Climate Change Should Be Part Of Regular Savings And Investment Decisions

Climate Change Should Be Part Of Regular Savings And Investment Decisions To accelerate climate-conscious investment, we need to actively engage Canadians in the climate opportunity and make their stake in fighting climate change more tangible. (Shutterstock)

As a member of the Expert Panel on Sustainable Finance, we recently published our final report on mobilizing financial services to support Canada’s economic prosperity through the global transition to cleaner growth.

Our recommendations seek to connect the dots between Canada’s climate objectives, its economic ambitions and its investment imperatives. The overriding message is that if Canada is to meet its long-term environmental and economic objectives, sustainable finance needs to go mainstream.

Put simply, climate-conscious risk management and investment need to be part of the everyday savings and investment decisions made by individuals and businesses across Canada.

The report makes recommendations to grow and scale the market for sustainable finance, and then focuses on the products and services needed to meet the financing requirements of Canada’s economic sectors that are critical to the transition to cleaner growth, such as clean technology, oil and natural gas, infrastructure, buildings and electricity.

Normally, this would be all you need; market forces should do the rest. But globally, the market is not keeping up with climate change, and Canada is not keeping up with its peers.

Engaging Canadians

To accelerate climate-conscious investment, we go a step further and recommend actively engaging Canadians in the climate opportunity and making their stake in fighting climate change more tangible.

To engage them, we recommend the federal government create an incentive for Canadians to invest in accredited climate-conscious products. Specifically, we recommend that the Minister of Finance create additional space in RRSPs and defined contribution pension plans for these investments and offer a “super deduction” — in other words, a taxable income deduction greater than 100 per cent —on eligible investments.

With few Canadians maximizing their registered savings contributions, the super deduction is a way to broaden the reach to every Canadian with a registered savings or defined contribution pension plan.

This simple intervention could be powerful. The economic effects of climate change and the opportunities for new value creation would be discussed and debated as part of Canadians’ savings and investment decisions, and individual investors would have a tangible stake in the performance of solutions.

The effect would be to significantly accelerate the fly wheel of climate-conscious investment advice, product development and capital flows to sustainable economic activities.

Working with provinces

To engage the business and financial communities, we recommend that the federal government work with the provinces and the private sector to develop a capital plan that maps out the necessary investments to realize Canada’s environmental and economic objectives.

This all starts with an ambition for innovation and global competitiveness, sector by sector, and a strategy to get there. The capital plan to underpin this strategy would include financing requirements and sources — both public and private —and identifying critical financing gaps.

This sounds like a big job — and it is. But fundamentally, it’s what anyone would do when considering an investment.

Suppose you decide to remodel your home to make it more comfortable, improve its aesthetics and reduce your energy costs and GHG emissions.

You would begin with a vision for your remodelled home; you would research the available technologies and designs and develop a strategy to achieve your vision; and you would develop a capital plan to finance the project, drawing on different sources — perhaps some of your own savings, a government green grant or loan program and a new mortgage from a bank.

You would also consult your home insurance provider and consider how to make your remodelled home more climate-resilient and, in doing so, improve your comfort and reduce your home insurance premiums. Our recommendation is simply that we do this for the whole economy, sector by sector.

‘Mid-century objective’

We also recommend extending the horizon for Canada’s climate ambitions beyond 2030 to 2050. With 2030 little more than a decade away, we need a mid-century objective to provide the horizon to mobilize capital at scale.

Together, a clear vision, a mid-century target and an associated capital plan would spell out the scope and horizon of the opportunity very tangibly, providing a beacon for the private sector and a road map to where their ingenuity, expertise and capital are needed.

Of course, the capital plan would be a forecast and would need to be updated as new technologies develop, climate effects materialize and new information becomes available, but a plan beats no plan.

Canada has some catching up to do, but we believe our country can be among the leaders in the global transition to a low-emissions, climate-resilient future. But seizing this opportunity will require us to lean in and put some skin in the game. We believe our practical and achievable recommendations could prime the opportunity and make climate change part of Canadians’ everyday savings and investment decisions.The Conversation

About The Author

Tiff Macklem, Dean and Professor of Finance, Rotman School of Management, University of Toronto

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Related Books

Drawdown: The Most Comprehensive Plan Ever Proposed to Reverse Global Warming

by Paul Hawken and Tom Steyer
9780143130444In the face of widespread fear and apathy, an international coalition of researchers, professionals, and scientists have come together to offer a set of realistic and bold solutions to climate change. One hundred techniques and practices are described here—some are well known; some you may have never heard of. They range from clean energy to educating girls in lower-income countries to land use practices that pull carbon out of the air. The solutions exist, are economically viable, and communities throughout the world are currently enacting them with skill and determination. Available On Amazon

Designing Climate Solutions: A Policy Guide for Low-Carbon Energy

by Hal Harvey, Robbie Orvis, Jeffrey Rissman
1610919564With the effects of climate change already upon us, the need to cut global greenhouse gas emissions is nothing less than urgent. It’s a daunting challenge, but the technologies and strategies to meet it exist today. A small set of energy policies, designed and implemented well, can put us on the path to a low carbon future. Energy systems are large and complex, so energy policy must be focused and cost-effective. One-size-fits-all approaches simply won’t get the job done. Policymakers need a clear, comprehensive resource that outlines the energy policies that will have the biggest impact on our climate future, and describes how to design these policies well. Available On Amazon

