council would include liquefied natural gas (LNG) or carbon capture and storage (CCS) systems in its definition of transition activities. Climate advocacy groups maintain that LNG development can lead to additional long-term carbon emissions, known as carbon lock-in. CCS projects also pose a lock-in problem and have often failed to meet their ambitious carbon-dioxide-storage targets.

Taxonomy should be science-based: climate action groups

In a joint statement released last month, more than 30 non-governmental organizations and climate action groups outlined a set of basic principles they believe are essential for a credible taxonomy. The signatories contend that eligible activities under the taxonomy should be based on the Paris Agreement goal of limiting global temperature rise to between 1.5°C and 2°C. “This requires the rapid and systemic replacement of oil, gas and coal with clean energy,” according to the statement.

The signatories contend that the transition label should be restricted to high-emission activities for which there are no commercially available alternatives. Examples of these would include cement and steel, says Matt Price, executive director of Investors for Paris Compliance and a lead author on the document. “Mitigation for oil and gas [such as carbon capture and storage] is almost by definition carbon lock-in,” he said in an email. “LNG isn’t even mitigation unless a specific contract exists between that investment and closing a coal plant, and even that’s disputable on a life cycle basis.”

The group has also called for eligible investments to “do no significant harm” (a feature of the EU taxonomy) to ensure protection of important social and environmental considerations such as biodiversity preservation and labour rights. Additionally, the group calls for eligible investments to uphold Indigenous rights, including the free, prior and informed consent of Indigenous communities on projects affecting their resources.

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The group also recommends that the taxonomy be written with simple, clear language, making it interoperable (consistent) with other taxonomies. This would enable companies to use interchangeable reports from their disclosures under other taxonomies, easing their reporting burden if regulators eventually require public disclosure of their information.

Ralph Torrie, research director at Corporate Knights, says the taxonomy council should look to the Australian sustainable finance taxonomy released last year as a potential model for Canada. It’s a clear Paris-aligned classification system for green and transition investments, reflecting the needs of a similar resource-based economy. “People are paying a lot of attention to the Australian taxonomy,” he says.

Council begins work at a critical time

The council is beginning its work at a time of significant turmoil in energy markets, as the war in Iran has driven up oil and gas prices. This is creating expectations that Canada can benefit by building additional infrastructure for LNG export or CCS projects to expand oil-sands production, adding to carbon lock-in. Conversely, the energy crisis is also creating calls for Canada to electrify its economy to reduce dependence on increasingly expensive fossil fuels.

This issue is going to play a central role in the work of the council over the next two years. It will need to determine the boundaries for green and transition investments at a time when there are calls for expanding both clean and fossil fuel energy.

By flashing a green light on net-zero activities and a cautious amber on transition investments, the taxonomy should help to steer the capital markets of the 2030s in a more sustainable direction.

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 four plaintiffs allege that the CPPIB has breached its duties by mismanaging climate-related financial risks. Their case argues that the pension manager is dramatically underestimating its exposure to the financial risks of a warming planet. In its 2025 annual report, the investment board estimates only a 4% loss in a “hot-house world” scenario where temperatures rise by 3°C. But scientists warn that such a trajectory would bring devastating impacts to global economies, financial systems and human livelihoods. No portfolio could withstand the impacts of that much warming. Yet CPPIB has continued to commit billions to the cause of the crisis: fossil fuel expansion.

“Our case is alleging that CPP Investments is mismanaging our pension fund by failing to adequately respond to climate change,” explains Rav Singh, one of the young applicants. “CPP is supposed to be one of our most reliable sources of retirement income. We should all be concerned that our CPP benefits may not be as dependable as we’d like to think.”

This case is among the first of its kind, where beneficiaries are asking the courts to hold their pension manager accountable for mismanaging climate risks. The applicants are not seeking money; they are asking the court to direct CPPIB to identify, assess and manage climate risks appropriately and transparently, in line with its mandate to invest without “undue risk of loss” and act in the best interests of contributors and beneficiaries.

CPPIB has acknowledged that climate change is “an existential threat . . . the single biggest investment risk that we face.” In March 2025, CPPIB published an interview with climate scientist Johan Rockström, who warned, “We cannot continue allowing ourselves to destroy the stability of the climate system, and quite frankly the stability of the planet, by subsidizing unsustainable investments.”

Despite recognizing the threat, CPPIB’s climate approach tells another story. Its risk modelling assumes CPP resilience at more than 3°C of warming. According to the Intergovernmental Panel on Climate Change, 3°C of global warming could expose 3.25 billion people to lethal heat and humidity, decimate fresh water supplies and global food production, cause the extinction of plants and animals, lead to the collapse of marine ecosystems, and trigger catastrophic sea-level rise. It is imprudent to suggest that CPPIB can fulfill its mandate – or that Canadians can enjoy retirement security – under such catastrophic climate outcomes.

Meanwhile, last year CPPIB abandoned its net-zero commitment, reversing its 2022 statement that stewarding the portfolio to net-zero emissions was in “the best interests of the contributors and beneficiaries of the Canada Pension Plan.” The net-zero reversal was approved by a board on which nearly one-third of CPPIB directors held roles with fossil fuel companies, raising questions about potential conflicts of interest.

In the months following that reversal, CPPIB doubled down on fossil fuels: investing $4.1 billion in Sempra Infrastructure, which builds new gas pipelines and export terminals, and $1.4 billion in AlphaGen, owner of 23 fossil fuel power plants. These are not “transition” investments – they are bets on the continued expansion of fossil fuels.

When journalists asked CPPIB to explain how this climate litigation could be “an action against 22 million Canadians’ retirement security,” as articulated in its approach to climate risk, the fund didn’t respond. As applicant Aliya Hirji said, “I don’t want to be suing my pension. But I want to retire on a stable pension into a livable future. If taking CPP Investments to court is what’s needed to achieve that, so be it.”

