January 9, 2024
Leaving behind bad habits, embracing climate action
2023 was Earth and Canada’s warmest year on record. Some experts say 2024 may break the extreme temperature records set in 2023. We keep breaking records. Not the good ones.
The new year is a time to reflect on the past year and look ahead. In January, many make resolutions to kick-start the new year strong. Gyms are full, people’s grocery carts are filled with vegetables, and some do dry January. You name it. We often make resolutions we can’t keep like setting climate targets with no plans on how we will actually achieve them. So, for 2024, let’s try a different approach—what we bring with us and what we leave behind—so we stop breaking bad records.
In 2024, we leave behind:
Talking the talk but not walking the talk. In the latest Emissions Gap Report, the United Nations Environment Programme revealed that Canada’s implementation gap between its current climate policies and its Nationally Determined Contributions pledges relative to 2015 emissions is 27%. That’s the biggest gap among the G20 countries. While the federal government released the 2030 Emissions Reduction Plan and the National Adaptation Strategy, they are not being implemented quickly enough. And speed is the name of the net-zero emissions game. There’s still time to achieve these 2030 emissions objectives. The Canadian Climate Institute outlines five ways the federal government can do so.
The Climate Engagement Canada Net Zero Benchmark, which encompasses Canada’s top reporting or estimated emitters and/or corporate issuers, recently revealed that only 41% of Focus List companies indicate that “their CEO and/or at least one other senior executive’s remuneration specifically incorporates climate change performance as a key performance indicator (KPI).” In addition to that, 44% of the companies have set net-zero objectives, but lack 1.5°C-aligned short-term targets. These insights suggest that corporations need to do more work to demonstrate their climate ambitions and objectives are credible. Governments and companies can and must not only talk the talk but walk the talk.
Greenwashing, greenhushing and greenwishing. Companies may engage in greenwashing, greenhushing, or greenwishing practices. Greenwashing is when businesses appear more environmentally and socially conscious than they may be. Greenhushing is when companies deliberately downplay or conceal their climate-related actions and initiatives to protect themselves. And finally, greenwishing is when companies have sustainability desires and intentions without tangible follow-through and actions. While these inconsistencies might not be intentional, greenwashing, greenhushing and greenwishing represent reputational and legal risks for companies. Corporations should aim to transparently and accurately disclose their climate-related actions and initiatives.
A compliance-only approach to climate and ESG disclosures. Businesses should go beyond the strict compliance approach when it comes to climate and ESG-related disclosures. Doing so is a strategic choice to position themselves for long-term success and resilience. Disclosing climate-related risks and opportunities can enhance stakeholder trust through a commitment to transparency, attract and meet growing investors’ expectations, anticipate, mitigate, and adapt to future risks, give a competitive edge, drive innovation, and attract talent. By evaluating and disclosing climate-related risks, companies help identify how to mitigate and adapt to the risks they may face and reveal the opportunity side of the coin. Reactive risk management of climate-related risks and opportunities is a perilous approach in the face of increasing climate-related events. Corporations must embed climate-related factors in all departments and go beyond the strict compliance approach to climate and ESG disclosures.
In 2024, we bring:
Proactive climate regulation and legislation for corporations. Last year, the federal government endorsed the Green and Sustainable Finance Taxonomy Roadmap and committed to funding and completing the new Taxonomy in the Fall Economic Statement. It also committed to making climate-related financial disclosures mandatory for large Canadian companies. This represents a big step forward for sustainable finance and corporate sustainability.
In Québec, the Autorité des marchés financiers also published its draft guideline on Climate Risk Management, heavily inspired by the Office of Superintendent of Financial Institutions B-15 Guidelines. This is a first at the provincial level, showing the Québec leadership in sustainable finance.
Canada must not lose this momentum if we want to remain competitive. Major jurisdictions such as the United Kingdom, the Union European, Australia, and Singapore published their green and transition taxonomies in 2023 and many of these same jurisdictions enforced mandatory corporate disclosure of climate-related information in alignment with the International Sustainability Standards Board and the Global Reporting Initiative.
Canada must be proactive and continue its work in implementing its green and transition taxonomy as well as mandatory corporate climate disclosures. These initiatives will align our financial system with a net-zero emissions economy, drive capital towards green solutions, and be a catalyst for climate actions and reduce our emissions.
Greater collaboration. We have everything to gain from more collaboration. We have everything to lose from division and siloed work. While we may be stuck in a language debate sometimes, from the politicized debate around ESG to the cause of climate change, the reality is the changing climate is already affecting Canadians. Greater collaboration between scientists, policymakers, regulators, businesses, civil society, and other stakeholders can accelerate the transition towards a net-zero emissions economy by expanding capacity, decreasing our risk exposure, sharing the cost of innovation, increasing our chances of finding solutions, and helping us adapt faster. Although collaboration might not be the default state in some contexts, notably in the business context, we all have a collective interest in reducing our impact on the planet. Let’s embrace pre-competitive collaboration to solve the problem.
More education. Lastly, it wouldn’t be a Canada Climate Law Initiative blog post without mentioning the importance of education. Education is a key factor in fostering business resilience to a warming world, developing effective climate policies, and gaining a greater understanding of how to live more sustainably.
I’m almost at the end of Ed Yong’s book An Immense World which reveals how animals perceive the world using their own unique sensory capabilities. At the beginning of the book, he explains the concept of umwelt, defined and popularized by the zoologist Jakob von Uexküll in 1909. Umwelt is defined as “specifically the part of these surroundings that an animal can sense and experience—its perceptual world.” Yong emphasizes that our umwelt is limited. “To us, it feels all-encompassing. It is all that we know, and so we easily mistake it for all there is to know.” All of us need to see through others’ eyes and listen to gain a greater understanding of all the things we don’t know. So, in 2024, let’s bring in more education to gain a greater understanding of each other and ultimately, build a more sustainable world.