Thank you, Mr. Chair.
I thank the committee members for the opportunity to appear today.
Before I begin, I would like to acknowledge that this meeting is taking place on the traditional and unceded territory of the Algonquin Anishinabe people, and I am grateful for their thousands of years of stewardship on this land.
On behalf of the team at Deloitte Canada, we are proud to share our perspectives on how we work with organizations across the public and private sectors as they navigate evolving expectations and develop relevant, innovative and sustainable solutions.
Our reputation is built on our credibility, and with more than 175 years of experience as a Canadian firm owned by Canadians, we have grown into who we are today because of the trust that our clients offer us in our people and in our values.
As Canada moves toward achieving a net-zero economy, we work with financial institutions to identify sustainable business opportunities and to establish disclosures that inform capital markets in consistent and comparable ways. We're also beginning to work with financial institutions to assist their clients with transition planning.
Through our work at Deloitte, we believe that collaboration within the financial services industry is key to growing trade and increasing productivity. Many organizations are trying to understand how best to operationalize sustainable finance, and we're here to support them.
I would like to take a moment to present findings from recent original research conducted by Deloitte Canada on how companies making disclosures of their scope 1 and 2 greenhouse gas emissions are investing in sustainable capital expenditures and generating sustainable revenues from these investments. These findings establish a positive correlation between disclosures of scope 1 and 2 greenhouse gas emissions and greater sustainable investment.
Second, I would like to report findings from another stream of research by Deloitte Canada on how global capital markets are valuing the strongest performing companies in terms of GHG intensity compared to their sector peers.
We define GHG intensity simply as company scope 1 and 2 emissions divided by revenue. This stems from a perspective that comparable disclosures and a consensus around the inevitable transition are informing investors' decisions, resulting in greater investment flowing to the most GHG-productive companies globally in several sectors of economic activity.
I'd like to relate two points from this research.
First, our research has found that Canadian companies that are disclosing their GHG emissions are making sustainable capital investments that are six times greater than those made by companies that do not disclose GHG emissions. We also found that these capital investments are followed three years later with the achievement of sustainable revenues close to six times higher than companies that did not disclose GHG emissions. While these findings reflect correlation and not causation, they do tell us that disclosures are associated with much higher sustainable investments that also appear to be productive.
In our second stream of research, when considering how public company valuations are explained by financial and non-financial performance, where GHG intensity is the indicator of non-financial performance, GHG intensity explains more than 5% of company value in close to 60% of North American, 46% of European, and 24% of rest-of-the-world publicly traded firms. The relationship between better GHG intensity, intra-sector performance and higher valuation of public companies is not yet present in all sectors, but it is the case in one-third of sectors in North America and one-quarter of sectors in Europe.
I'd now like to turn my attention to a potential opportunity. As Deloitte works with public sector and industry associations, we see that these groups are actively considering how shared information platforms might be created to lessen the burden of disclosure and increase comparability to enhance more productive and efficient investments. A one-and-done approach to disclosures, particularly for small and medium-sized enterprises, is being discussed.
Recognizing the significant role of the financial industry as a trusted adviser to Canadian businesses, our research points to immense value from enabling the market transparency that permits benchmarking of GHG intensity, as well as sustainable investment, as part of transition planning. Canadian financial institutions have an opportunity, therefore, to engage with publicly traded companies, as well as small and medium-sized enterprises to make disclosures as easy and as efficient as possible. This, in turn, will shape macroeconomic outcomes and improve public outcomes, to the benefit of all Canadians.
Thank you, Mr. Chair and members of the committee, for having me here today.