September 14, 2023

Rising to the challenge: The imperative of businesses to understand and act on climate

How many climate-related events articles have you read this summer? Is it really necessary to repeat that the 2023 wildfire season has been the worst Canada has ever experienced? Perhaps you missed that headline. Perhaps a reminder that climate change is also impacting Canada’s communities–and not only people in distant countries–is needed.

This summer, I worked on our upcoming micro-certificate on climate governance which begins this October. When the program co-designer, Alison Schneider, and I began creating interview questions and other educational content, we wrote that wildfires burned 8 million hectares of forest. As the summer continued, the number increased to 10 million. By the time we recorded the interview the number was up to 13 million hectares of forest. Today, that number is at 15.3 million hectares of forest completely gone. That’s the size of New York state.

An enormous amount of forest was decimated. Communities were displaced. Homes were destroyed. Lives were lost.

A recent survey suggests 67% of Canadians says climate change worry them. Another recent survey suggests 72% of Canadians think the government should be doing a lot more or somewhat more to address climate change.

Investors trends are impacting businesses

The general public is not the only people worried about climate. Investors are also turning their heads to climate-related issues. Millani’s recent survey on ESG sentiment of Canadian institutional investors shows that climate is still on top of the mind of investors, with 98% identifying climate as the top ESG focus area. As such, they are demanding greater clarity to make informed decisions and align capital flows with our climate targets.

Last July, the CEOs of 11 pension plan investment managers, with over $2 trillion of assets under management, endorsed the International Sustainability Standards Board (ISSB) disclosure standards, and the 25 largest Canadian financial institutions backed the country made-in taxonomy made to provide greater clarity on what is aligned with credible and science-based transition pathways and what is not.

Climate change is impacting investment decisions in Canada. The window for action is getting smaller. We need to scale up climate investments to decarbonize and transition to a net-zero emissions economy. The climate investment gap in Canada is estimated at $115 billion per year.  

Businesses also need to step up. Boards and management level executives need to educate themselves to understand how climate impacts their business model and operations. They need to put climate on the board agenda, think, strategize, make decisions, and act to ensure their businesses can adapt to climate change, become resilient, and reduce their greenhouse gas emissions and impact on the environment.

Businesses and investors face a lot of uncertainty, which makes navigating climate-related issues and decisions harder. Climate and sustainable finance related policies and disclosure requirements are happening regularly. While it can be overwhelming to keep up with the latest regulations, reporting and other requirements, stopped operations and reduced revenues because of wildfires, floods, or storms in a short period of time are even more daunting. Extreme weather events are affecting and will continue to impact businesses in Canada. The Intergovernmental Panel on Climate Change suggests that “[t]he probability of compound events has likely increased in the past due to human-induced climate change and will likely continue to increase with further global warming.” Inaction is no longer acceptable.

There are many resources available to help companies understand climate science, how it may impact businesses, and how to start taking credible, accountable, and transparent action. Taking the lead to ensure climate-related risks are managed and opportunities leveraged accordingly requires a proactive approach that includes not only bold actions but also a commitment to continuous learning and growth, and a dedication of unlearning previous assumptions. Our new online 8-week program Climate Risk & ESG for Corporate Governance and Decision-making is open for registration to help professionals gain new skills and knowledge. Ensuring we have the workforce capacity to transition Canada to a net-zero emissions economy is crucial. This new program, starting in October, has been developed by the Canada Climate Law Initiative and the University of British Columbia. Register and rise to the challenge.