Good morning.
Before I begin, I want to acknowledge that I am speaking from the unceded ancestral territories of the Musqueam, Squamish and Tsleil-Waututh first nations. They have been custodians of the lands here for thousands of years, so I want to pay my respect to the elders past and present.
Thank you for inviting me today to talk to you about finance and green investments as well as transition and transparency in finance.
Vancity has for decades been working in the field of green finance, and we have been a leader both in disclosure and in thinking about how climate change and social issues are tied together.
Climate change is an urgent threat to Canadians in every province, including Vancity's more than 550,000 members and the communities of British Columbia where our members live and work. Climate change is costing Canada's economy billions of dollars and counting. While some Canadians can afford to adapt their lives to the climate challenge, many Canadians cannot. The climate challenge and the affordability crisis go hand in hand and are making each other worse.
In research that we partnered on recently, 30% of British Columbians, almost one in three, reported being impacted by extreme weather events in the last one to two years. For us in British Columbia, they are floods, fires and heat domes. Fifty-six percent of British Columbians who reported such an impact also reported high financial stress.
Businesses, including financial institutions, have a major role to play in addressing these challenges, and many are willing to step up. The net-zero journey towards a sustainable economy is one we must all take. Government and regulatory action is essential to enable all of us to achieve our net-zero goals faster and more effectively. At the same time, we can't lose sight of the affordability challenges that many Canadians are encountering, both in terms of the rising cost of living and in terms of housing affordability. From our perspective, the climate transition will fail if some Canadians are left behind in the transition, yet affordability is unachievable if we don't also transition to a clean and sustainable economy. The two challenges are inseparable.
On green financing and investment, in comparison to 10 or five or three years ago, tremendous progress has been made broadly in capital being allocated to sustainability. Encouraging and growing green financing and investment in Canada is an important part of the climate transition. We need to continue to see an acceleration of this capital allocation.
Vancity is an active member participant of the sustainable finance action council, which is working to provide recommendations to the Government of Canada to help transition the economy as quickly as possible, including capital allocation to achieve net zero.
Simply put, we believe that we need to transform the economy to one that protects the earth and guarantees equity for all. As we transition to net zero, we also need to pay close attention to how funding for sustainable initiatives is employed.
First, the right voices must be at the table as we transition the economy. If we rely on traditional modes for capital allocation, which have excluded too many Canadians in the past, we will end up with a low-carbon economy that is even more inequitable and potentially leaves workers behind. In addition to thinking about different modes for capital allocation, we also need to think about different frameworks for risk and return with a climate lens.
The work in progress to date in green finance has also largely been done within our current risk and return frameworks. It's useful and very important, but it may be insufficient to enable us to successfully, as a society, reduce inequality or drop emissions sufficiently. We need more innovation in partnerships and collaborations, products and policy.
We believe that consumers, investors and actors throughout various supply chains are ready to make this transition, but they need help in the form of greater climate disclosure, better data and market signals that help to price the climate into our economy. Take, for example, Vancity. We've set a goal of net-zero financed emissions by 2040. The bulk of our emissions come from real estate, both commercial and residential. As we've modelled our pathway to zero, it's become clear that between 80%, possibly up to 90%, of those reductions will need to come from some form of public policy support, either the ongoing implementation of new policies or the introduction of new ones, not to mention that we need a system of standardized building labelling to truly measure our progress.
I know we are not alone. Many private organizations are ready to act and keen to play their part in the transition, but like us, they need policies, data and investments to help them get there.
Transition finance is an important tool in achieving all these goals. However, the devil, as the saying goes, is really in the details. We know that it is essential for financial institutions to work with heavy emitters to transition their business models to the clean economy. At the same time, we believe that this work must be accompanied by transition plans that are aggressive, credible and transparent.
The public should have confidence that a promise to transition brings with it not just financing, but also a fundamental and urgent change to the way we do business. As part of that change, we work collectively to ensure that the workers who built these organizations are able to thrive and prosper from the transition and not be left behind.
Small businesses must also be part of the journey to net zero. Consumers are making more buying decisions than ever based on a business's reputation, including its commitment to social and environmental issues. This isn't just individual consumers, but also large—