The reality is that many of CPPIB’s peers are already showing what responsible, climate-aligned investing looks like. ABP, Europe’s largest pension fund, affirms that “Building good pensions together in a liveable world [is] our mission . . . A liveable world demands a sustainable economy.” La Caisse, which manages the Quebec Pension Plan, has exited coal and oil entirely and tied staff compensation to climate goals – actions it says have improved the fund’s financial position. And Ontario’s University Pension Plan directly links its fiduciary duty to climate responsibility, stating that “Climate change stands out among the significant material risks to our portfolio, demanding immediate action in line with our fiduciary responsibility.”

CPPIB is one of the world’s largest and most sophisticated investors. It has the tools, talent and resources to manage climate risk responsibly – but it must choose to actually do so. Protecting the CPP means protecting the climate that Canadians will retire into. Climate stability and pension sustainability are not opposing goals. They are inseparable.

Cheryl Randall is the campaign specialist and Patrick DeRochie is the senior manager for Shift Action for Pension Wealth and Planet Health, a charitable project that tracks the fossil fuel investments and climate policies of Canadian pension funds, and mobilizes beneficiaries to engage their pension managers on the climate crisis.

The post The Canada Pension Plan is undermining its own sustainability by investing in climate failure appeared first on Corporate Knights.

In Canada, a new report suggests the same forces are at work north of the border. However, unlike the uncertainty in the United States, the report concludes that ESG integration is “firmly entrenched” in Canadian investment management, even as investors adopt a lower-profile stance on their ESG activities. “Over the last 12 months, we’ve seen so many asset managers being attacked in the U.S., or their business being put at risk,” says Milla Craig, CEO of Montreal-based sustainability consulting firm Millani, which produced the report.

Canadian asset managers are not immune to these attacks, Craig says, especially if they have U.S. operations. In response, asset managers and owners are shifting attention from external communication of ESG themes to focusing on internal ESG strategy, according to Craig.

“This is very different from anything we have seen,” she says in an interview, referring to previous surveys conducted every six months since December 2022. Pushed by climate protests, many of these investors have adopted high-profile net-zero targets and other ESG commitments. Yet the protests have continued, alongside the rise of the anti-ESG political movement in the United States.

I don’t see investors backing off. There is infrastructure there today that wasn’t there seven years ago, and I think that’s a big difference in the market.

– Milla Craig, CEO, Millani

In response to these converging lines of criticism and opposition, investors are recalibrating, Craig says. They are maintaining their ESG policies but developing corporate strategies to shield them from attacks from both the left and the right.

“These organizations have been integrating ESG, but they’re now going to another depth to ensure they cannot be called out for not meeting their [ESG] commitments,” Craig says. All but two of 27 institutions surveyed in December 2024 remain committed to ESG integration, the report states. The respondents mainly included asset managers, alongside a smaller sample of asset owners such as foundations and pension funds.

A ‘striking shift’ toward ESG integration

As a tool, ESG integration is used by sustainability-focused asset managers offering green-labelled funds, for example. But it is also used by many conventional investors wishing to incorporate ESG factors into their portfolios as a way of identifying and managing related risks from things like litigation or the energy transition.

When it comes to climate, “investors are shifting from simply assessing if organizations have climate targets to analyzing and expressing a need for clear and credible transition plans, as well as the capital allocations needed to successfully execute such plans,” the report states.

When asked to rank the most important ESG topics, 67% of investors ranked climate first, biodiversity third at 44% and Indigenous reconciliation fourth at 30%. Internal ESG trailed in previous surveys, but in December 2024 it ranked second at 48%, a result the report calls “a striking shift.” Many investors are now spending time and resources to integrate tools like corporate climate scenario analysis – for assessing the potential impacts of climate change on a particular business – into their own investment management operations, it states.

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While banks and asset managers face a regulatory retreat in the United States – including the Securities and Exchange Commission’s decision to pause its legal defence of a recent corporate climate-disclosure rule – Millani found that Canadian investors support measures to bolster ESG disclosure in Canada and want the regulatory tools to help them develop a more sophisticated understanding of ESG factors shaping their portfolio companies.

This support extends to climate-related risk-management and disclosure rules on banks and insurance companies put in place by the Office of the Superintendent of Financial Institutions. It also includes recommendations by the Canadian Sustainability Standards Board for corporate climate disclosure aligned with international standards. Investors also support action by the federal government to establish official guidelines for what constitutes green and transition investments, according to the report.

Are they ‘greenhushing’ or simply retreating from accountability?

Millani’s contention that investors are standing firm behind ESG is at odds with a recent report from climate advocacy group Investors for Paris Compliance (I4PC), which looked at the climate performance of bank-owned asset managers, a large segment of the country’s investment industry. Released in January, the I4PC report shows that the asset-management arms of Canadian banks are lagging behind commercial lending arms on climate-risk disclosure, especially in reference to their financed emissions and how well these align with the banks’ net-zero targets.

The I4PC report also finds that most bank-owned asset managers are failing to set comprehensive transition strategies to align their portfolios with their parent banks’ net-zero commitments.

Craig acknowledges that asset managers are going into a period of “greenhushing,” and this carries some risk that they won’t be held accountable for failure to achieve climate or other ESG targets. But she doesn’t see evidence to date of a significant ESG pullback by Canadian asset managers. This is partly because asset owners like public pension funds have established ESG policies in the last decade that are pressuring asset managers to hold the line on ESG.

“From the study and my conversations, I don’t see investors backing off,” Craig says. “There is infrastructure there today that wasn’t there seven years ago, and I think that’s a big difference in the market.”

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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Energy security has become an overriding concern in the last two years as oil and gas prices have shot up, and sustainable finance has faced an increasingly hostile political environment in the United States. A consequence of this pushback came on New Year’s Eve, when global financial behemoths Bank of America and Citigroup left the Net-Zero Banking Alliance, one of the investment industry climate coalitions championed by the United Nations.

What does this mean for the year ahead? Will financial allocators support the energy transition of the future or capitulate to the demands of the present? Here are seven predictions for the world of sustainable finance in 2025, and its related tool kit of environmental, social and governance (ESG) investing.

