A number of Canadian institutional investors are urging corporations to begin addressing climate change risks and opportunities in order to receive their investment dollars.
Some 36 institutional investors, including Bâtirente, the British Columbia Investment Management Corp., the Caisse de dépôt et placement du Québec, the Investment Management Corp. of Ontario, the Ontario Pension Board and the University Pension Plan, signed an open letter prepared by the Responsible Investment Association. The signatories agreed that they expect investees to — among other things — provide annual disclosures of emissions data and detailed plans for transitioning away from a reliance on fossil fuels.
“As stewards of capital, we have a fiduciary responsibility to consider all material factors that may impact the risk-adjusted returns of our investments, including climate-related financial risks and opportunities,” read the open letter. “The value of financial assets could be impacted by the physical effects of climate change, known as physical risks, and by an adjustment toward a net-zero economy, known as transition risks.”
The other expectations included in the letter include: the establishment of a board to provide management oversight of climate-related risks, opportunities, strategies and performance; the establishment of long-term and interim greenhouse gas emissions targets in alignment with the goal of achieving net-zero emissions by 2050; and that all lobbying activities are aligned with the goal of achieving net-zero emissions by 2050 as well.
The open letter also acknowledged that Canada’s Indigenous peoples are facing disproportionate burdens, both economic and political, as a result of the transition toward a net-zero economy. Mark Sevestre, a founding member and senior advisor of the National Aboriginal Trust Officers Association, who was involved in the preparation of the open letter, expanded on this point in an email to the Canadian Investment Review.
“The transition to lower-carbon products raises demand for rare earth minerals and other resources to develop renewables, electric vehicles and energy storage systems,” he wrote. “The increase in demand has prompted new extractive projects that are on Indigenous lands, which makes Indigenous involvement and respect for Indigenous rights critical.
“Also, curbing fossil fuel extraction may cause significant social and economic disruptions in Indigenous communities, for instance, by threatening employment opportunities and energy sources for remote communities. Unfettered, this may lead to marginalization and conflict.”
The signatories agreed that, in moving toward a net-zero economy, their decisions would be informed by Indigenous perspectives and support economic opportunities within Indigenous communities.
“Despite Indigenous peoples often being the first and most affected by the climate crisis, Indigenous perspectives and voices are often left out of investors’ decision-making on climate action,” wrote Sevestre. “For the low-carbon transition to be just, affected populations must be at the centre of decision-making, particularly when proposed policies and projects may affect their rights and livelihoods. In Canada, this particularly includes workers and Indigenous peoples.”