The push to make companies detail their exposure to climate change received a boost last week with about 80 women leaders in business and civil society calling on Canadian securities regulators to restart work on mandating climate disclosures.
In an open letter organized by Women Leading on Climate, the signatories said they strongly disagree with the “abrupt” April announcement by regulators to indefinitely pause the work. “Tackling climate change is, in fact, essential to keeping markets competitive, efficient, and resilient,” read the letter, saying the policy U-turn puts the economy at risk.
The rules that have been in the works for many years require companies to report their emissions, outline the risks and opportunities they face from climate change and their strategy for managing them so investors have the information they need.
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“At the end of the day, what we’re trying to do is to help people to understand the financial risk presented by climate,” said Barbara Zvan, chief executive of the University Pension Plan. “We cannot fully understand this risk because we’re missing the data.”
Some 30 countries and states representing more than half of global gross domestic product either have the global disclosure standards in place or in the works, including the European Union, China, India, Japan and Mexico.
“All our partners that we actually want to increase trade with are doing this,” said Zvan.
Barbara Stymiest, a director at George Weston Ltd. and former chief executive officer of TMX Group Inc., said in a statement that Canada risks losing out by not going ahead with the rules. “Canada is a small fish and we need global capital. We don’t have the luxury of dropping out while everyone else is stepping up,”
The U.S. has, however, also backtracked on disclosure rules it put in place last year, which combined with general trade and markets anxiety, made this a risky time for Canadian regulators to start consulting on the requirement, said Grant Vingoe, chief executive of the Ontario Securities Commission.
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“If we had moved forward prematurely, or at a moment of peak fear and anxiety, it might have been more of a setback,” said Vingoe, speaking last week at a Responsible Investment Association conference in Toronto. “We haven’t abandoned climate disclosure, despite comments to the contrary, and this is not a final decision by any means, but a temporary pause.”
Regulators didn’t provide a timeline on when they would revisit the issue beyond “future years.” Vingoe, speaking only on behalf of the OSC, said he hopes to be able to check in again in a couple of years. In the meantime, he said he’d like to see the public offering market improve, as well as more evidence that climate disclosures do help attract more capital from markets outside the U.S., noting many public companies are already moving ahead voluntarily.
But the wildfires currently burning across Western Canada and the massive destruction of the January fires in California are reminders there’s no time to wait on these efforts, said Catherine McKenna, chief executive of Climate and Nature Solutions. “While the world is moving on and all of these jurisdictions are moving forward, we have Canada’s securities regulators saying, ‘Actually, we’re going to take a pause’ at a time when climate change is getting worse.”
McKenna, who’s also chief executive of Women Leading on Climate, said at the RIA conference that the policy is needed to advance the country’s interests. “This is about how we are going to move forward with the world to create the conditions to attract the investments that we need to build Canada.”
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