Evidence of meeting #110 for Environment and Sustainable Development in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was risk.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Céline Bak  Partner, Risk Advisory, Financial Services, ESG & Impact, Deloitte
Faith Goodman  Chief Executive Officer, Goodman Sustainability Group Inc.
Daan Van Acker  Program Manager, InfluenceMap
Renaud Brossard  Vice-President, Communications, Montreal Economic Institute
Rosa Galvez  Senator, Quebec (Bedford), ISG
Bruce Pardy  Professor of Law, Queen's University, As an Individual
Ellen Quigley  Research Professor, University of Cambridge, As an Individual
Peter Routledge  Superintendent, Office of the Superintendent of Financial Institutions

4:10 p.m.

Program Manager, InfluenceMap

Daan Van Acker

There's a transparency question here. Certainly, having increased transparency within the economy on the corporate side can aid in driving green and transition financing. However, there also seems to be traditional or continued action by the banks regarding their existing relationships with problematic industries and financing polluting companies.

In that sense, we're seeing other banks, even in regions where we have similar levels of transparency in the economy, financing more green companies and transitionary companies alongside their continued activities.

4:10 p.m.

Liberal

The Chair Liberal Francis Scarpaleggia

Thank you.

We'll go now to Ms. Collins.

May 30th, 2024 / 4:10 p.m.

NDP

Laurel Collins NDP Victoria, BC

Thank you, Mr. Chair.

My first question is for Ms. Bak. I'm following up on a question from my colleague from the Bloc.

You talked a little about consistency and predictability. Can you talk about how legislative and regulatory measures can help companies that might be hesitant to pull the trigger when it comes to ESG policies?

4:10 p.m.

Partner, Risk Advisory, Financial Services, ESG & Impact, Deloitte

Céline Bak

This is an evolving space, and I think it is a complex one for companies to navigate. There is, I believe, an important consideration for any company: what their competitors and peers are doing. Once the CEO, board or management team of a company sees a certain practice being adopted by peers, it is relevant. That may happen by region, by sector or by other types of dimensions as well.

4:10 p.m.

NDP

Laurel Collins NDP Victoria, BC

Thank you.

My next question is for Mr. Van Acker.

You painted a bleak picture of the gap between the net-zero pledges of Canada's biggest banks and their progress towards meeting their goals.

When we think about what elected officials and governments can do to get the biggest banks on track, what's the role of climate transition plans, and what steps would we need to take to make sure those kinds of strategies or others are implemented?

4:10 p.m.

Program Manager, InfluenceMap

Daan Van Acker

That's a great question and obviously a critical one for governments.

I'll preface this by saying that our expertise is mainly on the financial research side. I'm not as much a policy expert.

However, based on what we're seeing globally, obviously transition plans are key and governments can play a critical role in helping guide the financial sector—which includes banks—in aligning their financing with net zero and, as such, facilitate that activity in the real economy. A key part of that is increased transparency and disclosure, defining what sustainable activities are and aren't, and how corporations and the financial sector are aiding in financing that activity.

That can be a key role governments can play in aiding transition plans.

4:10 p.m.

NDP

Laurel Collins NDP Victoria, BC

Thanks.

I was also interested in some of what you were talking about when you were discussing the lobbying of the biggest banks—what organizations they're taking part in and what lobbying they are or aren't doing.

Can you expand a bit more on the lobbying that's taking place, the political advocacy from Canada's biggest banks and how this behaviour might undermine those pledges for net zero?

4:15 p.m.

Program Manager, InfluenceMap

Daan Van Acker

Yes, absolutely.

In general, within the financial sector, we see less direct lobbying by financial institutions. What I mean by that is that they are not, themselves interacting as much with policy. Rather, they seem to rely on industry associations, more and more, to do this on their behalf.

The Canadian banks are no exception to this in both the financial and real economy industry associations I mentioned. While the banks themselves state that they would support a public policy framework to guide the transition and that this is essential, the lobbying seems to undermine that. Blocking and diluting climate policy, both in the real economy and when it comes to financial regulation, are obviously not aligned with the pathway to net zero by 2050.

4:15 p.m.

NDP

Laurel Collins NDP Victoria, BC

It seems that the things you just said about the biggest banks could also be said about the biggest oil and gas companies in Canada. We're seeing those organizations lobby themselves, but they really rely on industry organizations to do a lot of their lobbying for them. They publicly might say they support a transition to a sustainable economy, but then actively engage their industry organizations in lobbying against those kinds of policies.

We also see that the people involved at the top of these organizations—the biggest banks and the biggest oil and gas companies—are often interchangeable. They move from company to company.

Can you talk about the interaction between the biggest oil companies and the biggest banks in Canada?

4:15 p.m.

Program Manager, InfluenceMap

Daan Van Acker

This is a particularly relevant question in Canada.

Based on our report, the figures I cited show that Canadian banks' exposure to fossil fuels in their lending activities is so much higher than in many of the other economies that we analyzed. Obviously, Canada has a significant fossil fuel sector. A significant portion of that lending we're seeing, this high proportion going to fossil fuel companies, is specifically to domestic Canadian oil and gas companies. It does seem that there are significant links between the Canadian banking sector and the fossil fuel sector.