In the United States, sustainable investors will face attacks on three fronts

Paul Atkins, Donald Trump’s choice to chair the Securities and Exchange Commission (SEC), is an ESG skeptic with a bent to streamlining securities regulation. While not considered a hard-right ideologue, he will reverse ESG-friendly regulations championed by the Biden SEC.

1. Shareholder rights. One of Atkins’s first targets will be Biden-era SEC guidance that makes it easier for investor activists to present shareholder proposals on environmental and social issues at corporate annual meetings. Expect Atkins to reverse the Biden policies and return to guidelines under Trump’s first administration that allow companies to reject ESG proposals if they don’t substantially affect operations.

Expect the Republican-controlled Congress to also weigh in, proposing legislation that would give corporations broad powers to reject shareholder proposals. That said, it’s not clear whether such a law could pass in the next two years, when the 2026 mid-term elections are expected to turn against the Republicans.

2. Climate disclosure. Atkins will also revoke a Biden-SEC regulation requiring publicly listed companies in the United States to disclose their Scope 1 and 2 (operational and energy) carbon dioxide emissions. The impact of this reversal will be muted, however, as climate disclosure rules take effect in California and in Europe, where about 3,000 U.S. companies operating in Europe will have to comply with climate disclosure rules under its Corporate Sustainability Reporting Directive (CSRD).

3. ESG fiduciary rights. And expect the Trump administration to reverse a Biden Department of Labor rule expressly permitting pension trustees to consider ESG issues in investment decisions. But the Trump rule will be contested in the courts, as sustainably invested pension funds make a legal case that ESG is fundamentally about improving financial assessment of financial risks and returns.

The takeaway: The Trump administration’s attack on shareholder rights will discourage investors from exercising their rights to file investor proposals on ESG issues. But on climate disclosure and fiduciary rights, this will create regulatory confusion more than a firm barrier to sustainable investing.

Shareholder proposals on ESG issues will drop in number and support

Shareholder collaboration on ESG issues will take a hit in 2025. Collaborations like the Climate Action 100+ shareholder network will lose clout, as policy changes and the chill from the Trump administration take hold. In 2024, large U.S. asset manager Franklin Templeton joined other managers Nuveen, Goldman Sachs Asset Management and AllianceBernstein in leaving the network, which coordinates shareholder pressure on corporations on climate issues.

According to Morningstar data, the number of ESG resolutions at U.S. companies rose sharply between 2021 and 2024, although overall support was 27% in 2024, down from 37% in 2021. The decline was largely due to lower levels of support from the three largest asset managers: BlackRock, Vanguard and State Street, together known as the Big Three. There has been some pushback from at least one asset owner – PGGM – which has dropped some managers that are not meeting the Dutch pension fund’s expectations for ESG engagement.

The takeaway: In 2025, look for fewer but better-focused ESG proposals that can command larger support from asset owners and managers.

Long-term ESG-focused investors will stay the course

 Despite these negative trends, 50% of long-term ESG-oriented investors – including asset managers, funds and owners employing sustainable finance strategies – said they plan to maintain their current level of ESG activity in 2025, while 29% said they plan to increase it moderately and 10% plan a significant expansion, according to a survey by the U.S. Sustainable Investment Forum (US SIF).

Many Republican-led states are dropping companies with ESG policies as eligible managers for their pensions funds. But large managers like the Big Three have substantial accounts with Democratic-led states and European clients that are under their own stakeholder and regulatory pressure to meet climate and ESG targets. US SIF reported that sustainable assets under management at the end of 2023 were US$6.5 trillion, representing 12% of total investment assets in the United States.

The takeaway: ESG strategies have become embedded in a large proportion of the long-term asset-owner and -management sectors. Expect continued growth of sustainable finance assets by these investors in 2025, especially by pension funds weighing the evolving risks of heat, floods and storms and economic transformations from climate change.

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Shorter-term mutual fund and ETF investors will cautiously re-enter the sustainable funds market

Unlike core ESG investors committed to long-term sustainable strategies, interest by small institutions and individuals with shorter investment horizons has waned in recent years. Inflows in sustainable mutual funds and exchange traded funds (ETFs), two products popular with these investors, hit US$160 billion in the fourth quarter of 2021, triggered by low interest rates and climate-friendly policies in the European Union. But these dropped precipitously starting in 2022, when central banks ramped up interest rates, the Ukraine war drove up energy prices, and Europe established more stringent anti-greenwash fund-disclosure rules.

By the second quarter of 2024, Morningstar estimates that net inflows had dropped to US$6.3 billion, with the United States registering net outflows. Not surprisingly, Morningstar estimates there were 246 new sustainable funds launched in the first three quarters of 2024, down from 444 in the same period in 2023.

But there are early signs this outflow is beginning to turn around. Global flows into sustainable mutual funds and ETFs hit US$10.4 billion in net new money in the third quarter of 2024, driven largely by reduced outflows from the United States. It appears investors are gaining comfort with the new European rules and longer-term prospects for green stocks, although there was a sell-off of clean energy immediately after the U.S. election.

The takeaway: Expect sustainable mutual fund and ETF inflows to bottom out in 2025 and investors to return to these products, as long-term interest rates improve conditions for green bonds and climate-friendly stocks and European investors become more familiar with ESG fund-disclosure rules.

Europe will simplify, not throw out, ESG disclosure rules

European Commission President Ursula von der Leyen has proposed an “omnibus” reform of corporate and finance disclosure rules aimed at simplifying the complex web of ESG reporting requirements imposed by the European Union. “The questions we are asking, the data points we are collecting – thousands of them – is too much,” she said at a meeting of EU heads of state last year.

The political balance at the European Parliament shifted to conservative parties in 2024 elections, sparking a fear of wholesale disclosure deregulation. But with thousands of companies investing in resources to meet the stringent rules this year, the European Commission would invite significant blowback and market confusion if it threw out the reporting regime.

The takeaway: Look for the European Commission to overhaul the information requirements in 2025, in a spirit of getting to the core of sustainability outcomes, not tossing out the whole framework in a U.S.-style attack on ESG.

