- Canada’s financial institutions have an important role to play in financing, investing and insuring low-carbon companies, projects, and retail products for the clean growth transition.
- Canada, with its natural resources, business ecosystem and knowledge base, is well placed to lead the world in clean growth innovation and the clean growth transition.
- We need to work on making energy generation cleaner, our use of energy more efficient, and our use of resources responsible.
All stakeholders, such as banks, government, tech companies, the energy providers, industry and consumers, need to focus on clean growth. We need cross-sector collaboration.
How would you define clean growth and what opportunities do you see stemming from the pursuit of clean growth?
I equate clean growth to low-carbon growth. Clean growth leads to a low-carbon economy; one that integrates reduction of greenhouse gases into the design and operation of power generation, infrastructure, industrial processes and goods and services.But to me, personally, clean growth means taking a step back and figuring out how to enhance our standard of living, our society and our economy in a clean way. Canada has a wealth of natural resources and we have the opportunity to provide a model for the rest of the world for responsible resource development. We can also lead in using nature as infrastructure to mitigate climate change and provide benefits to communities in a cleaner way than we traditionally have. For example, we could strategically grow natural areas to help provide flood mitigation, clean water and air through filtration services, and use nature to help combat heat island effects with the cooling effect of trees and parks. An opportunity for Canada is to tap into the country’s deep knowledge base, and its numerous centres for academia, R&D, incubation and acceleration – all of which have created the right environment for clean growth innovation.
What are the next steps we need to take to accelerate Canada’s transition to a low-carbon economy?
The demand for clean growth is increasing and will drive tens of trillions of dollars of opportunity around the world over the next several decades.But the reality is that the transition to a low-carbon economy is not going to happen overnight. It is going to take several decades and we need to invest in and build the necessary infrastructure to support clean growth.Fossil fuels still account for more than 70% of global energy and with a growing global population we know that the demand for energy will also continue to rise. I see energy production on a spectrum; on one end, you have traditional fossil fuel-based energy and on the other, you have renewables. Around the middle, you have low-carbon energy sources. I think the opportunity lies in finding more ways to work with all energy players on that spectrum. We have the opportunity to develop innovative solutions to make existing fossil fuel-based energy production cleaner and to support the growth of the renewable end of the spectrum, as well as to encourage the responsible use of all our energy resources.
“We have the opportunity to develop innovative solutions to make existing fossil fuel-based energy production cleaner and to support the growth of the renewable end of the spectrum.”
One of the risks associated with transitioning to a low-carbon economy is relying on one stakeholder to lead the way. Collaboration across, and within, sectors, and with governments will be critical. As will creating consumer awareness and market demand. We all must lead in our own way; governments, companies, communities and consumers all need to work on the transition. That way, if one falls down, others are there to pick up the slack. Finally, let’s be clear that the discussion is not limited to energy generation. Clean and more efficient use of our energy is as important, and that includes transportation, heating and cooling, industrial process, and so on.
What role must investors and the financial system play in the clean growth transition?
Financial institutions have multiple roles to play in contributing to a low-carbon economy, both in reducing the risks as well as in propelling the opportunities forward. In the past, banks thought about sustainability in terms of their own operations, focusing on making them clean, green and efficient. Today, each arm of a bank – the financing arm, the investment arm and the insurance arm – has an interesting piece of the low-carbon solution.
“One of the risks associated with transitioning to a low-carbon economy is relying on one stakeholder to lead the way. Collaboration across, and within, sectors, and with governments will be critical.”
Financing is originating more and more loans for low-carbon and renewable projects, such as energy efficient buildings, and wind and solar farms. The investment side with the rise in green and impact investment options, is providing opportunities that not only have financial returns, but also provide environmental benefits to society. Lastly, the insurance industry is among the hardest hit by all of the extreme weather events we have been experiencing, such as intense storms, floods, and wildfires. So, insurance also has a role to play in the growth of resilient buildings and infrastructure by incentivizing low-carbon and resilient behaviours like adoption of electric vehicles and well-built resilient communities.
What is TD working on right now, both internally and externally, to support Canada’s clean growth?
We recently launched our new corporate citizenship platform called The Ready Commitment, which aims to help people feel more confident – not just about their finances, but also in their ability to meet their personal goals in a changing world. Having a healthy and vibrant planet is foundational to feeling confident about the future. One aspect of supporting this confidence in a changing world is helping to create a healthy environment so that people and economies can thrive. To address this, we are focusing on two aspects: helping to grow and enhance urban green and natural areas and supporting the transition to a low-carbon economy. In addition, we contribute in some way to all the United Nations Sustainable Development Goals (SDGs) and have prioritized 9 SDGs where we can have the greatest impact through The Ready Commitment.
“Financial institutions have multiple roles to play in contributing to a low-carbon economy, both in reducing the risks as well as in propelling the opportunities forward.”
We have a long history of environmental leadership and we have recently committed to a target of $100 billion by 2030 to support the low-carbon economy through our lending and investment activities, and environmental projects. We are working with companies, ventures and projects to drive innovation that contributes to carbon emission reduction, renewable energy, clean technology, energy efficient buildings and healthy, resilient communities across Canada and the U.S.
One example is our TD Green Bond Program. We were the first Canadian bank to issue a green bond back in 2014, and all the money raised financed low-carbon projects such as renewable energy and energy efficiency projects. Our first issuance was successful, the bond was oversubscribed, and we attracted new investors to the bank. Seeing the opportunity to grow the green bond market and create shared value by generating positive business results and environmental benefit, we issued a US$1 billion bond in 2017, are developing a significant green bond underwriting business, and becoming an active investor.
“Today, each arm of a bank – the financing arm, the investment arm and the insurance arm – has an interesting piece of the low-carbon solution.”
TD’s leadership also involves collaborations to foster dialogue on what a low-carbon future looks like and how we can use our internal capabilities to help us get there. One of those collaborations is with Bloomberg through which we have established the TD-Bloomberg Sustainability Dialogues to bring leaders from all sectors together to discuss how Canada can transition to a low-carbon economy, and how business can help. As part of this program, we have developed several papers with insights from business, government and not-for-profits, ranging from Alberta’s energy future to Vancouver’s cleantech economy. This September will be the third annual conference in Toronto, which will focus on how the financial sector and companies can better position themselves to identify climate-related risks and the opportunities of a low-carbon economic transition.
“When a bank finances, invests or participates in the low-carbon economy, others follow suit, and the ripple effect is a shift in the economy as well.”
As part of our work to assess climate-related risks, we are one of 16 global banks participating in a pilot led by the United Nations Environment Programme Finance Initiative (UNEP FI), which focuses on developing methodologies to address the recommendations set out by the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosures (TCFD). We are also currently the only bank participating in all three pilots representing different arms of the bank: financing, investing and insurance. As part of the pilots, we have been exploring the potential of data visualization tools to help with climate-related risk assessments to visually pinpoint certain aspects on a map where lending portfolios may be at risk due to extreme weather events such as storms, floods and wildfires. You can learn more about this work and our experience in a recent report from UNEP FI on the pilot study.
How do you envision Canada’s economy by 2050?
When I think about the future of Canada and its economy, I see one that really reflects Canada’s values of inclusivity, sustainability, diversity and innovation. It uses resources wisely and protects its vast natural assets in consideration of the health and vitality of our economy and future generations of Canadians. As a sustainability expert within the financial sector, I feel I have a part to play in the transition to a low-carbon economy through supporting clean growth solutions. When a bank finances, invests or participates in the low-carbon economy, others follow suit, and the ripple effect is a shift in the economy as well. That’s why supporting clean growth solutions is so important.