Environment Committee on Nov. 18th, 2024

[The Chair, Liberal, Francis Scarpaleggia]

Thank you very much.

I now give the floor to Ms. Taylor Roy.

[Leah Taylor Roy, Liberal, Aurora—Oak Ridges—Richmond Hill, ON]

Thank you very much.

Thank you again to the witnesses who are here for the second panel.

We've been listening to the conversation so far, and there seem to be different conversations going on, with a lot of concern about the cost of implementing these or how this is going to be done and put in place, which is absolutely essential. We need to think about how it can be done, but none of this is completely rolled out yet.

For these questions or concerns about which companies will be required to have audits, who will do the audits and how we will treat small businesses, which we know don't have the resources or the manpower, typically, to undertake these things, I know there are a lot of different options. There are a lot of different ways of putting these in place, so they're really important as we roll these things out, but I'm concerned that the focus on cost is trying to be used to stop us from going forward with this, and there's very little concern about the cost of not putting these in place, both from a business perspective and because, as you just said, Mr. Schein, the investors are demanding these taxonomies and we are at risk of losing capital investment here.

I'm wondering if you could perhaps comment a little on the trade-off and the balance between putting taxonomies, disclosure and reporting requirements in place and how we do that in a cost-effective and efficient way, and why that's important given what's at risk right now with capital flows and, really, with pollution and climate change.

[Anthony Schein]

Sure. I'd be happy to speak to two components of that.

The first is that in our work at SHARE we regularly engage with publicly traded companies in Canada on climate and on other “ESG-related risks”. We know that companies already are inundated with requests for different types of disclosure on climate and on other ESG metrics from an absolute alphabet soup of different standards.

When we talk to corporate secretaries, that is their complaint: “We can make the disclosure, but we would like you to agree to a system so we can make one set of consistent disclosures.” The cost they are concerned about is just that: It's duplicative and competing types of disclosure regimes, which is exactly why we have wanted to develop a Canadian taxonomy and to align it with emerging international standards. That, I think, is the key component.

Secondly, for all of this, we know that there's an opportunity cost to missing investments in Canada, and that for all of what we're talking about here, there are huge opportunities in the green economy, including 3,000 jobs in St. Thomas, Ontario.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Ms. Pauzé for one and a half minutes.

[Monique Pauzé, Bloc, Repentigny, QC]

Ms. Chipot, the Canadian Securities Administrators' biennial report stated that the industry is providing misleading information on the level of commitment and effort invested in credible transition plans. I think that your own report states something similar.

Could you talk to us about greenwashing?

[Alice Chipot]

Thank you for the question.

There has been a great deal of reflection on that recently, particularly in terms of the Competition Act. Greenwashing refers to when economic stakeholders, such as banks or businesses, make commitments or promote practices using unclear language. As we've indicated, such language does not allow a comparison of actions taken by stakeholders or a true understanding of what is being included.

Terms such as “transition plan”, “green investment”, “responsible investment” or “ethical investment” are common. The meaning of those terms is unclear. They're marketing terms that are misleading and which do not allow an understanding of the extent to which environmental, social and governance factors will be monitored.

These practices are almost commercial in nature. As long as there are no clear rules of the game for everyone, there will continue to be marketing-type communication strategies with no impact.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Ms. Collins.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

My final question is for Ms. Walton. It's a two-part question.

One, I will give you a bit of space to more fully flesh out the risks of being left behind if we don't have mandatory disclosures and mandatory transition plans. What does that mean for the Canadian economy and Canadian businesses?

I attended the PRI conference in Toronto. It was wonderful to see people from all around the world committed to responsible investment.

Also, we've talked a lot about emissions reductions. Through your work, can you talk about any responsible investments when it comes to biodiversity-related risks?

[Lindsey Walton]

Thank you, and thank you for attending.

The most I can speak about right now regarding biodiversity risks is that, after climate, they're becoming the number one concern for investors and corporations. We brought huge delegations to Montreal for COP15 and to Cali for COP16. Right now, you can follow up on the outcomes of that on our website.

Regarding your other question, the risk of being left behind is a huge one in Canada. Through some studies we've done, Canada has one of the lowest regulations for ESG around the world. We've brought a lot of international investors to the table at government organizations to explain that, if Canada doesn't move ahead with things like mandatory disclosure for at least large businesses within the taxonomy, it will become more and more uninvestable, because—

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Mr. Deltell, go ahead for three minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you, Mr. Chair.