Canada will become a leader on transition investing

Canada is expected to appoint an arm’s-length council in 2025 to oversee a new green and transition taxonomy, an official standard for banks, funds and asset managers on green and transition investments.

One of the big questions is whether gas projects like liquefied natural gas infrastructure will qualify for the “transition” label. Guidelines set by the federal government in 2024 rule out new gas production for the transition label. Existing natural gas production displacing coal could be transition-eligible but would have to be aligned with a global temperature rise of no more than 1.5°C. These are important marching orders for the arm’s-length council, which will likely follow the federal mandate to rule out projects with significant carbon lock-in.

The takeaway: The taxonomy will help Canada to become a leader in transition projects in areas such as green steel and cement and the gradual phaseout of fossil fuel power with clean energy. That is, if the taxonomy is even finalized under the precarious situation facing the current government.

Canada will impose mandatory full-scope carbon emission reporting – but it won’t come in 2025

In December, the Canadian Sustainability Standards Board (CSSB) adopted international accounting rules calling on Canadian corporations to report the full range of their carbon emissions. That is, not only Scopes 1 and 2 emissions from operations and energy, but also Scope 3 emissions from end uses.

However, the rules include a two-year delay for Scope 1 and 2 reporting and a further year for Scope 3 reporting. It’s now up to the Canadian Securities Administrators, the umbrella organization for securities commissions, to decide whether to follow through on the CSSB recommendation and make full carbon-emission disclosure mandatory.

The takeaway: Alberta will almost surely fight full disclosure, since the oil and gas industry is responsible for about 30% of Canada’s total emissions, particularly on Scope 3. But I’m going to go out on a limb here and predict that the other provinces will win this battle, backing the CSSB’s carefully crafted consensus to bring Canada into alignment with Europe and many other jurisdictions in 2027 and 2028.

The big picture

Stronger-than-expected anti-ESG attacks in the United States or Europe could put a very cold chill on green investing in 2025, but right now it looks like sustainable investing has built sufficient strength in the last decade to withstand the growing conservative backlash against it.

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 Seven sustainable finance predictions for 2025 appeared first on Corporate Knights.

The UN Secretary-General, António Guterres, opened the UN Convention on Biological Diversity (COP15) in Montréal with a stark message: “Without nature, we are nothing. Nature is our life-support system, and yet humanity seems hell bent on destruction.”

The summit brought together delegates from over 190 countries to negotiate the post-2020 Global Biodiversity Framework, the implementation of which will require a transformation in the way we produce, consume and trade goods and services that rely on and impact biodiversity.

Companies and investors have, therefore, been paying close attention. Businesses and investors have a critical role to play in biodiversity and conservation efforts and need to invest in sustainable production and extraction methods.

On Dec. 14, the Finance and Biodiversity Day of the summit, speakers across the financial sector discussed various ways of aligning financial investments with the new biodiversity framework. In anticipation of these finance talks, a new global engagement initiative, Nature Action 100 was launched to drive investors’ action on nature-related risks and opportunities.

As a scholar in sustainable finance, I believe that while these initiatives and discussions are important, we need more targeted and urgent investments in nature-friendly solutions to reverse biodiversity loss.

“Without nature, we are nothing”

Numerous scientific studies point to alarming statistics on the rates of biodiversity loss. The Living Planet Report 2022 shows an average decline of 69% in wildlife populations since 1970, thus emphasizing the dual crises of biodiversity loss and climate change driven by human activities.

Unlike the climate crisis that led to the signing of the Paris Agreement, biodiversity loss has received little attention until now. However, the risks from biodiversity loss are enormous.

According to an OECD report, ecosystem services from biodiversity, such as crop pollination, water purification, flood protection and carbon sequestration, are worth an estimated US$125-140 trillion per year. About US$44 trillion per year of this global output is dependent on nature .

Bending the curve of biodiversity loss

The Convention on Biological Diversity’s fifth Global Biodiversity Outlook summary report for policymakers, published in 2020, suggests a portfolio of actions to restore biodiversity.

These actions include the restoration of landscapes and marine and coastal ecosystems, redesigning agricultural systems through innovative productivity-enhancing approaches, deploying green infrastructure, enabling sustainable and healthy diets, rapidly phasing out fossil fuel use, and many more.

Businesses and investors have a critical role to play in each of these action domains, especially when it comes to shifting to more sustainable production and manufacturing processes, investing in energy efficiency and waste reduction, conservation of natural resources, and investing in climate solutions that also support biodiversity.

Biodiversity awareness in the world of finance

The awareness about biodiversity risks remains very limited within the finance community. This year, the non-profit CDP, which runs the world’s environmental disclosure system, included new questions to assess firms’ approaches to biodiversity.

The results show that three-quarters of 7,700 respondent companies do not assess their impact on biodiversity. Most companies in nature-damaging sectors, such as apparel and manufacturing, are still failing to take meaningful action to stop biodiversity loss and environmental degradation.

According to a 2021 OECD report, nature-related dependencies, impacts and risks are poorly understood and almost entirely uncompensated for in the financial sector. This leads to capital misallocation that ultimately undermines the wellbeing of society.

There are, however, positive signs. Thirty-one per cent of companies in the CDP survey have made a public commitment and/or endorsed biodiversity-related initiatives, and 25% of respondents are planning to do so within the next two years.

The growing awareness is confirmed by the 2022 Global Risks Report, which found that biodiversity loss ranks third among the top 10 global risks by severity over the next 10 years.

Integrating nature in financial decisions

One of the key challenges for investors and lenders is getting the relevant data to make evidence-based decisions to allocate funds. This is in line with the ever-increasing demand for environmental, social and governance (ESG) data disclosure.

The newly launched international initiative Taskforce on Nature-related Financial Disclosures is developing a risk management and disclosure framework for organizations to report and act on evolving nature-related financial risks.

Biodiversity is also attracting the attention of financial policymakers. In March 2022, the Network for Greening the Financial System, a coalition of more than 120 central banks and supervisors, published a new statement, acknowledging that biodiversity loss could lead to significant macroeconomic and financial stability risks.

