Sustainable Finance Action Council – what is it and what does it do?
July 20, 2021 | Stephen Phoon
Image by Gerd Altmann from Pixabay
The Canadian federal government announced in May 2021 the launching of the Sustainable Finance Action Council.
What is it? The Council will provide guidance to the Canadian financial sector in adopting sustainable finance best practices. This is a recognition by the government that incorporating environmental, social and governance (ESG) factors into financial decisions will be needed to accelerate achievement of Canada’s climate goals.
The formation of the Council is the recommendation by Expert Panel on Sustainable Finance in 2019, as the vehicle to implement the Panel’s proposals to transition Canada to a low-carbon economy. The launch follows announcements by the federal government last year of its commitment to reach net zero emissions by 2050 and more recently the Canadian Net-Zero Emissions Accountability Act in June.
Leaders from major public and private financial sector organisations will participate as members of the Council, enabling a diverse representation of the industry. The Council will be chaired by Kathy Bardswick. She was a member of the UN Inquiry into a Sustainable Financial System, and served as in senior leadership roles for Co-operators Group and the Canadian Institute for Climate Choices.
What does it do? The Council’s primary mandate is to make recommendations related to financial market infrastructure to promote sustainable finance in Canada. Chief among these are disclosure of climate risks and opportunities, better access to climate data and analytics, and standards for sustainable investments.
Its initial emphasis will be to enhance climate-related financial disclosures, aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TFCD). TFCD is the international framework for voluntary disclosures to provide information to investors, lenders and insurance underwriters about their climate-related financial risks.
The Council will also focus on gender and diversity reporting, recognising representative decision making as a critical component of sustainable finance.
The Council will receive $7.3 million funding from the federal government over the next three years.
What should we look forward to? Among the key challenges for the Council will be finding sustainable finance solutions that would work well across various provinces, each with its own governance structures, and more specifically a model to involve and engage the oil and gas sector constructively. Being a very recent development, it will take some time before we see the efforts and impacts of the Council.
Stephen teaches and consults on sustainability with a major college in Toronto. He is passionate about catalysing action towards an equitable and sustainable net zero future.