Environment Committee on Nov. 18th, 2024

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

Wow. Ohmigosh.

Mr. Barbe, if Canada adopted all 15 recommendations in the final report of this expert panel on sustainable finance, how many emissions would be reduced in Canada as a direct result?

[Nicolas Barbe]

First of all, I don't believe we are on the path to adopting all of those recommendations, so I don't think it's been costed from that perspective.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

I'm not asking about costing. I'm asking how many emissions would be reduced. Isn't this what this is all about—reducing emissions?

[Nicolas Barbe]

That's right, but what I'm saying is that I don't think we've necessarily come up with a tally for recommendations that are necessarily going to be pursued.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

That's for how many emissions will be reduced by following these regulations.

[The Chair, Liberal, Francis Scarpaleggia]

I think I will go now to Mr. Longfield.

I don't want to put words in Mr. Barbe's mouth, but I think what he's saying is that they're still developing the recommendations, and as they develop them they'll calculate the cost and the impact on emissions.

Is that correct?

[Nicolas Barbe]

Maybe to clarify the question, Mr. Chair, we're talking about the two initiatives that my colleagues just focused on in terms of the taxonomy or climate disclosures. The expert panel went beyond that. I just want to be clear on the question.

[Dan Mazier, Conservative, Dauphin—Swan River—Neepawa, MB]

You have no idea how many emissions are being reduced.

[The Chair, Liberal, Francis Scarpaleggia]

We'll go now to Mr. Longfield.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Chair.

Thank you to the witnesses for being here.

In May 2024 the International Sustainability Standards Board opened an office in Montreal. The board is working to develop the global baseline for sustainability disclosure standards to better inform decision-making in the world's capital markets.

Has the Government of Canada worked with the International Sustainability Standards Board for them to come to Montreal? Are they working with this group in Montreal now?

[Clifton Lee-Sing]

I'll have to come back to you with a written response, because I don't know the background of the conversations between the government and this entity. I do know that there are conversations about disclosure standards and the progress being made by the ISSB and how that relates to the Canadian version of standards. I don't know the relationship between them.

[Lloyd Longfield, Liberal, Guelph, ON]

It's fair to say, though, that in terms of an international standard—you mentioned jurisdiction shopping—capital will be looking for jurisdictions that have not only adopted an international taxonomy but have also implemented other financial tools to show that disclosure is being done.

[Clifton Lee-Sing]

Jurisdiction shopping can go both ways. I think the goal is to have less fragmentation in the market and to have some interoperability between taxonomies and disclosure.

In terms of jurisdiction shopping, often it goes in the opposite direction. You have people who are hoping to look for funding in markets, and they want the least level of regulations or requirements to be able to do so. Having in place internationally accepted standards, or Canadian province-wide with the federal government standards, will help reduce that fragmentation.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

We've heard some questions around the 2030 goals. Initially we had a 30% goal of reductions over the 2005 numbers. We're now at about 36%. We've become more aggressive and in line with the science to say 40% to 45% is the new target that we are working towards. I think we adopted that in April 2021. As we see the forest fires and the climate change impacts, how flexible does this need to be? Is this something that we need to review in terms of a taxonomy, whether the science lines up with current targets?

Mr. Barbe.

[Nicolas Barbe]

It's not necessarily my area of expertise, but what I can say is that the legislation that was introduced, the Canadian Net-Zero Emissions Act, forces greater ambition over time. There is a process in place.

[Lloyd Longfield, Liberal, Guelph, ON]

This committee actually did a study on that, and it was good to see it adopted. This committee should be aware of that.

Thank you.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Thank you, Mr. Longfield.

Ms. Pauzé, over to you for a minute and a half.

[Monique Pauzé, Bloc, Repentigny, QC]

I'll go back to the 2023 report from the commissioner of the environment and sustainable development on the supervision of climate-related financial risks. The commissioner said that there was a lot to be done. He also said that the Office of the Superintendent of Financial Institutions Canada stopped short of insisting on the transition to a net-zero economy.

Since it was an emergency a year ago, have any measures been taken since the commissioner of the environment and sustainable development released his report, which specifically addressed the financial risks?

[Clifton Lee-Sing]

I'll take that question. The current mandate of OSFI is a prudential one, and it includes appropriate management of risks so that deposit holders can be assured that their money is available at the banks. Part of those risks include climate, and OSFI, through its guideline B-15, encourages and mandates financial institutions to address that.

That said, the mandate is about prudential management of risks. It is not that OSFI should regulate and mandate financial institutions to achieve certain climate objectives. That would require a mandate change.

[Monique Pauzé, Bloc, Repentigny, QC]

What are the federal government's priorities for limiting the negative impact of the financial system on the environment?

[The Chair, Liberal, Francis Scarpaleggia]

That's a question with a long answer.

Nevertheless, I would ask you to answer briefly, Mr. Lee‑Sing.

[Monique Pauzé, Bloc, Repentigny, QC]

I just want to know what the federal government's priorities are.

[The Chair, Liberal, Francis Scarpaleggia]

Okay.

Mr. Lee‑Sing, if you can't tell us what your priorities are in a few words, I would ask you to please send us an answer in writing.

Ms. Collins, you have the floor.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

One of the things that we heard from witnesses and those organizing and advocating for sustainable finance regulations is that Canada has been behind other countries. Clearly the EU is ahead of us. There are 40 other countries that have sustainable finance regulations. Canada seems to be playing catch-up. I'm curious about why, from your perspective, that's the case.

[Clifton Lee-Sing]

It is certainly the case that timing is essential. There is a risk that capital flows don't get to where they need to be. There are risks of greenwashing, so timing is really essential. I think one of the challenges in Canada is that we face a different type of economy than in other jurisdictions. We have a large natural resource sector, and those are often high-emitting sectors. It's taken some time to find the right balance to have conversations with stakeholders about what the taxonomy should be.