Sustainable Finance Report
The Green Budget Coalition acknowledges the importance of the June 2019 Final Report of the Expert Panel on Sustainable Finance which provides a blueprint for integrating sustainability and climate-related financial risk and opportunity into government decision-making and the financial sector and financing the transition to a clean economy. The GBC supports many of the Expert Panel’s recommendations, but with major caveats regarding new public financing for fossil fuels.
The Expert Panel calls for recognition of the economic opportunity presented by the transition to a “competitive low-emissions, climate-smart economy”. This would be guided by a detailed capital plan aligned with Canada’s long-term climate change targets.
The Panel also recognizes the opportunity for targeted tax incentives to drive private investment into clean innovation to embolden Canadians toward climate-aligned investments. The GBC’s recommendations on renewable and decentralized energy represent a concrete approach to realize this opportunity.
The Panel recommends creating and strengthening financial sector institutions to help integrate climate considerations throughout the sector. In particular, the GBC supports implementing the recommendations of the Task Force on Climate-Related Financial Disclosure (TCFD) and making annual TCFD reporting mandatory for governments, investors and banks. The GBC also supports clarifying the scope of fiduciary duty for investors and corporate boards in the context of climate change.
While the panel also appropriately recommends a focus on products to finance clean innovation in priority areas of the economy, including clean technology buildings, and electricity, the GBC cannot support the panel’s inclusion of the oil and gas sector in any policy related to sustainable finance. The continued growth and operation of the oil and gas industry is inconsistent with science- based mid-century decarbonization goals, even if additional progress on marginal upstream emissions reduction were achieved.
The GBC opposes the use of new targeted sustainable finance tools for the oil and gas sector. In particular, we object to the application of so-called ‘transition bonds’ for the fossil fuel sector, which, unlike other sectors of our economy, does not have a credible transition pathway to achieving zero emissions. Transition bond finance should only flow to sectors with the ability to fully transition to clean energy, which is not possible with fossil-fuel related companies. The integrity of the wider green bond market would be compromised by attempts to open up the market to flow new, low-cost finance to oil & gas companies.
The Green Budget Coalition recommends that the federal government, especially Finance Canada, give the Panel’s report the most serious consideration, while not establishing additional subsidies for fossil fuels or new targeted finance flows for fossil fuels which would undermine our long-term climate goals.