As climate change restructures the Canadian Arctic year by year, institutional investors should be paying attention to this all but undeveloped economy, according to one expert.

“For those that live there, the dominant narrative is about how climate change is remaking the Arctic from a frozen periphery to an area of immense geographic and economic significance,” said Jessica Shadian, president of Arctic360, during OPTrust’s climate change symposium in Toronto on Tuesday.

Currently, Canada’s northern territories suffer from a major lack of modern infrastructure, impacting virtually every aspect of life, including access to fresh food, clean water, reliable transportation and the internet, she said. However, the area is rich in natural resources, such as minerals, fish and fossil fuels. But the lack of infrastructure makes it difficult for local communities to harness these resources to bolster economic development, said Shadian. As the area’s weather gradually changes, current challenges are exacerbated but new opportunities are beginning to emerge.

Read: Investors challenged by lack of disclosure on indigenous relations by Canadian business

During her presentation, Shadian pointed out the potential for investment in the area, noting many other countries have paid much more attention to their Arctic regions. “Canada lags behind many of its Arctic neighbours,” she said. “Over the past 10 years, Norway has turned its attention north by expanding its Arctic fisheries and offshore gas production.”

Iceland and Greenland both make rigorous use of the Arctic region with an eye towards responsible energy practices, and 20 per cent of Russia’s gross domestic product comes from economic activities in its Arctic, added Shadian.

Even China, which has no physical exposure to the Arctic, is realizing the potential of the changing realities in the region, particularly in the case of shipping, she said, noting Canada’s Northwest Passage is already experiencing increased shipping traffic and China is eyeing the potential trade route keenly, hoping to make it a more widely used path.

Read: Why big pension funds love Australian ports

Ports are another area where local communities see a direct benefit, due to better access to virtually all goods, said Shadian.

As well, beginning to address the crippling lack of infrastructure in Canada’s north could be a tangible option for institutional investors that are concerned with the issue of economic reconciliation with Indigenous peoples, she said. The federal government should correct its mistake of failing to demonstrate the region’s potential to investors, she added.

“Most of Canada’s banks and pension funds have not been provided an opportunity to see the north as an emerging economy, with a strategic value, a human value placed there, and thus cannot see it as a region worthy of consideration let alone investment,” said Shadian.

Read: The hazards of responsible investing in emerging markets

Copyright © 2018 Transcontinental Media G.P. Originally published on benefitscanada.com
See all comments Recent Comments

Chas:

It’s going to take this kind of private initiative and risk taking to transform the north, while perhaps restoring certain soul strengthening traditional ways of life in the process. Look at Greenland and the job the Danes have done there.

Our approach to date seems to have been “flood the area with a bottomless pit of social services to take care of the social damage we have done up there over the years, and people will just tolerate it forever.”

Gov’ts also seem to take the view that when competing for people to lure to the north, it’s OK to compete with private enterprise on the compensation front, in a battle gov’ts know private enterprise can’t win. This can’t continue.

Sovereignty isn’t conditional. We either develop the north responsibly–in all respects– or we’ll loose it to far more populous countries like China.

A “New National Program” rallying cry (for you history buffs?) Perish the thought.

Thursday, November 22 at 11:39 am | Reply

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