The new investor-led initiative Nature Action 100 builds on similar initiatives to help investors engage with companies that are contributing to biodiversity loss. Engaging with companies to reduce their negative impact on nature can be a powerful tool for change, especially when coming from large investors and asset owners.

The International Sustainability Standards Board (ISSB) is now considering biodiversity in the development of new ESG disclosure standards. Addressing COP15 delegates, Emmanuel Faber, chair of the ISSB, announced the appointment of two special advisors to provide strategic counsel on issues relating to natural ecosystems and ‘just transition.’

The future lies in impact investing

While these initiatives are crucial, focusing on data disclosure is not sufficient. Even if we quickly agree on disclosure frameworks and measurements around biodiversity, disclosures that are voluntary and not supported by regulation are vulnerable to greenwashing which is widespread in the ESG space.

We need to encourage more targeted investments in nature-positive solutions that reverse biodiversity loss. Impact investing — investing money with the intention to benefit society and the environment — offers a framework for this.

Impact investing starts with identifying a societal challenge and then screens for investment opportunities that provide measurable solutions. But impact investments remain very small relative to other responsible investment strategies. Many impact investors use the UN Sustainable Development Goals (SDGs) to set their impact goals and measure outcomes.

To tackle biodiversity loss, we need more investments in SDG14 (life below water) and SDG15 (life on land). Despite the importance of ocean ecosystems for local livelihoods, food security and carbon sequestration, SDG14 receives the least amount of funding of any of the SDGs.

Canada is a global leader in clean tech innovation and many companies at the nexus of nature and climate are emerging across the country, including innovation in ocean tech, clean marine transportation and regenerative agriculture.

But financing remains a challenge, especially at early stages when risk is high and scale is lacking to attract large investors. More innovative financing mechanisms and instruments are needed to fill this gap.

Investing in Indigenous-led projects can also advance both reconciliation and biodiversity goals, because Indigenous lands contain 80% of the world’s remaining biodiversity.

The Finance and Biodiversity Day at COP15 stimulated important discussions on how to align financial flows with the new biodiversity framework, but real actions remain to be seen. We need action now, as time is not on our side.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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When we turn our attention to how we will restore our lives and our economy when the pandemic passes, the future of the electricity system emerges as a key question. While we are becoming even more dependent on electricity, we have been reducing the greenhouse gas (GHG) emissions and air pollutants from power plants by phasing out the dirtiest of the generating stations, switching out coal for gas, and investing in efficiency, solar and wind energy. Still, the power sector remains a major source of GHGs and pollution in many parts of Canada, and electric vehicles and heat pumps are opening up vast new markets for electricity that could threaten the gains we have made. The post-COVID recovery presents a historic opportunity to make a final push for a fossil-free, renewable electricity system for all Canadians. What would it take?

Good news and bad news

Thanks to the legacy of Canada’s vast, hydroelectric resources, most of the power we generate is emission-free, on a nationwide basis. In fact, because we generate more power than we consume, the carbon-free portion of our generation is enough to cover more than 90% of our domestic electricity needs. That’s the good news. The bad news is that our electricity system is divided into regional and provincial silos that are well connected with their U.S. neighbours but not with each other. As a result, there are provinces with large surpluses of renewable hydropower right next door to provinces that are still dependent on coal-fired power plants for most of their electricity. To provide carbon-free electricity to all Canadians, it will be necessary to build new transmission links between the “hydro have” and the “hydro have-not” provinces.

In addition to improving access to the current surplus of hydropower that exists in some provinces, the complete decarbonization of Canada’s electricity supply will require expanding renewable electricity production. There is more good news here. Since 2009, the cost of wind and solar energy has declined by 70 and 89%, respectively. You’ll recall from our Build Back Better Homes and Buildings plan that the cost of Model T Ford automobiles plummeted by 80% between 1910 and 1920. One hundred years later, we’ve seen the same tumble in the costs of renewable energy, both propelling and propelled by a 14-times increase in global installed solar capacity – from 40 gigawatts (GW) in 2010 to 580 GW in 2019 – and a fourfold increase in global installed wind capacity over the same period – from 148 GW in 2009 to 594 GW in 2019.

In Canada, the physical supply of sun and wind energy isn’t a limiting factor in determining the role these energy sources will play in our energy future. Wind energy is now the cheapest source of new electricity supply, and solar is not too far behind. Once the purview of backyard hobbyists, billion-dollar wind and solar projects are now commonplace. The 400 MW Vulcan solar project under construction in southern Alberta will be the largest in Canada to date, and Canada’s largest wind farm is the 363 MW Seigneurie de Beaupré complex in Quebec. Before the onset of the pandemic crisis, clean energy was firmly established as one of the fastest growing and dynamic sectors of the global economy, and it will surely resume that position in the post-pandemic economy.

Greening the grid: Connectivity is key

Ensuring Canadian provinces have equal access to the benefits of the emerging clean energy economy will require improving the infrastructure for interprovincial trade in electricity. Canada is an east-west idea in a north-south continent, and nowhere is this more apparent than in the electricity flows across the U.S. border. At more than 60 billion kilowatt-hours (kWh) per year, exports of electricity to the United States dwarf interprovincial trade, and what interprovincial trade does take place is dominated by the flow of Labrador’s Churchill Falls power to Quebec, which is itself about equal to 75% of Quebec’s power exports to the U.S. In western Canada, Alberta and Saskatchewan rely heavily on fossil fuel generation while sandwiched between B.C. and Manitoba, both of which have nearly 100% carbon-free grids, with power to spare. In eastern Canada, Quebec and Newfoundland generate a large surplus of renewable electricity, most of which is exported to the U.S., while the Maritimes and Ontario face the prospect of continuing or increased reliance on fossil fuel generation as aging nuclear plants approach retirement.

