Edward Waitzer: Canada’s financial sector is missing in action on climate change [Globe & Mail]

Ed Waitzer - Publications

Canada’s financial sector is missing in action on climate change


Opinion Contributed to The Globe and Mail / Published January 22, 2018

There is a pressing need to reassert the social utility of the financial sector – including the development of products, services and markets that help mobilize capital for social good. Why, then, is it so difficult for our financial institutions (and regulators) to “connect the dots”? Consider their conspicuous absence in recent global climate-change initiatives.

In the wake of the 2015 Paris agreement, conservative estimates of the measures needed to keep global warming below 2 C called for leaving at least one-third of existing global oil, one-half of global gas and 80 per cent of global coal reserves in the ground. The estimated value of stranded assets from the 2 C carbon budget ranged from $50-trillion (U.S.) to $100-trillion. This did not include the value of related infrastructure, such as the value of refineries, pipelines, ports and storage facilities. A recently leaked draft report of the United Nations Intergovernmental Panel on Climate Change suggests that to keep warming to below 1.5 C, the carbon budget is now half of previous estimates.

Will the transition be effected in a gradual, managed manner or as part of a highly disruptive process with severe costs to global security and stability? Unfortunately, we are currently on track for the latter course. As a result, Canada now faces critical economic risks that deserve urgent attention from our financial institutions and regulators. But when it comes to the transition to a low-carbon economy, Canada’s financial sector has lagged behind global best practices, particularly with respect to disclosure standards, capital raising and investment plans.