Sustainable Finance and the Road to Climate Change Adaptation

11:15 Wednesday 29 May

SP026

Room S13

 

Sarah Keyes (Canada) 1; Gordon Beal (Canada) 1; Elizabeth Atkinson (Canada) 2; Anne Adrain (United Kingdom) 3

1 - Chartered Professional Accountants of Canada; 2 - Natural Resources Canada; 3 - Institute of Chartered Accountants of Scotland

This session explores the critical intersection of public and private sector efforts to finance investments to build resilience and adaptive capacity in the face of climate change. With the transition to a low-carbon economy estimated to hold tens of trillions of dollars in opportunities, sustainable finance is becoming a front-burner issue across the global finance community. Sustainable finance is a global movement that includes examining financial policies and regulations to create conditions to promote long-term economic growth that delivers on environmental and social objectives as well as financial returns.

Key messages for the session focus on:

  • Expanding the narrative – climate adaptation is an economic issue and this messaging needs to expand so that it includes the opportunities of building resilience and broad recognition that adaptation is a space for innovation and inventiveness.
  • Increasing integration – it is essential that there is collaboration between public and private sectors at all levels to realize all of the opportunities for increased competitiveness and productivity, lower long-term costs, and resiliency within our economy and society.
  • Providing institutional support – leveraging tools within institutional structures in order to encourage broad-sweeping adaptation action and build the institutional support for change. This in turn creates demand, increasing transparency, and building capacity. Financial levers to be leveraged include disclosure and reporting.
  • Engaging assurance providers – Consider the role that assurance might play in underpinning the credibility of climate change reporting and how the skill set of the auditor might need to evolve in response.

Target audience

Who? Business leaders, finance and investment community, policy makers, researchers, professional accountants.

Why should they attend this session? There is an urgent need for public and private sector cross-functional collaboration on financing investments required to build resilience and adapt to predicted climate change impacts.

How does it benefit them? Participants will benefit from an understanding of trends in sustainable finance and climate-related financial issues globally. Participants will hear first-hand from public and private sector leaders on related initiatives happening in Canada and globally, benefiting from key lessons learned through these experiences.

Proposed format for the session

  • Presentations – Each panelist will have a 10 minute presentation (With four speakers this is 40 minutes in total).
  • Moderate Panel Discussion – 20 minutes.
  • Interactive Audience Q&A Session – 45 minutes.

Contributing Authors abstracts

1. Gord Beal, Chartered Professional Accountants of Canada

With a private sector perspective, Gord will set-up the discussion by reviewing the recent timeline of global sustainable finance initiatives, starting with the release of the 2015 Paris Agreement and the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD) recommendations. We will then discuss developments since 2015 including the EU High Level Expert Group (HLEG) on Sustainable Finance, the G7 Global Investor Initiative, Canada’s Expert Panel on Sustainable Finance, the G7 Roundtable on Sustainable Finance, and Canada’s Climate Adaptation Leaders Forum on Finance and Investment.

Through this review, the importance of increasing collaboration between public and private sectors at all levels will be underscored. As an example, Gord will speak to the partnership between CPA Canada and Natural Resources Canada in developing the pilot Leaders Forum and the choice to target executive leadership across the finance and investment community, as well as the public sector. This overview references the push and pull strategy and the roles of different players in embedding adaptation in institutions.

 2. Elizabeth Atkinson, Natural Resources Canada 

Building upon the key messages from the 2019 Climate Change Adaptation Leaders Forum on Finance and Investment, this presentation will examine how the framing of climate adaptation affects private and public sector responses. Elizabeth will discuss the need to expand the narrative of climate adaptation in order to encourage innovation and inventiveness that can subsequently increase competitiveness and climate-resiliency.

Looking at public sector, Elizabeth will also discuss why current approaches to climate adaptation can fail to address the complexity of the problem and the need to shift towards a more comprehensive and integrated consideration of climate change impacts.

The presentation will conclude by considering how Canada’s Climate Adaptation Platform is facilitating the work coming out of the 2019 Leaders Forum by targeting executive leadership on a regional scale.

 3. Sarah Keyes, Chartered Professional Accountants of Canada

Investors are increasingly incorporating climate considerations into their investment decision-making, demanding more transparency from companies on their responses to climate-related issues. Businesses and jurisdictions seeking to attract investment will be more competitive when they can demonstrate how they have taken climate change vulnerabilities into account, as well as what they are doing to address the risks that they pose. Robust disclosure plays a critical role in enabling financial markets to price risk correctly and drive behavioural and institutional change within companies. To inform decision-making, companies could consider building internal capacity, platforms, and tools that guide portfolio managers to understand how to incorporate climate-related data on physical risks into decision-making by asset class and at the total portfolio level.

CPA Canada is currently undertaking a multi-year initiative to research and develop best practice guidance on the implementation of TCFD recommendations. CPA Canada is also developing a series of professional capacity building training programs for executive leaders and accountants working in business and professional services to facilitate expanding the narrative and encouraging institutional change. Sarah will present the findings of CPA Canada’s research on climate-related financial disclosures and integration of climate change considerations into decision making by public and private sectors.

4. Anne Adrain, Institute of Chartered Accountants of Scotland 

This presentation will explore the importance of trust and reliability of non-financial information and data, including climate related information; the evolution of the auditing profession and what the future of auditing looks like.

The International Auditing and Assurance Standard Board (IAASB) is currently consulting on guidance on how assurance provider might audit new extended forms of reporting, such as Integrated Reporting. The current assurance framework for assurance on financial related information does not lend itself easily to non-financial and qualitative information. Increasingly, this information is viewed  as equally important as the financial information. Users of financial reports, such as investors, are placing reliance upon this information. As a result, the scope of the traditional audit is likely to change to include more information that sits outside of the financial statements, including climate related information.

Furthermore, professional accounting bodies and accounting educators need to ensure that the auditors of the future have the appropriate skills and expertise to assure these emerging forms of reporting. Auditors will need to adapt their existing skill set to incorporate a broader range of interconnected information included in annual reports.