There may one day be a national power grid in Canada, but long distances between generators and markets and the bane of asynchronous grids make that day far off. In the medium term, in the context of post-COVID economic recovery investments in clean energy, priority should be given to building new transmission links that have the highest potential for expanding Canadian markets for existing clean energy and leveraging growth in new renewable power investments. These projects take time to plan and build, but they are necessary elements of any effective strategy for a sustained recovery based on clean energy. We have included the following shortlist of indicative projects in our scenario for a carbon-free Canadian grid:

• Add a 500 kilovolt connection between B.C. and Alberta to facilitate clean power flow to and from Alberta, $2–2.8 billion

• Strengthen the intra-provincial grids in Alberta and Saskatchewan to facilitate the growth of wind energy supply, $1.3 billion (transmission only)

• Add a new high voltage connection between Manitoba and Saskatchewan, $2 billion

• Build an additional Nova Scotia/New Brunswick tie line to facilitate the flow of Quebec hydropower to the Maritimes, $500 million

• Upgrade the current interconnection and build a new 2,000 MW high-voltage, direct current (HVDC) connection between Ontario and Quebec to facilitate the supply of hydropower to Ontario and to provide Ontario with access to seasonal reservoir storage in Quebec, $1.7 billion

Greening the supply: Tapping into Canada’s renewable cornucopia

To establish a reference level of carbon-free generation in Canada, we have added projects that are committed or under construction to the existing supply. This includes both the Site C hydro project in B.C. and the Muskrat Falls hydro project in Newfoundland and Labrador, as well as smaller planned additions to hydroelectricity generation in Manitoba and Alberta. As well, we have included wind and solar power projects that are underway or committed in most provinces, totalling an annual supply of 26 terawatt-hours (TWh). Depending on circumstances, these additions either displace fossil fuel generation or add to the surplus that is available for export or interprovincial trade. We also have assumed a reduction of 20 TWh per year to reflect the planned retirement of the Pickering Nuclear Station in Ontario. The net result is a reference level of 551 TWh of low-carbon electricity.

The new interconnections included in the above list allow increased supply of carbon-free electricity to Alberta, Saskatchewan, Ontario and the Maritimes. In the Maritimes and Ontario, the residual fossil fuel generation is relatively small and easily displaced with additional wind power and, in the case of Ontario, some refurbishment of aging hydroelectric stations. In Alberta and Saskatchewan, the feasible wind power potential (according to the GE Pan-Canadian Wind Integration Study) is not sufficient to completely displace fossil fuel generation, so further investments in solar farms were used to eliminate the remaining fossil fuel power plants.

All totalled, the scenario includes $8.3 billion for the transmission projects, $57 billion for 28.5 GW of wind capacity, $30 billion for 15 GW of solar capacity and $5 billion for storage facilities. Most of the storage is pumped hydro, and while it’s not fully modelled in this scenario, any stimulus measures should also be inclusive of additional hydropower potential to be reaped through upgrades and refurbishments. Annualized capital costs over the lifetime of the assets are in the range of $4.5 billion to $6.7 billion. By way of context, Canadian households, governments and firms already spend more than $60 billion per year on electricity. It’s envisaged that implementation of the scenario would extend over a 10year period, by which time the annual 75 Mt CO2e (carbon dioxide equivalent) of GHG emissions from the Canadian power sector would have been virtually eliminated.

This is only one scenario, but it is indicative of both the possibility for and the magnitude of a final transition away from fossil fuels in the Canadian electricity sector. When fully built out, it yields an annual carbon-free electricity supply of 625 TWh – 40 TWh above current domestic consumption levels. In order to focus on opportunities for federal economic stimulus investment, the scenario has focused narrowly on the supply side and the interprovincial trade in electricity, but there is an enormous potential to free up additional supply through efficiency gains in lighting and other electrical end uses, and through conversion of resistance heating to heat pump technology.

Finally, while investments in the bulk transmission system will help connect end users to centralized supplies of hydropower, seasonal storage, wind and solar farms, and local distribution systems are at the heart of the transition in the electric power sector. Electrification of buildings and vehicles, the growth of rooftop solar and other embedded generation (electricity production that is “behind the meter” in the traditional power sector), vehicle-to-grid storage, microgrids, 5G infrastructure, end-use efficiency gains and informatics, the changing out of inefficient electric resistance systems – all these things happen locally, wherever people live and work. In the post-COVID recovery period, the investments we make in local infrastructure and the built environment will determine how successfully we make the transition to a renewable and carbon-free electricity system. Opportunities for federal stimulus initiatives in this area range from green power procurement for federal facilities to investments in the acceleration of distributed power and smart grid systems.

Canada 2020–2030 Build Back Better Power Program

Recovering stronger by topping up our green power sources, storage and connections

The opportunity

We will continue to face many challenges in the coming weeks and months as the COVID-19 pandemic unfolds. As we work to “wake up” the economy in a safe and prudent manner, we should also be thinking about how we can build back better.

On average, Canada’s electricity grid is clean. Currently, 82% of electricity generation in Canada is carbon-free, and coal is set to be phased out by 2030 in Alberta and Saskatchewan. But for the moment, powering our electricity grid still results in air pollution, and after 2030 we will continue to see a rise in carbon pollution as gas plants replace coal power plants.

Saskatchewan and Alberta generated 82% and 91%, respectively, of their electricity from fossil fuels, split almost evenly between coal and natural gas, and Nova Scotia relies on coal for 60% of its power. Canadians living in these jurisdictions are exposed to air pollution that is harmful to their health, shortening lives by nearly a year, and now rivalling tobacco smoking for its negative health effects on society. Globally, the loweringof life expectancy from air pollution exceeds that by all forms of violence. Working together to clean up the air pollution caused by our grid is the right thing to do now.