4:15 p.m.

NDP

Laurel Collins NDP Victoria, BC

I wonder about the conflict of interest if the folks at the top of the biggest banks in Canada are using industry organizations—

How many seconds do I have left?

4:15 p.m.

Liberal

The Chair Liberal Francis Scarpaleggia

You have about 30.

4:15 p.m.

NDP

Laurel Collins NDP Victoria, BC

Okay.

If they are using industry organizations to undermine climate policy and have these deep interconnected ties to oil and gas, what kind of advice might you give to policy-makers to address this issue?

4:15 p.m.

Liberal

The Chair Liberal Francis Scarpaleggia

It would have to be brief advice.

4:15 p.m.

Program Manager, InfluenceMap

Daan Van Acker

My advice would be for increased transparency and disclosure around lobbying in general, connections to industry associations and alignment with positions.

4:15 p.m.

Liberal

The Chair Liberal Francis Scarpaleggia

Thank you.

I'm going to ask Mr. Kram to start the second round of questions. It's going to be a four-minute round. I will give Ms. Pauzé and Ms. Collins two minutes.

4:15 p.m.

Conservative

Michael Kram Conservative Regina—Wascana, SK

Thank you very much, Mr. Chair.

Thank you to all the witnesses for joining us today.

Let's start with you, Ms. Goodman, because I believe you were the first one to bring up small and medium-sized businesses.

Is there currently a federal government program to provide rebates on the carbon tax to incentivize small businesses to make their businesses less emissions-intensive?

4:15 p.m.

Chief Executive Officer, Goodman Sustainability Group Inc.

Faith Goodman

There's a whole range of federal government programs and certainly a range of tools that exist. Also, as everyone knows, for SMEs, there are Crown corporations like EDC and BDC that also have a range of programs.

The point that I was really raising at the heart of the matter, as we think about transition financing, climate policy and this balanced approach for economy, environment and society, is that SMEs don't get left behind. In aggregate, their footprint matters. In aggregate, from a GDP standpoint, they really matter.

As we look at what other countries are doing, in particular for SMEs—their institutions, their tool kits, their digitization—we see that these are important considerations for us. We think about policy, policy development, policy implementation, and I was homing in on experimenting. What are other countries doing? What lessons learned are there for Canada? We don't need to wait. There's a lot that we can do.

Tangentially, I also mentioned the SME Finance Forum, which is part of the World Bank. They've done tremendous global studies on access to finance, access to markets, access to skills, and enabling environments. There are very concrete ideas on what can be done now.

There's an opportunity for the federal government and for provincial governments to work cohesively on this SME challenge, and it is material.

4:20 p.m.

Conservative

Michael Kram Conservative Regina—Wascana, SK

Do you have any specific recommendations for changes to existing federal government programs with respect to the carbon tax and green initiatives for SMEs?

4:20 p.m.

Chief Executive Officer, Goodman Sustainability Group Inc.

Faith Goodman

One of the big opportunities for all governments is looking at what jurisdictional best practices are relating to access to financing. As we talk about transition policy, we look at this huge cohort of SMEs and entrepreneurs who need to think about the global rules bearing down on them, such as supply chain sustainability rules.

Competitiveness matters. To be competitive, you're going to look at your peers and you're going to need financing. As we all know, access to low-cost financing is a competitive advantage. That is a very important area for us to think about.

As SMEs over the last few years have moved more into the sustainability agenda, as I said, they cite problems with resources, such as access to talent, access to time, access to funding, as a big impediment. That would be a spotlight area I would recommend.

4:20 p.m.

Conservative

Michael Kram Conservative Regina—Wascana, SK

Thank you.

Let's go to Mr. Van Acker now.

Mr. Van Acker, you talked about how the big five banks in Canada are still financing coal companies and oil and gas companies, presumably because these are profitable ventures. I am wondering, if the big five banks were to stop financing oil and gas and coal companies, what impact that would have on them in terms of lost profits and lost revenue.

4:20 p.m.

Liberal

The Chair Liberal Francis Scarpaleggia

You have 10 seconds.

4:20 p.m.

Program Manager, InfluenceMap

Daan Van Acker

It's a great question. We don't recommend that they stop financing immediately. We simply recommend that they align their phase-out, as many banks are doing, with science-based pathways.

4:20 p.m.

Liberal

The Chair Liberal Francis Scarpaleggia

Mr. Longfield, go ahead for four minutes.

4:20 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Thank you, Mr. Chair.

Thank you to the witnesses.

In the brief amount of time we have, I want to start with Ms. Goodman.

I was formerly part of an SME, and I had to report environmental information back to my board of directors. I was managing director of a Canadian division of a U.K. company. We had to report on energy conservation that we were doing, as well as on water treatment and waste stream management, in order to make us more competitive globally, but also, as you said, to be part of a supply chain that needed us to show that we were doing these activities.

I'm wondering how, in terms of policy, we could enact something such that SMEs would have to do surveys similar to the ones I was doing for my U.K. head office. Would that be through Stats Canada?