In the beginning...

Here is the article that started us thinking about Governance for Our Kids Climate. Thank you Heather Scoffield!

Want to see real action on climate change? Follow the money

Want to see real action on climate change? Follow the money

When it comes to climate change, money can move much faster and with a lot more impact than government policy.

That’s something federal Environment Minister Jonathan Wilkinson hopes to harness, but it’s something the Alberta government seems to fear.

Wilkinson is in Italy this week, working with his German counterpart to raise billions of dollars in aid for developing countries to fight climate change, in advance of a major climate summit a month from now in Glasgow.

In an interview, Wilkinson said he’s quite aware that the commitments for $100 billion a year from rich countries to help developing countries cut their greenhouse gas emissions are insufficient on their own and need to act as a “catalyst” for the full participation of the private sector — participation that’s essential if those countries hope to address the climate and prosper at the same time.

“The public money is intended to start this process, and to eventually crowd in private sector money,” he said.

It’s the same calculus here at home, but the federal Liberals are only beginning to use their power to shape markets in a way that will lure big investment into the very expensive transition away from fossil fuels to cleaner energy.

Wilkinson said his government will produce a deeply detailed plan within the next few months for how Canada will meet its newly increased target of cutting emissions by more than 40 per cent by 2030.

And the Liberal election platform contained a few key promises that will likely figure prominently at the Glasgow summit as Justin Trudeau seeks to entrench his legacy and portray Canada as a poster child for the environment. The government will likely talk about its promised cap on emissions from oil and gas, its carbon levy that climbs steeply to curb consumer behaviour, and its plans to electrify the nation.

But just as important — although less flashy — are its promises to set some standards for private investment. The platform said a Liberal-led government would make it mandatory for companies to disclose climate-related risks, and also require the financial sector to develop and disclose solid plans for getting to net-zero carbon emissions by 2050, in tandem with Canada’s national goal.

“We need to move forward with more robust disclosure requirements so that people understand what it is that the investment decisions are,” Wilkinson said Thursday from Milan.

Requiring companies to reckon with how much climate change could affect their operations may sound dreadfully bureaucratic, but let’s look at what the Canada’s second largest pension fund — the Caisse de dépôt et placement du Québec — did this week. By embedding climate risk into its strategy to give Quebecers the return on investment they expect, the Caisse reached the conclusion that it needed to sell off its interests in oil production by the end of next year, and at the same time increase its investments in heavy emitters that are trying to scale back their carbon footprints.

In other words, a long-term focus on returns that incorporates the effects of a warming planet is prompting the Caisse to divest.

The Alberta government and the Canadian Association of Petroleum Producers were unimpressed. A spokeswoman for Alberta Energy Minister Sonya Savage said the move was “empty symbolism” that was “short-sighted and disconnected from reality.”

But in fact, it’s anything but.

By moving its money out of oil, the Caisse is setting a high bar for other pension funds and financial institutions in Canada, and also signalling that there’s profit to be made in doing so, says Dan Woynillowicz, a climate and energy consultant based in Victoria, B.C.

Rules and standards could rev up the shift.

A lot of Canadian banks and firms talk a good game about supporting the environment, but without transparency and solid rules that spell out what that talk actually means, it’s hard to know what is bluster and what is worth investing big money in.

But if official rules for companies and financial institutions can be shaped to impose transparency and reflect what is already happening elsewhere in the world, the transition to clean energy could take on significant momentum, Woynillowicz said.

“The energy transition is now embedded enough (in investment strategies) that it’s now happening,” he said. “The question is, how fast? The accelerant is government.”

Given the climate-focused moves by huge global investment funds, as well as authorities in Europe and likely soon the United States, it’s clear that Canadian pension funds, banks and the oilpatch will have to fall into line, sooner or later. Those who wait for later will undoubtedly be the target of public protests — Greenpeace is launching a bank campaign soon — and divestment.

Wilkinson has some carefully selected words of advice for Alberta Premier Jason Kenney on the subject.

“Being thoughtful about climate is increasingly going to be a competitiveness issue for the oil and gas sector and for all sectors of this economy. I think the premier of Alberta certainly needs to, should understand that.”

Heather Scoffield is the Star’s Ottawa bureau chief and an economics columnist. Follow her on Twitter: @hscoffield