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This release was originally published by ecojustice.
Toronto, Ont./ Traditional territories of several First Nations including the Williams Treaties First Nations, Huron-Wendat, the Anishnaabeg, Haudenosaunee, Chippewas, and the Mississaugas of the Credit First Nation — Thousands of sustainable finance experts from around the world gathered in Toronto this week for the PRI in Person conference, offering the Canadian federal government an important opportunity to deliver details on Canada’s approach to sustainable finance.
New financial rules are desperately needed, as Canada is already listed by the UN as a “low regulation jurisdiction” on sustainable finance, while being home to financial institutions who have the highest levels of financing for oil, gas, and coal.
In a speech at the conference, Deputy Prime Minister Chrystia Freeland noted they are continuing to advance reporting requirements and sustainable finance labeling, known as a taxonomy; but they must advance policy that truly aligns our financial system with Canada’s climate commitments.
The government’s directive that a taxonomy must be scientifically aligned with 1.5-degrees is positive, which means that a sustainable finance taxonomy must not, by definition, include oil or gas. While excluding new fossil fuel expansion from the sustainability label is obvious, including existing ‘natural’ methane gas projects in the taxonomy in any way would be problematic, given that studies show that gas – when accounting for its extraction, cooling, and transport – is more polluting for the climate than coal.
The government must deliver on promises of prominent representation for civil society climate experts as well as Indigenous rights holders, as the initial process three-years ago missed these essential perspectives.
Yet, more progress for truly climate-aligned finance, including requirements for 1.5-degree aligned climate transition plans, must be prioritized. Finance is the missing piece of Canada’s federal climate plan, and new policy is needed to ensure our financial system aligns with the goals of the Paris Agreement on Climate Change.
Karine Peloffy, Lawyer & Sustainable Finance Project Lead at Ecojustice and CAFA’s legal architect said:
“This taxonomy announcement was meant to settle what does and doesn’t count as a ‘sustainable investment’ — an ingredient in a broader effort to align Canada’s financial sector with Canada’s climate commitments, and ensure one isn’t working actively against the other. Instead, what we got was yet another ‘plan to eventually make a plan’ that leaves the door open to considering fracked fossil gas as a climate solution, and brings us no closer to reining in the climate-heating investment practices of the financial sector. If decision-makers are looking for inspiration to bring much-needed clarity to this sector, I’d strongly recommend they borrow from the common-sense principles found in the proposed Climate-Aligned Finance Act (CAFA), currently before the Senate.”
Julie Segal, Senior Program Manager of Climate Finance, of Environmental Defence Canada, says:
“These sustainable finance policies should be the foundation for our financial system to align with climate action. The definition of what constitutes a sustainable investment should be water-tight to ensure it does not promote greenwashing, and has to be driven by science, not politics. The government’s acknowledgement that new oil or gas projects are inconsistent with a safe climate is a positive step, but investments in any type of gas projects still risk locking Canada into an anachronistic economy. The announcements from the government today on taxonomy and disclosure for large companies are sensible, but further requirements to align our financial system with climate action, including through Credible Climate Transition Plans, are needed to establish credibility and move our financial system in the right direction.
Richard Brooks, Climate Finance Director with Stand.earth said:
“It’s clear from a report from the University of Toronto published yesterday that Canada’s biggest financial institutions are not doing enough to accelerate the energy transition. They are doing the exact opposite with financed emissions double the total emissions of Canada. This is why we need more robust financial regulation to drive substantial climate action by big banks and pensions. Today’s announcements on taxonomy and disclosure help but our government must go much, much further to flip our financial institutions from making the climate crisis worse to advancing real climate solutions.”
Adam Scott, Executive Director, Shift: Action for Pension Wealth & Planet Health said:
“Aligning Canada’s financial system with climate goals is essential to protecting our financial system and our planet. Any policies to get us there must be fit for purpose. The task of completing a climate transition is not about short-term marginal emissions reduction. It’s about creating a systemic pathway for fully replacing fossil fuels in our energy system. Policies like Canada’s new climate taxonomy must get this right in order to avoid stranded assets and climate failure.
Keith Stewart, senior energy strategist with Greenpeace Canada said:
“Taxonomies and disclosures are nice, but what we really need is for our elected officials to step up and set clear rules to move big money out of fossil fuels and into climate solutions. Anything less is an insult to everyone picking up the wreckage of their lives after unnatural disasters like wildfires, floods and storms supercharged by the burning of fossil fuels.”
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Ecojustice uses the power of the law to defend nature, combat climate change and fight for a healthy environment. Its strategic, public interest lawsuits and advocacy lead to precedent-setting court decisions, law and policy that deliver lasting solutions to Canada’s most urgent environmental problems. As Canada’s largest environmental law charity, Ecojustice operates offices in Vancouver, Calgary, Toronto, Ottawa and Halifax.
Environmental Defence: Environmental Defence is a leading Canadian environmental advocacy organization that works with government, industry, and individuals to defend clean water, a safe climate, and healthy communities.