Harnessing AI to Address Canada’s Climate Transformation

This past summer, Canada was marred by a slew of natural disasters that have been accelerated by climate change.

Forests burned in the west, east, and northern territories, marking the country’s worst wildfire season on record. Blistering heat waves swelled across the provinces, while droughts swept across the Canadian Prairies, forcing farmers to write off large amounts of crops. Heavy rains also caused flooding in Atlantic Canada, killing four people in Nova Scotia and significantly damaging buildings and municipal infrastructure.

While the total cost of this summer’s extreme weather events is still unclear, last year’s insured losses from natural disasters amounted to CAD$3.1 billion, the third most expensive year for insured losses in Canadian history. The losses from this year’s damages, and those that Canada will experience in the coming years, could balloon further if we fail to adequately address the financial risks associated with a changing climate.

To get to grips with Canada’s climate issues, national and provincial governments and regulators are working on developing the relevant policies and rules. For example, the Office of the Superintendent of Financial Institutions (OSFI) — Canada’s financial regulator — released its inaugural climate risk management guideline in March. The rule outlines how the country’s financial institutions should both disclose and manage their climate-related financial risks. Similarly, the Canadian Securities Administrators — the country’s securities regulator — is working on developing climate disclosure requirements for Canadian issuers. Similar developments are happening globally, with all G20 nations committed to developing climate disclosure regulations in the coming years.

The Private Sector’s Role in Advancing Canada’s Climate Transformation

The private sector plays a crucial role in ensuring the Canadian economy remains competitive and resilient to a changing climate. All organizations contribute to the ambitious targets set out in the international 2015 Paris Climate Agreement, which pledges to limit global warming to “well below” 2°C and ideally to 1.5°C above pre-industrial levels.

Canada has pledged to reach net-zero emissions by 2050 and emissions reductions of 40% to 45% by 2030. Achieving these goals requires transformative and innovative approaches by all economic sectors. To support the climate transformation, Canada needs to move smart and fast and should consider every tool at its disposal, including software solutions that use artificial intelligence (AI). 

Using AI to Scale Corporate Climate Resilience

AI-based technology can be a key enabler to climate action. It can help accelerate a response to strategic climate issues, supercharging a team’s abilities to synthesize information and connect the dots. It can also support companies in aligning their public climate-related financial disclosures with global reporting rules and standards.

To effectively understand, manage, and communicate their climate-related financial risks, corporate teams often conduct extensive research. They also benchmark their climate management and disclosures against those of climate leaders, industry peers, and best practice recommendations. However, internal teams that are assigned these tasks are often small and under-resourced, meaning they can get bogged down in the research and planning phases of climate risk management. This takes precious time and money away from developing and implementing a climate strategy.

AI-powered technology like Manifest Climate can help empower Canadian companies and capital markets to move faster on climate risk management and build a sustainable, climate-adjusted future. This technology not only gives organizations the opportunity to accelerate their climate maturity — it helps to automate the time-consuming, menial, and often gruelling tasks associated with managing climate risks. Trained with climate expertise, AI-based software can help to cut through the noise and focus decision-makers’ attention on what matters most.

Benchmarking Climate Progress and Planning Next Steps

Robust climate governance is paramount when it comes to transitioning to a low-carbon economy and building corporate climate resilience. However, according to Manifest Climate’s AI-powered research, only 28% of 3,000 organizations aligned their 2021 climate-related financial disclosures with at least one governance reporting recommendation from the Task Force on Climate-related Financial Disclosures. The latter is known as the world’s premier framework for corporate climate reporting, and forms the basis of many national climate-related financial disclosure rules, from Canada and the US to Brazil to the UK (and beyond). 

AI-based software solutions offer companies the opportunity to improve their climate governance and risk management. These technologies allow organizations to swiftly gather and assess large amounts of climate data, as well as to analyze the best examples of how corporate executives are managing climate risks. Having access to this information is critical to how firms plan their next steps and take climate action. Robust climate data also ensures companies are up to speed on what they need to know to position their companies as climate leaders and build climate resilience. 

Aligning With Evolving Climate Reporting Standards

AI helps organizations assess whether their climate disclosures and management are compliant with national regulations, like OSFI’s climate risk management rule, more effectively and efficiently. Firms can quickly develop an understanding of where they’re doing well in their climate risk management and where there’s room for improvement. Technology can also support companies with data-driven insights and actionable, next-step recommendations to create an effective climate plan and boost their climate management. 

For companies to effectively address their climate risks, corporate teams need to stay on top of the ever-evolving climate disclosure and management landscape. This can be a challenge amid competing priorities and a firehose of climate news that never seems to stop. AI-based software can filter out business-relevant climate trends, data, and updates, ensuring internal teams have the necessary knowledge to address their leaders on climate. This helps to build organization-wide climate competence, which ultimately contributes to the effective management of climate risks.

Addressing the financial risks of climate change is a massive challenge for organizations in Canada and beyond. However, Canadian technology startups like Manifest Climate are working on tackling this head-on and are well-positioned to lead the world through the transition toward a low-carbon, climate-adjusted future.

Mapping the Way Forward for Canada’s Climate Transformation

Canada’s knowledge-based economy and abundance of natural resources give us the unique opportunity to pave the way toward a climate-resilient economy. But for this to happen, corporate Canada needs to envision a future that embraces sustainability and innovation. Organizations also need to leverage every tool at their disposal, including advancements and efficiencies possible using AI, to move as quickly as possible on their climate risk management. 

To win in the climate transformation and credibly contribute to achieving the goals of the Paris Agreement, Canada should cultivate an ecosystem that supports climate innovation. Policy change is crucial, and the private sector must do its part to fully understand the challenges and opportunities that are associated with climate transformation. 

To move fast and smart, we need to utilize the wealth of climate expertise, natural capital, and innovation that Canadian enterprises can bring. All sectors of the Canadian economy also need to inspire and uplift each other toward the common purpose of future climate and economic resilience.  

Responding to the risks posed by climate change is a global challenge, which means international collaboration is vital. Through Canada’s climate commitments and technological advancements, we are in the ideal position to foster international partnerships and collaborations that will amplify the effective and efficient management of climate risks.

AI-powered tools have the power to rapidly accelerate corporate climate management, scale climate resilience, and promote climate transparency and accountability in capital markets. Let’s utilize the power of AI to help promote a climate-resilient world, achieve Canada’s climate targets, and reach the goals of the Paris Agreement. It’s only when we use every tool at our disposal that we will move faster and ensure a sustainable, climate-adjusted future for the long term.