Thank you, Mr. Chairman.

Thank you all for the opportunity to speak today.

Business and finance have crucial roles to play in forging national and transnational outcomes, including greater social inclusivity and environmental sustainability, but their most appropriate roles are increasingly maligned and misunderstood as climate hysterics have become commonplace. Understanding the optimal role of business and finance in forging the social, environmental and economic outcomes we all desire requires a sober analysis of the challenge of climate change itself, as well as a deeper appreciation of essential fiduciary rules, the determinant roles of consumers and regulators, and the ancillary role of commerce.

Financiers and businesses have no special powers nor any innate responsibility to right others' wrongs or turn the carbon clock backwards. Achieving a more inclusive and sustainable economic growth model requires that regulators, public policies, civic society and individuals coalesce, along with corporations, around very specific patterns of behaviour.

Let me state this more plainly. If consumers continue to demand ever-rising quantities of fossil fuels, it is the responsibility of fossil fuel producers to provide those resources as cleanly and as cheaply as possible—full stop.

The challenge of climate change is daunting. It consists of two intractable problems wrapped into one.

The first is a collective action problem. Today, three countries—China, India and Russia—account for more than twice the greenhouse gas emissions generated by the European Union and the North American continent combined. Unless and until China, India and Russia adopt equally ambitious targets for emissions, as this body and much of the rest of the western world already have, the prospects for achieving the goals of the Paris accord—namely, net zero by 2050—are zero.

Aligning one's financial system to an outcome that is highly unlikely to be achieved guarantees financial and macroeconomic underperformance. If I have one piece of advice for this committee, it is this: Avoid a great deal of economic and financial sacrifice for no apparent gain. Imposing a wrongly conceived paradigm upon your financial system would serve no useful purpose.

Given that ESG investment strategies have underperformed broader, more diversified strategies by more than 250 basis points per annum over just the last five years, the cost to individual Canadian pensioners over time would almost certainly amount to tens of billions of dollars of lost income.

The second dimension of our climate challenge is a multivariable optimization problem. Canada, like every other country, is duty-bound to have a national energy policy that is clean, affordable, reliable and, ideally, abundant. After all, energy security is part of national security. Canada is blessed with abundant choices between oil and gas, nuclear, hydro, wind and, to a lesser extent, solar. Exploit your advantages. Most other nations are not as fortunately situated.

China and India continue to rely upon coal for more than half of their electricity supply. Given their needs for economic growth, it is wholly unreasonable to expect that India, Nigeria, Indonesia and dozens of other countries, which collectively account for two-thirds of the global population, will dramatically alter their production and use of fossil fuels in manners consistent with Paris-mandated objectives.

Pope Francis wrote in his encyclical Laudato Si' that we are not faced with separate crises—one environmental and another economic—but, rather, one complex crisis with multiple challenges. Solutions demand an integrated approach. We must combat poverty, restore dignity to the excluded and protect nature all at the same time.

I am not a climate-denier. The evidence for anthropomorphic impacts on our land, air and water is in plain sight, available for everyone to see. Given our collective action failures and multivariable needs, however, global temperatures are heading higher. This means, in the mitigation versus adaptation debate, that public policy should lean more heavily toward adaptation. The globe has never had to sustain 10 billion souls simultaneously. It will soon have no choice. How 10 billion souls sustainably occupy our planet in the centuries to come remains among humanity's most significant challenges, and climate risk certainly portends significant economic and financial risk, as everyone on this panel will say.

All this said, government regulations that force Canadian pension plans to restrict their investments into climate-aligned indices or strategies will not help create a climate-aligned world. Canadians can divest their way to a green portfolio, but they cannot divest their way to a green globe. Decarbonizing industrial production requires massive amounts of investment, not divestment.

Moreover, divestiture does not stop companies from making unwanted decisions. It merely impacts their cost of capital and transfers ownership from those who don't support a given management team and strategic direction to those who more broadly do.

Responsible investors allocate capital most wisely when they properly anticipate the world that will be, not some imagined, hopeful world that has a very low probability of bearing out. In practice, this requires investing in a very broad range of companies, industries and real assets, including many brown ones with significant prospects of becoming more green.

It also involves the provision of patient capital to the most promising technologies that lower what Microsoft founder Bill Gates has called the “green premium”, which is the difference between existing practice and less carbon—