Concerns over climate change in Canada and abroad have been rapidly gaining speed and momentum in recent years. Now, amidst the global health crisis presented by COVID-19, governments, action groups, and citizens around the world are reflecting on how we can address these twin crises and build a better future going forward. One such strategy is to attempt to leverage the pandemic into an opportunity by tying government stimulus packages to efforts to keep global warming within 1.5°C to 2°C and to encourage businesses to transition away from a fossil-fuel-based economy.
On May 11, 2020, Canada joined the ranks of countries doing just that. As part of Canada’s COVID-19 Economic Response Plan, Prime Minister Justin Trudeau announced the Large Employer Emergency Financing Facility (LEEFF), a program meant to provide loans to large Canadian employers who have been affected by the COVID-19 outbreak. In line with global calls for sustainable stimulus packages, the program requires companies that receive government assistance to publish financial disclosure reports with information on climate‑related risks. The report must highlight how the company’s strategies, policies, and practices will help manage climate-related risks and opportunities, and contribute to achieving Canada’s commitments under the Paris Agreement and the goal of net-zero emissions by 2050.
Measures like these are critical for ensuring that efforts to repair the economic damage caused by COVID-19 do not derail efforts to limit global-warming. The post-pandemic recovery period will be a decisive moment for fending off climate change. It is vital that as Canada’s economy re-opens, we avoid making the same mistakes as in the 2008 financial crisis, when government measures to stimulate economies largely ignored environmental consequences.
And if you think this proposal sounds too much like “hippie idealism” or “leftist hogwash”, consider that McKinsey & Company ― a company not known for indulging in sentimentality or misplaced optimism ― has reported that a low-carbon recovery could not only help reduce emissions, but also create more jobs and economic growth than a high-carbon recovery. Consider also that companies and investors are already showing buy-in as they recognize the financial risks that climate change poses to their investments and the need for risk disclosure mechanisms. Just recently, Morgan Stanley announced that it will begin publicly disclosing how much its loans and investments contribute to climate change, becoming the first major U.S. bank to do so.
As the world moves into a “new normal”, much remains uncertain. What is clear though is that we have reached a pivotal moment to prevent catastrophic global warming. The government’s announcement of LEEFF is a positive step in the right direction. But we need more than just risk disclosure. We need our federal and provincial governments to invest in a low carbon recovery from the COVID-19 economic crisis to ensure that as we move out of one crisis, we do not precipitate another, possibly greater, one.