Climate remains on investor agenda despite economic and geopolitical tensions

Detailed summary

New report finds accounting for climate risks is top of mind for asset managers, but fewer emitters are disclosing their long-term goals

Trade tension and geopolitical strife have shifted Canada’s policy priorities away from climate change, but major investors say they remain focused on preparing companies for a transition to a low-carbon economy.

Prime Minister Mark Carney touts the country’s natural resource bounty, including oil and natural gas, as key to strengthening the national economy in the face of a U.S. trade offensive.

The rationale: By boosting exports through tens of billions of dollars of new pipelines and LNG terminals, Canada could become a supplier of choice as previously reliable trade routes, such as the Strait of Hormuz, are rendered too dangerous and threaten global energy security.

All of this spending, accompanied by Ottawa deprioritizing climate-related policies, suggests a slower pace on the road to net zero. Behind the scenes, though, institutional investors want proof that the country’s largest companies are still striving to lower their greenhouse gas emissions and adapt to more severe weather, including heat waves, wildfires and floods.

A report grading large Canadian emitters on sustainability performance, published Thursday by investor-led coalition Climate Engagement Canada (CEC), shows that accounting for climate risks is top of mind for asset managers and owners such as pension funds and insurers. Results for the 39 companies the group tracks are mixed.

Large investors are doing their fiduciary duty by keeping companies focused on climate-related risks and adaptation to both policy and the physical impacts, said Barb Zvan, chief executive officer of University Pension Plan Ontario and chair of the CEC steering committee.

“We’re the ones with the long-term horizon. We’re the ones that ultimately will own the risk of this in the holding of the assets,” Ms. Zvan said in an interview. As a result, institutions are keeping climate concerns front and centre, she said.

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Opening of the article, excerpted from The Globe and Mail (Report on Business). To read the rest, open the article on the publisher's site.