Thank you very much for having me.

I'm Adam Scott, the executive director of Shift, a non-profit education and advocacy project focused on aligning Canada's financial sector with climate. I'm joining you from Toronto, the traditional territory of many first nations, including the Mississaugas of the Credit, Anishinabe, Chippewa, Haudenosaunee and Wendat peoples.

I'm a career climate expert with more than 20 years of experience working to solve this issue through research, policy and solutions. Along with many other colleagues who have provided testimony here, I was an author of a policy road map for a sustainable financial system in Canada.

I'll start with the bottom line, reflected by many other experts you've heard from: We simply cannot achieve Canada's climate obligations without new policy to align our financial system with science-based targets. The stability of our financial system and the long-term growth of our economy are very much at risk here.

This isn't just a moral argument. It is a financial one. As you will all appreciate as lawmakers, many of the most critical decisions that determine Canada's progress on climate aren't actually made by politicians. These decisions are made behind the closed doors of financial institutions and corporations in their day-to-day business. Wherever capital is allocated, money borrowed, debt issued and financial investment decisions made, that's often where the rubber hits the road on climate every single day in this country. How many everyday financial decisions are being made through the filter of a credible, science-based climate plan?

According to Oxford University's net-zero tracker, roughly two-thirds of Canada's largest corporations have made a commitment to net zero. However, that number is far lower when we look at the wider corporate sector. Unfortunately, even among companies and institutions that have made those commitments, they're rarely followed up with credible climate transition plans for achieving them. Every single day, financial decision-making in Canada largely continues with business as usual, financing climate failure and putting the stability of our entire financial system in danger.

Expert colleagues at these hearings have highlighted, in particular, the failure of Canada's largest banks to back up their net-zero commitments with credible climate plans, especially with the obvious requirement to end new finance for coal, gas and oil, while also directing adequate capital towards credible climate solutions.

At Shift, we focus on the climate plans of pensions, Canada's largest asset owners. As long-term buy-and-hold investors, pensions are acutely vulnerable to climate risks and stranded assets. While we're starting to see voluntary leadership and climate plans emerging among some pensions—proof that credible climate plans are real and very achievable—we also still see far too many pension plans, like the Canada pension plan, refusing to set interim targets, while continuing to make investments in fossil fuel expansion that directly bet against climate safety.

We are also troubled by obvious governance failures on climate, in particular the prevalence of directors cross-appointed to the boards of fossil fuel companies and financial institutions at the same time, creating the obvious potential for serious conflicts of interest when discussing this topic. This is an issue raised by others.

I hope that, by this stage in your study, you fully appreciate the dangers of climate failure for Canada and the economy. This is already causing damage to our economy, the global economy and our ability to grow GDP. It is a headwind against GDP growth that, without action, will get worse every single year. Canadian financial institutions are highly exposed to stranded assets, which can lose value suddenly as the energy transition already under way continues to accelerate.

Thankfully, we have the tools available to modernize our financial regulations on climate. The first building blocks are under way—you've been talking about them already—and so is putting in place a credible green taxonomy that excludes fossil fuels from green or transition labelling. Greenwashing is already widespread in financial circles, and we can't allow new loopholes for that to continue.

Climate disclosure rules are also essential. It's very good to see first steps announced to amend the Canada Business Corporations Act for major companies to align with international climate reporting standards.

This trend will need to continue at full speed. Those baseline moves are not enough alone to align financial flows with climate safety.

Along with many other experts, I'd direct this study toward the need to adopt the measures found in the climate-aligned finance act, which, as we heard, is a detailed, ambitious and practical blueprint for moving past disclosure into regulating alignment directly through a variety of measures.

I'll remind you again that this is an unprecedented situation. The climate crisis continues to get worse, carrying with it complex and potentially cataclysmic financial risks. Our brittle and dated regulatory system is not fit in its current state to ensure that Canada's financial sector lives up to its reputation for stability and prudence.

I'll conclude by urging this committee to understand that the policy reforms that we're calling for should really be seen as inescapable, because they're ultimately required to protect the financial system and to meet our climate goals. The question, really, is when we will put them in place. Will it happen quickly enough?

Thanks very much.

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