This Changes Everything: Capitalism vs. The Climate

by Naomi Klein
1451697392In This Changes Everything Naomi Klein argues that climate change isn’t just another issue to be neatly filed between taxes and health care. It’s an alarm that calls us to fix an economic system that is already failing us in many ways. Klein meticulously builds the case for how massively reducing our greenhouse emissions is our best chance to simultaneously reduce gaping inequalities, re-imagine our broken democracies, and rebuild our gutted local economies. She exposes the ideological desperation of the climate-change deniers, the messianic delusions of the would-be geoengineers, and the tragic defeatism of too many mainstream green initiatives. And she demonstrates precisely why the market has not—and cannot—fix the climate crisis but will instead make things worse, with ever more extreme and ecologically damaging extraction methods, accompanied by rampant disaster capitalism. Available On Amazon

From The Publisher:
Purchases on Amazon go to defray the cost of bringing you,, and at no cost and without advertisers that track your browsing habits. Even if you click on a link but don't buy these selected products, anything else you buy in that same visit on Amazon pays us a small commission. There is no additional cost to you, so please contribute to the effort. You can also use this link to use to Amazon at any time so you can help support our efforts.




Pumped Dry: The Global Crisis of Vanishing Groundwater
In places around the world, supplies of groundwater are rapidly vanishing. As aquifers decline and wells begin to go…
Why Climate Change Won't Be Solved Easily
by Thom Hartmann Program
Solutions for Climate Change are going to have to be much more radical and much more powerful than the solutions we…
The Counter-Intuitive Solution To Getting People To Care About Climate Change
The Counter-Intuitive Solution To Getting People To Care About Climate Change
by Kamyar Razavi
In a May episode of Last Week Tonight With John Oliver, Bill Nye the Science Guy took a blowtorch to a miniature globe.…
5 Ways To Be A Responsible Wildlife Tourist
5 Ways To Be A Responsible Wildlife Tourist
by Tracie McKinney
Imagine walking through a lush tropical forest. You hear a rustle overhead, and a half-eaten fruit plops onto the…
Climate Change Is Affecting Crop Yields And Reducing Global Food Supplies
Climate Change Is Affecting Crop Yields And Reducing Global Food Supplies
by Deepak Ray
Farmers are used to dealing with weather, but climate change is making it harder by altering temperature and rainfall…
The Arctic Paradox
by Tobias Thorleifsson
Explore Ellesmere Island with Tobias in this talk, as he urges us to protect this arctic environment from the hands of…
Increased Drought Amid Climate Change & Warming
by Kate Marvel, Radio Ecoshock
Columbia/NASA scientist Kate Marvel explains “hyroclimate” as rains and droughts go extreme. When it comes to your…


A New Wave Of Smart Cities Has Arrived
A New Wave Of Smart Cities Has Arrived
by James Ransom
An abandoned mine shaft beneath the town of Mansfield, England is an unlikely place to shape the future of cities.
An EU Ban On Palm Oil Won't Save Asian Rainforests, But Here's What Might Help
An EU Ban On Palm Oil Won't Save Asian Rainforests, But Here's What Might Help
by Elizabeth Robinson and Herry Purnomo
Anyone lucky enough to visit Ghana could do worse than order a plate of boiled yam and red-red – a stew made with beans…
How The Politics Of Fear Manipulates Us To Tribalism
How The Politics Of Fear Manipulates Us To Tribalism
by Arash Javanbakht
People have always used fear for intimidation of the subordinates or enemies, and shepherding the tribe by the leaders.
Betting On Speculative Geoengineering May Risk An Escalating Climate Debt Crisis
Betting On Speculative Geoengineering May Risk An Escalating Climate Debt Crisis
by Shinichiro Asayama and Mike Hulme
The opening of the Oscar-winning film The Big Short, a comedy-drama on the global financial crisis of 2007-2008, begins…
Solar Weather Has Real, Material Effects On Earth
Solar Weather Has Real, Material Effects On Earth
by Michael Batu
On Sep. 1, 1859, solar astronomer Richard Carrington witnessed sunspots that suddenly and briefly flashed brightly…
Using Language To Fight Dirty Fossil Fuels
Using Language To Fight Dirty Fossil Fuels
by Matthew Hoffmann
I had a room full of bright first-year university students in front of me, but confusion reigned as I tried to describe…
Adapting Cities To A Hotter World
Adapting Cities To A Hotter World
by Jennifer Weeks
Heat waves can be deadly, especially when they combine high temperatures with elevated humidity levels that make the…
How Ice Cores Shape Our Understanding Of Ancient Climate
How Ice Cores Shape Our Understanding Of Ancient Climate
by Tas van Ommen
It is just over 50 years since French scientist Claude Lorius dropped some glacier ice in his whisky and started a…