The Canadian government has launched a new advisory council with a mandate to make recommendations on “critical market infrastructure” needed to attract and scale sustainable finance in Canada. But campaign groups criticised the move, describing it as an opportunity for the financial sector to regulate itself.
The Sustainable Finance Action Council (SFAC) brings together banks, pension funds and insurance companies. The council will advise both the finance minister and the environment and climate change minister on climate risk disclosure, climate data and analytics, and common standards for sustainable and low-carbon investments. The establishment of the body fulfils a recommendation of the Expert Panel on Sustainable Finance, chaired by Tiff Macklem, governor of Bank of Canada (BOC).
The new advisory group was quickly criticised by climate campaigners. “We definitely see this as allowing industry to regulate itself,” said Adam Scott, director of Shift Action for Pension Wealth and Planet Health. “Canada’s financial sector is lagging far behind in taking real action to address the climate crisis, so we don’t see how a voluntary committee made up of representatives of that industry is going to be able to lead decisive change.”
Greenpeace Canada’s senior energy strategist Keith Stewart agreed, warning that “if you invite the foxes to design your henhouse, expect a lot of loopholes”.
Although Macklem has been outspoken on climate change as a systemic risk to Canadian financial stability, Canada’s fragmented financial regulatory system gives the BOC few direct regulatory tools. Financial regulation is largely the responsibility of the Office of the Superintendent of Financial Institutions, which is about to conclude a three-month financial industry consultation on climate risk. It is also working with the BOC on a joint pilot project on climate risk scenarios.
The new council, chaired by former insurance CEO Kathy Bardswick, will first focus on climate reporting and disclosure standards aligned with the Taskforce on Climate-related Financial Disclosures recommendations. Members of the new body will be announced at the group’s first meeting next month.
Canada’s annual per-capita emissions of greenhouse gasses are among the world’s highest, largely because of the country’s large oil and gas sector. Canada’s six largest banks alone lent the fossil fuel industry CAN $137 billion in 2020, up 50% from 2014.
This page was last updated May 17, 2021
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