We can reduce greenhouse gases by changing corporate behaviour

There has been a lot of high-pitched noise this week on how Canada should navigate between the environment and the economy.

On Tuesday, the Liberals rolled out their vision for the Trans Mountain pipeline from the oilsands to the coast of British Columbia. The policy includes a promise to put federal revenues from the project toward renewable energy initiatives.

And then the Liberals will try to balance out that pro-energy move by taking a pro-environment stance in two pieces of controversial legislation, pushing through measures for a new approvals process for natural resource development as well as a ban on tanker traffic off part of B.C.’s coast.

In the midst of that Liberal balancing act, on Wednesday federal Conservative Leader Andrew Scheer announced his party’s plan to reduce greenhouse gas emissions — a plan that doesn’t include a carbon tax, but pronounced on how to make major emitters change their ways.

The din is deafening, but we can hope it’s not so loud as to drown out a set of practical solutions that landed on the government’s doorstep late last week.

A task force of financial market experts has mapped out some relatively painless, but practical and prudent ways to cut emissions right away — a plan that involves big banks, big oil, regulators and government, but also includes investment decisions made every day by regular people.

The task force was convened by the government to make so-called sustainable finance — a corporate system that reinforces climate targets and doesn’t work against them — meaningful.

Led by a former central banker — Tiff Macklem — as well as senior people from two institutional investment funds and a chartered bank, the task force says Canada is behind in orienting its economy and capital markets toward climate change. But we have the ingenuity to catch up, and then some.

The world, they say, is shifting resolutely toward low-carbon markets.

The European Union, China and the United Kingdom are well on their way toward capitalizing on the corporate quest for a smaller carbon footprint, and investors everywhere are clamouring for change.

It only makes sense for Canada’s companies and investors to shift accordingly, not just to take advantage of new markets for clean technology, but also to mitigate risks that come from climate change and environmental catastrophe.

Canada’s oil-and-gas sector is in the crosshairs obviously, but so is the financial sector that underwrites those companies and also carries much of the financial risk of crumbling infrastructure, flooding, drought and the subsequent revaluation of real estate everywhere.

If Canada had a “comply or explain” regime that forced companies to disclose their emissions as well as their possible exposure to environmental damage, then the growing number of investors who want to put their money in fighting climate change would know where to turn and could influence corporate behaviour, the task force says.

They urge regulators, the Bank of Canada, accountants and the companies themselves to set up that system and enforce it.

For individuals, the task force looks to registered savings plans as a way to encourage retail investment in climate. The federal government could create extra space in RRSPs for climate-friendly investments and give those savings even better tax treatment than other types of stocks and bonds.

And when it comes to financial markets, governments should pave the way for a market of “transition bonds” that would reward oil-and-gas companies, as well as other carbon-intensive firms, for progress they make in meeting their targets on cutting emissions.

Many of the task force’s ideas don’t cost much and offer the opportunity for both financial reward and emissions reductions at the same time.

In other words, the ideas offer creative solutions that are compatible with growth and protecting the environment.

And despite having been written by institutional investors, the task force report also makes common cause with some of the ideas coming from the environmental movement.

The David Suzuki Foundation, for example, is costing out a long-term road map to meeting Canada’s carbon commitments and sees large-scale private-sector investment in electricity as key.

But before we get carried away with the promise of practical solutions, there’s a big hitch: lack of certainty in Canada’s carbon markets.

That’s where all the political noise, federal-provincial fighting and frequent changes of government planning come in to play.

With each successive government comes a different approach to pricing carbon. There is no detailed, long-term plan for expectations.

Just last week, for example, federal Environment Minister Catherine McKenna said she would not raise the federal carbon tax after 2022 — leaving the public to wonder what else she had in mind to meet Canada’s international obligations.

We have a vague idea, but not clear enough to make its way in numeric terms into a company’s financial disclosure documents.

For sure, the private sector could — and for its own posterity, should — park the politics and take on some of the task force’s ideas on its own. But it would be a whole lot easier if the political decision-makers could come to a consensus.

Heather Scoffield is a columnist with Torstar Syndication Services.

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