Good afternoon, ladies and gentlemen.

Thank you so much for joining us.

Ms. Chipot, I am very intrigued by the words you're using. You mentioned creative uncertainty. A bit like my colleague Ms. Pauzé, it made me smile. It reminded me of the exact words the commissioner of the environment and sustainable development used in his report last week. He said, “This lack of transparency meant that accountabilities for reducing emissions remained unclear. … Federal organizations … faced challenges in effective implementation” of most of these measures.

I'd like your comments on the importance of gathering statistics, data and accurate, confirmed evidence to make wise and informed decisions.

[Alice Chipot]

You've already summarized the comments accurately.

Even from the viewpoint of the market and various economic stakeholders, the rules need to be fair and transparent for everyone. That way, good stakeholders can be compensated, and we'd also be able to identify the bad stakeholders and determine what plan they're using. Is it a methodologies-based plan? Is the plan based on their goals? As long as creative uncertainty remains, we can't separate the wheat from the chaff and position ourselves.

We need to get to the bottom of what the players are doing in order to see things clearly. Who is benefiting from the uncertainty, right now? That's the question that always gets asked.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

You spoke about methodology. Once again, I think you paid attention to the report tabled by the commissioner of the environment and sustainable development. He said, “The recent decreases to projected 2030 emissions were not due to climate actions taken by governments but were instead because of revisions to the data or methods used in modelling.”

In terms of the methodology and the uncertainty you've mentioned, companies must be transparent, but don't you believe that the example should be set at the top, meaning by government?

[Alice Chipot]

Yes, you are correct.

Governments and public institutions must provide economic stakeholders with very clear guidelines. Economic stakeholders are subject to additional stress when they don't know how to navigate the many diverse demands being made of them. There are many frameworks in place. It's not good for anyone. It's not good for the economy, and it's not good for the planet.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you very much for confirming what the commissioner of the environment and sustainable development said regarding the clarity the government needs but has yet to demonstrate.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Mr. van Koeverden.

[Adam van Koeverden, Liberal, Milton, ON]

Thank you, Mr. Chair.

I'd like to start with a quote from Jim Leech, chair of the advisory council for the Institute for Sustainable Finance. I'll shorten it a bit, but he says, “The Climate Investment Taxonomy Framework is a necessary step towards securing Canada’s competitiveness.... We need the clarity this framework provides to attract global capital....”

Despite the overwhelming consensus we've heard on this committee over the last number of weeks that this is a necessary step for our financial and environmental ambitions, Conservative witnesses and testimony and many questions from Conservative MPs have disputed how critical an ambitious taxonomy and disclosure is, even suggesting that it could devastate revenues and jobs in the private sector.

I'm going to ask each witness to answer this independently. In your expert opinion, is it remotely possible that the costs associated with disclosures as they relate to sustainability could possibly outweigh the opportunity losses and potential liabilities of inaction on this, given the direction the world is headed in?

I'll start with Ms. Walton.

[Lindsey Walton]

I would say that in the long term, that's unlikely, in my view. It's unlikely that you're going to get access to capital even in the short term if you don't have these disclosures.

[Adam van Koeverden, Liberal, Milton, ON]

Madame Chipot.

[Alice Chipot]

I would agree too. There is big pressure to have better disclosure. I think investors are really waiting for it.

[Adam van Koeverden, Liberal, Milton, ON]

All right.

I was hoping that Mr. Schein could answer the question too. Can we possibly take a moment to see if he can come back online? Did he have to go?

[The Chair, Liberal, Francis Scarpaleggia]

I don't think we can do that. [Inaudible—Editor] time.

[Adam van Koeverden, Liberal, Milton, ON]

Okay.

Ms. Walton, would you care to elaborate on how that would work? Currently, there are auditors in every business and in every company. This is not a new or novel practice for companies to have to measure various goals and aspirations. We've already seen many companies change how they do business.

[The Chair, Liberal, Francis Scarpaleggia]

He's back.

[Adam van Koeverden, Liberal, Milton, ON]

Mr. Schein is back.

My apologies, Ms. Walton. I'd like to ask Mr. Schein to answer the previous question.

Did you hear it, Mr. Schein, or should I repeat it?

He seems to be having some technical difficulties.