Minister of Environment and Climate Change Catherine McKenna discusses climate-related financial risks and opportunities with Bank of England Governor Mark Carney at the Toronto Region Board of Trade, July 15, 2016
We recognize that it really is the challenge of our generation, and we only have this generation to tackle this challenge.
Thank you for having me. Why so why is a Central Bank Governor and why are financial regulators looking at climate? The reason is that last year the G-20 asked us to. They asked the Financial Stability Board which I chair, as you mentioned to address the risks that come from climate change. This is the risk that financial markets adjust abruptly to climate risk. You sometimes see it with extreme physical events, but more broadly there's this question of over what time path will there be carbon pricing on a more global scale? Will various frameworks and other things begin to bite? And how does the market adjust?
If you have the information to make judgments about how well companies are adjusting to the framework that's coming in place in Canada, and if that framework is credible and the global process is credible and is going to be reinforced over time, then some of that adjustment gets pulled forward
If you know if the framework is credible, the knowledge that we're going to do things in the future affects behaviour today. The knowledge that climate policy is real, that it's you know, to use the Canadian example, it's not just the federal government, it's all provincial governments as well, that there's tangible action, reward winners, reward or punish losers, reinforce managements that are thinking in a forward sense.
The first thing, obviously, is in a consistent, comparable and reliable way what's your footprint? You know, what are your missions in a way that talks not just about probably the emissions of your actual activities, but your upstream power emissions? A Canadian advantage, I would you know, in a global sense, having both of those in there, given the overall mix energy mix in this country.
So again, back to long-term value creation. What's your strategy for managing climate-related risk? How do you govern that? What's your risk management around these issues?