Mr. Chair, I'm pleased to be here today to contribute to the committee's study on environment and climate impacts related to the Canadian financial system.

I acknowledge that this hearing is taking place on the traditional unceded territory of the Algonquin Anishinabe people.

Joining me today are Mathieu Lequain and Jean-François Nadeau, who are, respectively, principal and director in our office.

My remarks today are based on three reports we published in recent years on this matter. These are our 2021 “Lessons Learned from Canada's Record on Climate Change”; our 2022 “Research Paper on Climate-related Financial Disclosures”; and our 2023 report “Supervision of Climate-Related Financial Risks—Office of the Superintendent of Financial Institutions Canada”, also known as OSFI.

First, our 2021 “Lessons Learned from Canada's Record on Climate Change” clearly illustrated the cost associated with weather-related events in Canada, which were equivalent to 5% to 6% of annual gross domestic product growth. These costs have real consequences for households and business owners. For example, a major lender recently announced that it would no longer accept new mortgages for homes in high-risk flood zones. The consequences of such decisions on the value of residential housing, which for many households is the main asset, could prove quite dire.

Our “Lessons Learned” report indicated that financial decisions in Canada must take climate change into account if climate risks are to be mitigated. To do so, it is important for households, companies and governments to be able to understand their exposure to such risks and develop plans to manage them.

Climate-related financial disclosures are necessary stepping stones toward that goal. Our 2022 Research Paper on Climate-related Financial Disclosures looked at the state of various initiatives that were under way in Canada to improve the disclosure of climate-related financial information.

We mentioned that despite the decentralized nature of the regulatory frameworks for financial disclosures more generally—with the provinces and territories responsible for securities regulations within their own jurisdictions—Canada must address the lack of transparency, inconsistencies, and the quality of climate-related financial disclosures.

Finally, financial regulators must ensure that financial institutions, as stewards of the savings of Canadians, are managing climate-related financial risks appropriately. Our 2023 report on OSFI’s Supervision of Climate-related Financial Risks examined whether the office incorporated climate-related financial risks into its risk management systems and frameworks for federally regulated financial institutions and pension plans.

In our audit, we found that OSFI made meaningful progress towards integrating climate risks into its supervisory framework, but that full implementation was still years away. We also highlighted an opportunity for OSFI to consider how to adapt its role to further Canada's whole-of-government approach to climate change and sustainable development.

Since we released that audit, we have noted some positive developments. For example, OSFI has created an information page entirely dedicated to climate risks and expanded its outreach to stakeholders by creating the climate risk forum. The development of the forum is in line with one of our audit recommendations. It also launched a public consultation on the standardized collection of climate-related emissions and exposure data. Finally, OSFI tabled its first departmental sustainable development strategy.

Mr. Chair, this concludes my opening remarks. We would be pleased to answer any questions the committee may have.

Thank you.