Like the Building Back Better Homes and Buildings plan, the Building Back Better Power plan would deliver a strong triple benefit. Over 10 years, it would create 675,000 person-years of work, eliminate the 75 million tonnes of GHG emissions from the power sector and deliver better health to Canadians by reducing air pollution. A carbon-free grid across Canada would be achieved by:

• investing in the transmission infrastructure needed for increased interprovincial trade between B.C. and Alberta, between Manitoba and Saskatchewan, and between Quebec and both Ontario and the Maritime provinces. This will expand markets for low-carbon power surpluses while providing flexibility for Alberta or other importing provinces to become power exporters in the future;

• building the intraprovincial transmission capacity to ensure access to wholesale markets, thereby attracting investments in renewable energy, especially in the rich solar and wind regimes of southern Alberta and Saskatchewan; and

• decreasing air pollution exposure and providing the backbone needed to grow the flow of renewable power.

These proposals are consistent with the plan we put forth last week. They go hand in glove to reduce demand for energy to heat our homes and workplaces, to convert the power for our cars from fossil fuels to electricity and to ensure that all provinces have clean electricity grids with the requisite capacity. The Build Back Better Power plan would create more and better jobs each year for a decade as more and more people, both young and experienced, learn how to deliver transmission projects. Such a plan would benefit the West and the Atlantic provinces in particular. In turn, these transmission projects would accelerate renewable energy investment, resulting in more jobs and significant progress in building out the renewable energy supply.

So let’s explore the power of power.

The proposal: Build Back Better Power

A 20% federal incentive of $1.7 billion in line with the value of GHG-emissions reductions for the first two years after the project is commissioneding would attract $6.6 billion in private investment, for a total of $8.3 billion to finance Canada Clean Power Transmission Lines.

The Canada Clean Power Transmission System (Canada CPTS), to be commissioned within five years, would in turn help attract $92.5 billion in private, co-op and Crown corporation-sector investment to scale up the renewable power needed to make all provincial grids 100%t carbon-free. Wind energy would require $57.1 billion to deliver 28.5 Gigawatts (GW) of new clean power capacity, mostly in Alberta and Saskatchewan. Solar energy would require an additional $30.3 billion to deliver 15.1 GW of power, again to be sited mostly in Alberta and Saskatchewan. Nova Scotia and Ontario would benefit from surplus power from neighbouring Quebec to eliminate coal in Nova Scotia and to eliminate the need for gas power plants to offset the retirement of the Pickering Nuclear Station.

Accelerating the commissioning of the Canada CPTS to 2025 rather than 2028 or 2030 would help put Canada at the forefront of the burgeoning global market for clean power. It would create 675,000 person years of employment over 10 years and deliver 75 million tonnes in GHG reductions annually over the same period. Perhaps most importantly, it would deliver clean air to Canadians in Nova Scotia, Saskatchewan and Alberta.

Steps for Build Back Better Power to fund the Canada Clean Power Transmission System

1. The Canada Infrastructure Bank (CIB), with support from the federal government, commits to funding for grants to buy down risk to bring parties together, including:

· $1.7 billion to buy the emissions reductions for the first two years of operations for elements of the Canada Clean Power Transmission System that are commissioned before 2025. These concessions would attract $6.6 billion in private investment and would bring provincial parties together with the necessary speed and efficiency. The goal of the Canada Clean Power Transmission System would be to help unlock $92.5 billion in private, co-op and Crown corp–sector investment for renewable energy.

2. Provinces only pay for new interties (interconnections permitting passage of current between two or more electric utility systems) in years they see value from them through federal Price Indexed Transmission Contracts. The CIB takes long term price risk of interties providing a mechanism in which the provinces pay for the interties only when they see value in the trade. In years they do not see value in the intertie, the CIB pays for the revenue requirement of the intertie. The CIB would in theory collect enough revenue in the years the interties are used frequently to pay for the years that they are not used as much. This will ensue the provinces are not at long term electricity price risk or stranded asset risk.

3. If the Federal Government or its crown corporation wants to “sell-on” this risk, it could possibly do so with a 45 year perpetual bond on which interest only is payable for the risk weighted net present value of the intertie revenue requirement.

Building intra- and interprovincial grid connections have been a “priority” for decades.  Now is the time to bring parties together to build the backbone needed to attract investment at scale to deliver a zero-carbon grid by 2030.  Doing so would reduce air pollution for many communities and would create 675,000 person-years of work.  That’s the power of … power.

With files from Toby Heaps, Aleena Naseem and Laura Väyrynen

Notice to reader: Please be aware some of the figures and other details in this white paper have been updated in the Final Report to reflect feedback.

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The first “green recovery” session on April 22 explored proposals for greening Canada’s building stock: Recovering Stronger with a Green Renovation Wave.

Canada’s buildings currently contribute to 13% of our national greenhouse gas (GHG) emissions. Based on today’s economics, we can reduce those emissions by nearly 100 million tonnes simply by upgrading the energy efficiency of Canadian buildings with mass retrofits. A nationwide program to encourage “deep retrofitting” of Canada’s residential, commercial and industrial buildings would put thousands of Canadians back to work and stimulate the economy at a time when it most needs help.

It’s a huge logistical challenge, but the good news is that it’s no longer a technology challenge, and it doesn’t have to be a financing problem.

The challenge and the opportunities

The payback from building retrofits is just one example of how focusing on green recovery strategies following the COVID-19 pandemic can be a triple-win proposition. Investing in more sustainable processes, technologies and industries will not only fuel an economic rebound; it will create more efficient and resilient infrastructure, throughout the country, that will virtually pay for itself. Plus, it will develop Canadian knowledge and leadership in a growing industry, building deep expertise that Canadians can sell to the world.

To help inform the discussion, Corporate Knights has launched a seven-event series called The Canada We Want: Planning for a Green Recovery. These virtual roundtables, running from April 23 to June 3, include top decision-makers from government, industry, finance, labour and the not-for-profit sector. The moderator is economist and climate activist Diana Fox Carney.

Here are the highlights of the first session, on how to create a “green renovation wave.”

Takeaways

“The window of what is viable has shifted,” said Toby Heaps, the cofounder and president of Corporate Knights. “Just two months ago, the federal government was budgeting $70 billion to address the climate crisis over the next 10 years. Suddenly, it finds itself anteing up $71 billion for wage subsidies over just the next three months.”

