CashNews.co
Attracting global capital to Canada will increasingly require understanding the sustainable finance landscape.
That’s according to Dentons partner Bill Gilliland, who says this knowledge is essential for Canadian companies “given [that] the resource nature of the Canadian economy is very focused around extractive industries, including fossil fuels but also mining and other industries that do bring an impact to the environment.”
Because many sustainable finance markets outside Canada have also “been more developed for a longer period,” securing global investment opportunities can also hinge on Canadian companies understanding what sustainable financing tools are available to them, Gilliland adds.
Gilliland, a member of Dentons’ corporate, securities, and M&A practice group, will speak on key sustainable finance trends and innovations at Canadian Lawyer’s ESG Summit on Oct. 30.
The panel will also cover how green finance can give companies a competitive advantage, the risks organizations should consider while transitioning to a more low-carbon operation, and the obligations involved in raising capital via sustainable finance vehicles.
Gilliland told Canadian Lawyer on Thursday that companies should monitor several recent developments in the sustainable finance space. The first unfolded on Wednesday when the federal government announced it would support the development of made-in-Canada sustainable investment guidelines that would taxonomize investments in accordance with the net-zero emissions by 2050 goal.
The move had been recommended by the Sustainable Finance Action Council, a group of experts on sustainable finance that the federal government launched in 2021. It was also a project “originally proposed as important back in 2019 by an expert panel then chaired by [former Bank of Canada governor] Mark Carney,” Gilliland says. The panel noted that due to the resource and extractive-based nature of Canada’s economy, it made a lot of sense for “companies in Canada to transition their businesses to more sustainable practices, to have its own made-in-Canada, transition financing taxonomy,” Gilliland adds.
While there have been several attempts to develop such a taxonomy, “the fact that the government has now announced that they will be pursuing that… is a very significant development and is going to have a big impact on companies looking to raise money to finance their transition or governments [looking] to finance their transition to a more sustainable state.”
Another development Gilliland says businesses should look out for is the expansion of the concept of “green use of proceeds” – where the proceeds of certain loans are used for projects with clear environmental benefits – to include nuclear power. While more “green” uses would include funding a solar power plant, recently, “there’s been a number of green bonds issued to finance the development of nuclear power,” Gilliland says.
He also noted conversations in Canada “around the extent to which developments involving natural gas could in any world be labelled as ‘green’ or ‘transition.’”
Some of these conversations focus on “potentially the development of emissions-abated gas power plants, for example, being something that could be financed under this new green and transition taxonomy that… the government is supporting,” he adds. “I think from the perspective of the Canadian markets, that’s going to be a very significant development.”