Hello, everyone. My name is Barb Zvan. I'm the president and CEO of University Pension Plan. I chair the Sustainable Finance Action Council's taxonomy technical experts group and I was a member of Canada's Expert Panel on Sustainable Finance.
I previously appeared before this committee to speak about your February 2020 report, “Canadian Ideas: Leveraging our Strengths”, which contained 92 recommendations, the first of which was: “Adopt the recommendations of the Expert Panel on Sustainable Finance that are within federal jurisdiction and support other jurisdictions and the private sector to do the same.”
The expert panel's recommendations included establishing the Sustainable Finance Action Council and bringing together key stakeholders to develop Canadian green and transition taxonomies. As we noted in 2019, without the essential building blocks “market development and investment in this field will continue to lag, and sustainable finance will remain an add-on to mainstream capital market activities.”
Today, I'm here as a representative of the finance community to talk about the urgent need for Canada to implement a green and transition taxonomy and the immense economic risk of failing to finance the transition to a resilient, net-zero world.
I want to start off with a big number: $115 billion. That is the size of the annual investment gap that Canada has to fill in order to deliver on its net-zero transition commitments, according to data provided by the Sustainable Finance Action Council secretariat and confirmed in last year's budget.
So where do we find $115 billion each year? The government alone cannot meet this need. Domestic financial players cannot do it alone. We need to attract private investors from within Canada and from abroad who are eager to fund projects that are compatible with net-zero goals.
The interest and the demand is there, as evidenced by the growth of products like green bonds, but we must provide urgent clarity and guidance about Canada's transition in order to accelerate the flow of capital to support it and in turn create new, well-paying jobs and grow Canada's economy.
Now the playbook for this already exists. Around the world there are more than 30 taxonomies already in place or under development, generally focused solely on green activities, each customized to a specific country or region in order to link global capital markets with their respective net-zero pathway. A Canadian taxonomy would foster investor confidence and support the growth of Canada's sustainable finance market. This is critical to ensuring Canadian companies have access to a reliable source of capital over time to support credible net-zero transition plans and new economic opportunities.
The federal government has had the Sustainable Finance Action Council's green and transition taxonomy road map report since November 2022. The report not only provides guidance on standardizing classification of green activities, an important step to mitigate greenwashing, but unique to Canada, it also includes a transition classification, which is crucial for decarbonizing emission-intensive activities and securing Canada's economic competitiveness in a global low-carbon transition.
This transition category includes decarbonizing fossil fuel production in a credible and impactful way. Inclusion of the transition category has received global attention with nations like Australia following suit, and Sean Kidney, CEO of the Climate Bonds Initiative, an international NGO working to mobilize capital for climate action, described SFAC's proposal of a transition category as an example for other nations.
As other nations move forward with the frameworks to mobilize capital, Canada is being left behind. Businesses and investors are prepared to invest now in whichever country or region offers not only the best opportunities but also clarity that the investment will be aligned with the country's net-zero transition. Canada cannot afford to be left behind. Canada cannot afford to have other regions define transition without us or for us.
I thank the committee for its time and look forward to answering your questions.