Evidence of meeting #132 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 taxonomy.
A recording is available from Parliament.
Chief Executive Officer, Regroupement pour la responsabilité sociale des entreprises
It is indeed related to disclosure, but, to be quite frank, I think it's also related to ambition, if I may say so.
Bloc
NDP
Laurel Collins NDP Victoria, BC
Thank you, Mr. Chair.
I want to thank all of the witnesses for being here.
Madame Chipot, you were just talking about a lack of ambition. We've heard here, in expert witness testimony and also in investigative reports, that one in five board members of the banks in Canada also serve on the boards of fossil fuel companies.
Can you talk a bit about this conflict of interest and how that connects to the lack of ambition that we're seeing in the big five banks here in Canada?
Chief Executive Officer, Regroupement pour la responsabilité sociale des entreprises
Of course, I can speak about that.
Maybe I can answer that in English.
We have to look at the ambition and the numbers the banks are giving themselves, but we also have to look at the practice in terms of the organizations.
As you say, we are seeing a lot of overlap on the boards between the banks and the big companies.
I'm referring here to oil and gas companies.
This is going to stop the ambition for sure because you wear two caps at the same time, and this is not a good practice. In other places around the world, you can't have these two positions.
Also, it goes back to the analysis of the lobbying. In Canada, we have, I think, a problem.
We have difficulty regulating some lobbying practices.
All of those elements, in my mind, are a big reason we have a hard time meeting the ambition we should have in the face of the urgency of the situation.
NDP
Laurel Collins NDP Victoria, BC
Thank you so much.
My next question is for Mr. Schein.
I wanted to ask about industrial carbon pricing, or large emitter trading systems, and the output-based pricing systems. These are doing the bulk of our emissions reduction. Between now and 2030, this is the policy that is going to be most effective in driving down emissions.
We've heard from the Conservative leader an avoidance of answering whether or not he would cancel the industrial carbon price, saying in Parliament, actually, that there is no industrial carbon price, but there clearly is a federal backstop to this.
Can you talk about the importance of maintaining and actually strengthening the industrial carbon price here in Canada?
Chief Operating Officer, Shareholder Association for Research and Education
Absolutely.
It is one of the most powerful levers that we've seen so far in making progress towards our 2030 goals. As I know you spoke about earlier today, we're not quite where we need to be. We have a ways to go to be on track for 2030, but the industrial carbon price is doing a lot of that needed heavy lifting.
I know that one of your previous witnesses, Jonathan Arnold from the CCI, spoke extensively around this. I would refer back to some of the research that the CCI has published on this. However, the emissions reductions from industrial carbon pricing are critical. Certainly, we need clarity about what the path between here and 2030 is, and what the pricing regime will look like beyond 2030.
Around the world, countries are making progress, and Canada risks being left behind if we don't set clarity and have commitments that can outlast any one Parliament or any one political party.
NDP
Laurel Collins NDP Victoria, BC
It's really clear to me that this policy is vital if we have any hope of meeting our climate targets, because 40%, potentially, of our emissions reduction plan relies on the industrial carbon price and these kinds of systems.
Can you talk about the other side of that, just the kind of business uncertainty that comments from the Leader of the Opposition and also Jenni Byrne, talking about cancelling the industrial carbon price...?
Chief Operating Officer, Shareholder Association for Research and Education
Certainly.
We work with large Canadian institutional investors who are thinking in the long term, who are investing for the long term. They get a bit antsy when we're seeing a lot of uncertainty in the marketplace, a lot of uncertainty among policy-makers. They start to look at where they can put their money that will be more stable and won't be subject to quite so much political back-and-forth. Therefore, providing a level playing field—a fair framework for investors to lock in for five-year, 10-year or 20-year commitments around building or making investments in Canada—is crucial.
I mentioned the lag that we're seeing in some cases around critical mineral extraction, the opportunities that are there in Canada and some of the barriers to be overcome there. One of them is that the upfront costs of developing critical minerals mining are huge, and the payout might not come for 10, 15 or more years. We can't have money locked up in projects like that where we're likely to see wild swings and back-and-forth in the regulatory environment.
All of that makes investors more cautious and makes them look for opportunities elsewhere. It's a big world. There are a lot of places where companies can invest.
NDP
Laurel Collins NDP Victoria, BC
I have a question for Ms. Walton, but, Mr. Chair, how long do I have?
Liberal
The Chair Liberal Francis Scarpaleggia
We'll begin the second round of questions. As during the first half of the meeting, members will have three minutes each.
Mr. Leslie for three minutes.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Thank you, Mr. Chair.
Ms. Walton, I would like to start with you. You mentioned earlier that you had a hope, or perhaps a need, that we move away from voluntary towards mandatory. In your sense, or in your organization's sense, is it that the government would agree that, ultimately, we need to move beyond voluntary towards mandatory, expanding that, as you mentioned, to all sizes of business eventually?
Director, Americas, Responsible Investment Ecosystems, Principles for Responsible Investment
I'm sorry. Can you repeat that?
November 18th, 2024 / 12:40 p.m.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Earlier you mentioned the need to move from voluntary to mandatory and the need to have all sizes of businesses be disclosing.
In your view, in your engagements with the current government, is it the government's belief that we need to move from voluntary to mandatory and then beyond that from large financial institutions to all sizes of business?
Director, Americas, Responsible Investment Ecosystems, Principles for Responsible Investment
Well, it’s my hope. My understanding from the government is that it's looking at large private corporations and that the securities administrators are looking at the public.... It’s our hope that eventually there’s full coverage.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
Okay. I’ll move to Mr. Schein.
You mentioned the importance of a taxonomy scheme being established. If it wasn’t to be implemented in Canada, how much do you think emissions would rise in this country? In turn, if it was, what is your assessment of the decline in emissions directly due to the scheme?
Chief Operating Officer, Shareholder Association for Research and Education
I'm sorry. I can't speak to a causal relationship with specific emissions reductions there.
I do know that the taxonomy is one of the most requested in-demand tools that investors around the world have been looking for, in Canada and in other jurisdictions. It is critical in helping investors make evidence-based decisions around where they are putting their money, and it's essential both to building the Canadian economy and to reducing emissions.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
In this scenario, who are the auditors of these disclosures? Where do they work? Who would be providing compensation to them for doing this? Is it government? Is it a third party? Who actually audits this?
Chief Operating Officer, Shareholder Association for Research and Education
The audit regimes are partly based on investors being able to have some accountability, but there are also audit schemes that are in place there. The costs of undertaking those audits are, as I understand, ultimately assumed by the enterprise. For large, publicly traded companies, which are what we're talking about here, the audit is an important budget line, and certainly they'll be able to undertake this work to ensure there is accuracy.
Conservative
Branden Leslie Conservative Portage—Lisgar, MB
They will sacrifice jobs because they're larger, but Ms. Walton previously said that we need to expand this to all sizes of business. Would you agree with that? Could small businesses afford that auditing scheme?
Chief Operating Officer, Shareholder Association for Research and Education
My focus and SHARE's focus is on publicly traded companies and larger actors in the financial system today. I would say that as I would prioritize this, I would start with the biggest impact, the highest emitters and the largest market capitalization. If so, we would certainly want to start with the largest companies.
