Thank you, Mr. Chairman.
It's an honour to be here today. I'm representing Corporate Knights. Corporate Knights is a Canadian-based media and financial products company. We're best known for a magazine we publish on sustainable business that's circulated in the Globe and Mail, and now we have a U.S. version in The Washington Post.
Globally, we rank companies. We presently have 2,000 large companies in our database, and we rank them on things ranging from safety to the per cent of their tax obligations met, to their carbon and energy productivity.
In our financial products purview, we have a suite of equity products and fixed-income products that are premised on bringing a new balance sheet into the 21st century, where you can take into account a company's social and environmental performance in quantifiable ways and then integrate that into your investment propositions.
We also are working with some leading Canadian businesses from the resource, financial services, and manufacturing sectors to create a council for clean capitalism. We define clean capitalism as an economic system in which the prices fully reflect social, ecological, and economic benefits and costs, and actors are fully aware of their impacts.
As far as my presentation here today goes, I have a fairly simple message and it comes back to first principles.
If we take a step back and we ask where we are strong in Canada economically and what we are strong at, we come away with a pretty resounding focus on the resource sector and on financial firms. Within the TSX 60, our main blue chip composite index, 63% of the firms are either financial firms, material-orientated firms, or energy firms. If you look around the world, you see where Canada is strong and plays a pivotal role in the development of many emerging economies.
We have just initiated a study and we've uncovered over 20 countries around the world where a Canadian-based company is the number one private foreign investor in that economy. That's a pretty staggering statistic considering we're only a few per cent of the global GDP. We're making a comprehensive assessment of that, and we'll have a better idea at the end of the summer of exactly how many countries we're the number one foreign investor in. We play a pivotal role.
To my colleague's comments around corporate social responsibility, that's not really where the action is. Where the action is, and what the world needs from an international development perspective, is finance, specifically finance for infrastructure and for energy, and resilient forms of energy at that. The various agencies, whether it be the International Energy Agency or the OECD, estimate that over a trillion dollars of extra finance is needed each year for renewable energy in order to avoid catastrophic climate change scenarios and also to meet the energy security needs of economies around the world, including developing economies.
Presently, emerging markets have a key problem. The best forms of energy, in many cases for them, are renewable forms of energy, but often the capital costs are prohibitive. The cost curve when you want to make an investment in energy infrastructure is much more pronounced at the front end of the cycle, if you're going to invest in renewable energy, than it is if you're going to invest in fossil fuel energy. With fossil fuel energy, you have to keep paying variable costs for inputs like coal, oil, or gas, whereas with renewable energy, it's mostly at the front end.
The trouble is that most developing economies cannot get cheap credit. They pay exorbitant rates of interest on the international markets, and this is where Canadian companies and the public sector can play a really pivotal role. There are trillions of dollars of finance, there is a new emerging field called green bonds, which HSBC classifies now as a $174 billion market globally. TD Bank is a leading player in this field.
If you marry up our financial capacity with our resource penetration—so you map out all of the economies around the world where Canadian companies play a major role, then you look at those economies and you see what their infrastructure needs are—what they're asking for in terms of the finances they need to develop their infrastructure and use the EDC, which is interested in ramping up their activities in this base to provide more finance to credit enhance some of these propositions so that instead of paying really high rates of interest they are paying rates of interest that are on the AAA tranche, would make the capital costs much more affordable and make these projects much more doable.
There is a national economic benefit that would accrue to our country from doing this is. Sometimes development advocates proclaim against tied aid. There are a lot of cases to suggest against it, but the Export Development Corporation of Canada is a former tied-aid, and has been a remarkably successful form of tied aid for generating jobs and prosperity for our economy.
When you look at where the world economy is going now, more and more capital is being invested in renewable energy infrastructure and water infrastructure. The western markets are often not at the front end of this. The Asian Development Bank and China are doing a bunch of stuff here. The U.S. is starting to do some things. Canada has a huge opportunity to ramp up our portfolio of credit enhancement products, specifically out of EDC, from less than 1% to the 5% or 10% range. That would really position us well in those economies. There's massive potential to marry up EDC with the strength and interest of our pension funds to also invest in these areas.
I would encourage the committee to look at options. A paper came out today from HSBC on these types of financial products. It is a good reference point and provides many examples for marrying up EDC credit enhancement activities with catalyzing infrastructure investments in developing countries where Canadian resource companies are prevalent.
We can look at home, right here in Newfoundland and Labrador, to find an example to apply elsewhere. With the fishery collapse, their economy has experienced the trauma that can happen when you run up against the wall as a single development. They put in place the really interesting approach of resource conversion. Resource conversion has become a popular concept internationally as of late, and I expect it will stay there.
Newfoundland and Labrador is taking their fossil fuel assets and generating cash from them. They're using that to invest in renewable energy—transmission and generation projects that will last for hundreds of years, long beyond when their fossil fuel assets are gone. They're doing this at a much more accelerated rate with the support of credit enhancement from the federal government. The federal government is helping to backstop the billion dollar loans Newfoundland is getting to build their infrastructure.
Using that model of resource conversion and applying it internationally for development purposes is not a silver bullet by any stretch, but it would have the most impact in catalyzing enhanced prosperity for countries around the world. It would also be good for Canadian businesses.
Thank you kindly.