Finance Committee on June 13th, 2023

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

We touched on this before, but I wonder if you could comment on the geopolitical ramifications of a poor Canada, because of suppression of its oil and gas industry, which is ultimately the goal of these policies, and a wealthier Russia, for instance, which will have no problem exploiting its natural resources for its economic gain.

[Rupert Darwall]

Well, I think you can look to Europe to see the dangers of not having natural resources and being quite energy intensive, particularly to Germany, which is one of the world's largest industrial exporters, with an economy that made itself very dependent on supplies of Russian gas. That is a major challenge now facing the German economy, which will see a lot of its petrochemical industry and its automotive sector suffering very big challenges and big contractions ahead.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morantz.

We'll go to MP Chatel.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

I again have a question for Ms. Bardswick.

I would really like to know, concretely, what the one or two steps are that the government absolutely needs to undertake in order to give assurance that the government is moving forward and that investors can trust that Canada will be a leader in green and transition finance.

[Kathy Bardswick]

Well, I would start by suggesting that there has been work done and progress made associated with a vision for Canada that I think as financial institutions we certainly would aspire to see as a shared vision that not only is held federally, but is held across provincial, territorial and indigenous leadership in the country, to ensure that the alignment is there, because time is of the essence and none of us have excess resources or time to spend unnecessarily.

Having said that, within the context of SFAC and the mandate we were given, and that we believe and we support, there is a foundational build here associated with the tool kit for a robust sustainable ecosystem. That tool kit includes addressing a disclosure framework for the country. It includes implementing a taxonomy, and I would suggest that even Russia has a taxonomy, as does China. It also includes ensuring that we continue to improve the data requirements, and there is a role to play with public databases that exist. One aha for us was the extensive amount of data that is housed both federally and provincially and would add value to the exercise if it were governed and more usable from the financial institutions' perspective.

I would suggest that there is progress being made, but we need to commit to the recommendations to build out this capacity in far greater detail. I won't suggest for a minute that SFAC's recommendations should stand entirely on their own. We have also committed to broader consultation and would encourage an ongoing commitment to broader consultation in bringing the stakeholders who need to be at the table into execution.

[Sophie Chatel, Liberal, Pontiac, QC]

Also, the timeline is in the next 12 months maximum, if not earlier.

[Kathy Bardswick]

Well, SFAC's current mandate ends in March 2024. I would hate to see us lose the momentum the current financial institutions are providing to this exercise. If we could find a way to continue an engagement process that would keep those folks at the table, I think it would really benefit the country.

[Sophie Chatel, Liberal, Pontiac, QC]

We often talk about a pathway for meeting our targets to ensure climate is under control and our communities are safe, that Canadians are safe—protecting Canadians against climate catastrophes—but to me, it's not apart from economic growth at all. I think a successful economy is one that protects its citizens against climate catastrophes but also grows the economy of tomorrow. Could you comment on that?

[Kathy Bardswick]

I would point out that recent weather events in this country have taken a significant toll on the country's economy, including our tourism, which currently is being affected by folks being unwilling to come to the country when our air quality is as poor as it is. There are many examples of negative economic impacts associated with these weather events. It really behooves us, given that we are into this climate deterioration, to put significant effort into building and executing the adaptation strategies we know can be done.

We have the answers; we just need to turn our attention to execution again, and I will end on that note. Quite frankly, vision is the fun part, and aligning strategy is fun. Execution is hard, and I think we have to accept that we need to roll up our sleeves and collaborate and co-operate on execution, because at the end of the day, that's what's going to get us the results we need.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chatel.

These have been great witnesses. We do have five minutes, so what I'm thinking here is that we'll have a quick question and answer. It will be like being in question period for our witnesses. We're going to go around the table. Let's go.

Are you starting off, MP Lawrence?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

I am.

I'm looking for a quick answer, and to show the spirit of non-partisanship and all-party commitment to fighting climate change, I'm going to end my questions with you, Mr. Stewart and Greenpeace.

Is nuclear energy part of the solution to climate change? That's for a simple yes or no.

[Keith Stewart]

The new nuclear is not.

[The Chair, Liberal, Peter Fonseca]

There we go.

We go over to the Liberals.

MP Dzerowicz, go ahead.

[Julie Dzerowicz, Liberal, Davenport, ON]

My question is for Ms. Zvan.

You talked about how we need the hardware to create the taxonomy. You talked about governance and then you also talked about the taxonomy development in order for us to be able to bring in capital. Business investment in general has been down despite, before the pandemic, historically low levels of interest rates. I wonder if we need to do a little bit more in order to incentivize capital investment. I wonder if you could address that.

[Barbara Zvan]

I think taxonomy is but one tool. I think there is a fourth work stream in Canada for the Sustainable Finance Action Council that's looking at the barriers to actually getting capital. The different financial institutions are providing real examples of what those barriers are, so we're summarizing those themes and presenting that back.

One of the solutions that is often noted is blended finance in terms of making sure the investor isn't taking a compromised return, that the first loss in some structured way is provided so the big investors, the private investors, can meet the fiduciary requirement of risk and return.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Now we go to the Bloc.

MP Garon, go ahead.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

My only question is for Ms. Bardswick.

I know that the Sustainable Finance Action Council gave environmental groups a seat at the table. It's quite recent, I know, but what role do you expect them to have in the council's operations?

[Kathy Bardswick]

I think you're referring to the taxonomy governance structure as opposed to the broader SFAC structure.

On taxonomy, we're looking at two significant interventions. One is to have a working group that is brought to the table in a broader, more inclusive way to influence the work as it is being developed. The secondary is to ensure that at the council table—and think of it as a board of directors that oversees strategy—there is also representation at that level.

[The Chair, Liberal, Peter Fonseca]

Thank you.

MP Blaikie will have our final question.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Given the current state of green finance in Canada, from the point of view of both combatting greenwashing and attracting capital investment, how important is it that the government act with a sense of urgency to put in place an investment framework?

[Kathy Bardswick]

It's urgent.

[The Chair, Liberal, Peter Fonseca]

With that, we'll thank our witnesses again.

You guys have been terrific. Thank you very much for all of your testimony on green finance.

Thank you, MP Chatel, for moving the motion.

Our analysts are getting ready to put together their report.

Members, we're adjourned.