Good morning.
My name is Julie Segal. Thank you for inviting me to appear.
I lead a program on climate finance policy at Environmental Defence. I managed a portfolio of investments before working on policy. I'm a member of the Quebec government's advisory committee for its road map to a sustainable financial system.
This study about the environmental and climate impacts from Canada's financial institutions is important. Canada needs policy to align its financial system with climate action and Canadians want it. I'm glad to detail solutions today.
Globally, Canada is still recognized as a low-regulation jurisdiction on sustainable finance. The lack of climate-aligned finance policy in Canada harms our environment and people living across the country. The lack of climate-aligned financial policy also damages our competitiveness for business and investment. For the benefit of this environment committee, I will focus on the environmental impacts.
To start, Canadian financial institutions provide among the largest sums of money to oil, gas and coal. The harms from oil, gas and coal are irrefutable when it comes to climate change, with fossil fuels being the leading cause, and are likewise obvious for other environmental harms like water pollution.
Where our banks and pension managers place money today determines these real-world impacts. Their climate ambitions do not match the urgency required to limit global warming, and they are not investing sustainably enough. Nearly all of Canada's financial institutions have committed to reducing their climate-harming emissions, but very few have plans or have started to act. Data shows that financial institutions' targets and plans improve when they are regulated to deliver on them.
People across Canada understand this. This is a very important point I'd like to underline. In recent polling, people across Canada said they do not trust their finance institution to take meaningful action on climate change without regulation. Over 90% of people do not trust voluntary action from their financial institution. The majority of people surveyed want rules to ensure the financial system invests more sustainably. When this is framed as directly countering greenwashing, just about 80% of people want the government to implement sustainability rules for the financial sector.
We have ready-made policies in Canada that can be executed. The climate-aligned finance act introduced by Senator Rosa Galvez is currently being studied in the Senate. I had the pleasure of being an adviser for this bill. It outlines a set of policies that would align our financial system with Canada's climate commitments of limiting global warming to 1.5°C.
More broadly, requiring plans from financial institutions—known as climate transition plans—is key. This is something nearly all participants mentioned today. This ensures that banks, pension plans, insurers and large companies detail plans for climate action, including short-term actions.
Modernizing the mandates of financial regulators is another key point for ensuring accountability, as is clarifying that leaders of financial institutions should aim to help mitigate climate damages. Public opinion supports these policies. Over 120 groups have specifically endorsed the climate-aligned finance act. Elected officials from four political parties, including members from this committee, endorsed a motion to align our financial system with safe climate action.
People understand that climate change is expensive. People understand that financial institutions should serve their interests, as the clients of banks and the beneficiaries of pension funds. Right now, the financial sector is under-regulated on climate and environmental impacts.
Canadians are waiting for outcomes on climate-related financial policy. This is the missing piece of Canadian climate policy.
In your committee report, I very much encourage you to urge the federal government to prioritize using all tools at its disposal to align Canada's financial system with the Paris Agreement. Canadians want mandatory policies that ensure that finance is sustainable and resilient to climate change.
Thank you very much for inviting me to testify today. I look forward to questions.