The federal minister of environment and climate change, Jonathan Wilkinson, introduced the event, noting that as the pandemic abates, “rather than simply looking to rebuild the economy the way it was before the pandemic, we need to question our assumptions about future sustainability and our physical and economic security. We have to build the economy we want and need.”

Ralph Torrie, a long-time energy consultant and a partner in the firm of Torrie Smith Associates, co-authored an article that underpinned this discussion: “Building Back Better with a green renovation wave.” This virtual manifesto proposes a bold economic-development strategy based on retrofitting Canada’s building stock.

“Rather than simply looking to rebuild the economy the way it was before the pandemic, we need to question our assumptions about future sustainability and our physical and economic security.”

–Minister of Environment and Climate Change, Jonathan Wilkinson

Torrie and co-author Céline Bak calculate that a 10-year program for thermally retrofitting and electrifying 60% of Canada’s dwellings would reduce GHG emissions by 45% and save Canadians fuel and electricity costs of $12.7 billion a year. The renovations would include conversion to heat pumps, controlled ventilation with heat recovery, insulating to achieve thermal leakage reductions of up to 70%, and a 20% improvement in lighting efficiency.

A global advisor on climate change and president of Analytica Advisors, Bak explained how forgivable loans could finance a renovation wave. “It will be a virtuous circle,” she said, comprising several players: the federal government, to provide loan guarantees; banks and credit unions, to underwrite the $40,000 renovation loans; the home or workplace owner, who would hire and pay the contractor; and an energy auditor to measure and verify the post-renovation benefits. The owner would submit this proof of energy savings to their bank, which would then be reimbursed by the government.

Sean Mullin, executive director of the Brookfield Institute for Innovation + Entrepreneurship, lent his voice to taking action. As a former advisor to the premier of Ontario, he urged government officials to seed recovery with additional long-term investments in climate issues. “There’s no reason Canadians couldn’t devote another 1% of GDP every year for the next 10 years to combating climate change,” he said. “We have the fiscal capacity to do that, even with all the borrowing we’re doing right now. We don’t have to be constrained by the fiscal anchors or mindsets of the pre-crisis environment.”

The audience of more than 300 industry and government representatives seemed to agree. In an online Zoom poll conducted during the session, 83% of participants supported Mullin’s call for an extra 1% budgetary investment in fighting the climate crisis. Only 5% disagreed.

Gordon Hicks, CEO of BGIS, Canada’s leading provider of real estate management services, including facilities management, confirmed there is huge demand for energy refits. “Given the rate at which technologies are advancing, we see opportunities in virtually every building that exists today,” he said. In fact, he believes Torrie underestimated the multiplier effect of this work: “For every dollar spent on energy efficiency, there should be a five times multiplier on GDP.”

“For every dollar spent on energy efficiency, there should be a five times multiplier on GDP.”

–Gord Hick, CEO, BGIS

 

Canadian Green Building Association CEO Thomas Mueller supported the need for a coordinated program of energy retrofitting. “We talk about 50,000 to 60,000 buildings needing to be renovated between now and 2030 to reach a 30% reduction in carbon emissions. It’s a significant challenge, but it’s not insurmountable.” He endorsed the idea that government funding must be tied to achieving specific outcomes – and ensuring those outcomes are sustained over time.

As head of sustainable finance for BMO, Jonathan Hackett endorsed the idea of the federal government leading a renovation revolution through forgivable loans. But as the banks gain more experience with lending against energy savings, he sees the private sector taking on more of the financing. “We can push this to the point where it really becomes self-perpetuating… with small subsidies rather than complete forgiveness.”

Amidst the panel’s support for a green renovation-focused stimulus, some concerns were raised about governments alone running such a crucial program. Said RBC board director Andy Chisholm, “We need solutions that are not susceptible to a change in government or a change in political attitude.” He expressed hope that retrofit loans could become a standard “asset class” that could be assumed by mainstream lenders, like mortgages or auto loans. Chisholm suggested the government’s role should be to subsidize the program structure, not individual transactions.

“We need solutions that are not susceptible to a change in government or a change in political attitude.” 

–Andy Chisholm, RBC

 

Derek Ballantyne, chair of the Canada Mortgage and Housing Corporation, supported the bankers’ call to create an asset class rather than a portfolio of projects. “Finding a financial architecture for this and how to get it kick-started is going to be the key around any federal involvement.” He suggested adding other incentives, such as insurance products, to attract private partners: “This kind of investment will not get done on government capital alone.”

Julia Langer, CEO of The Atmospheric Fund, chimed in as an expert commentator. Noting that the Greater Toronto Area–based fund has been successfully investing in retrofits for decades, she declared it’s time to shift the discussion from “what to do” to “how to do it.” “It is very complex,” Langer said. “We need on-the-ground mechanisms to bring projects together with capital, with suppliers – a local concierge service.” Her advice to the industry, government and lenders: “Don’t forget about that intermediation, which doesn’t [yet] exist in the country at a scale necessary to move the kind of dollars we’re talking about into play.”

Other questions were raised. Angela MacEwan, senior economist at the Canadian Union of Public Employees, when asked how Canada can ensure it has sufficient talent to conduct these renovations, said, “I think you have to work with building-trade unions. They provide a lot of training to their members.” She offered an example: the insulators’ union in British Columbia has added green training to its apprenticeship process.

She wasn’t keen about creating a blended public/private lending structure. “I don’t think this is the time for us to be making new instruments for people to profit off of the green transition. We need to be thinking about a just transition.”

While prominent players from a wide range of organizations agreed there is merit in launching a green renovation wave, many issues still have to be ironed out. But if sector leaders can come together to solve these problems first, Mueller suggested, Canada has an opportunity to export its expertise in this area, especially given the global footprint of Canadian real estate investors and pension plans. “Canada is a leader in green building,” he said. “I think we’ve missed a tremendous opportunity to take advantage of that so far.”

Added Mueller, “No country has figured out so far how to do large-scale retrofits. So this whole model around scaling it up, finding a way to finance it, to execute it, creates a whole value chain – and that’s something other countries would be very interested in. I think it is a tremendous opportunity.”

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