Thank you, Chair.
Good afternoon, honourable committee members. I am appearing today from the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinabe, the Chippewa, the Haudenosaunee and the Wendat peoples in Toronto.
As mentioned, I am the director of the Americas for the Principles for Responsible Investment. Thank you very much for the opportunity to provide information to this study, which is clearly in the Canadian public interest.
For close to 20 years, the UN-supported PRI has been the world's leading proponent for responsible investment. We work with our global network of signatories, comprising over 5,000 institutional investors and financial organizations that are signatories to the principles. These investors are based in 100 countries across the globe, collectively managing over $120 trillion U.S. There are approximately 240 signatories headquartered in Canada, including the major Canadian pensions and the asset management arms of the major banks.
PRI's 2024 to 2027 strategy sets out a vision for a global financial system that rewards responsible investment, operates within planetary boundaries, promotes human rights and achieves equitable societies. Signatories to the principles incorporate environmental, social and governance factors into their allocation and ownership decisions to fulfill duties of prudence and diligence owed to clients and beneficiaries.
For institutional investors seeking to generate long-term value, physical and transition climate risks pose new challenges to investment strategy. Legal analysis has established that investors generally have an obligation to consider identifying and acting on climate-related financial risks, including system-level risks. Leading up to COP29, the PRI has outlined recommendations that support long-term institutional investors that seek sustainable investment opportunities.
Number one, the world needs a fair, fast and stable transition to a low-carbon future. The PRI calls on Canada and other countries to take a whole-of-government approach to transition. Their updated 2025 nationally determined contributions—or NDCs—as a part of the Paris Agreement need to be an ambitious and credible platform for investors.
Number two, financial systems should align with the Paris Agreement's goal of 1.5°C. Foundational legislation and policy reforms are needed to clarify the relevance of climate and other system-level risks to investor duties and promote international regulatory compatibility on policy measures like disclosure standards, taxonomy and transition plans. These recommendations are related to the work undertaken by the expert panel on sustainable finance and the Sustainable Finance Action Council.
Number three, coherent real economy policies should include robust, predictable carbon-pricing regimes to boost transition, as well as other measures and incentives to ensure a fair, fast and stable transition.
Lastly, number four, scalable blended finance is required to enable capital to flow to sustainable solutions in emerging markets and developing economies. All the countries in which our signatories operate take their own approach to transitioning their economies to meet their sustainability targets on climate change mitigation, restoring nature and protecting human rights. Financial policy, corporate practice policy and real economy climate policy and regulation all work in tandem to maximize the universe of assets aligned with a climate-safe future and to address systemic risk. This approach can create a positive feedback loop that accelerates the transition.
Globally, we see concrete reforms in many areas of financial systems addressing climate change and nature. The PRI's regulation database, which documents financial, corporate and real economy policies that support, encourage or require responsible practice, shows that since 2014, across jurisdictions assessed, the variety of policy instruments has increased with the introduction of taxonomies, investor due diligence requirements, etc.
In the same period, the number of policies that reference the Paris Agreement has increased from 33 to surpass 200 out of the 379 entries in our database. The number of regulations that support the economic transition has also grown. It has quadrupled as a percentage of policies assessed. This has increased from 41% in 2014 to 60% of our policies in 2024. There's also an increased focus on regulations that support governments to drive economy-wide transition towards a sustainable future, recognizing that the financial sector alone cannot resolve system-level sustainability-related risks.
Over the course of these hearings, the committee members have already heard about the incredible financial risks and opportunities that climate change poses for Canada and the global economy. The government has projected that it needs upwards of an additional $115 billion annually to meet its climate targets. This, while damage and severe weather are increasingly costly to the Canadian government, taxpayers and insurers—