Centre for Corporate Governance and Risk Management: Investment in a low carbon economy

Building a carbon neutral world is a necessity, but will require compromise, hard work, innovation, and foresight from the global business community – and at present not enough is being done to mitigate the effects of climate change, particularly within the investment sector.

This was the one of several impactful messages delivered at a special public event, Building a Low Carbon Economy: the Role of Investors, hosted by the Beedie School of Business’s Centre for Corporate Governance and Risk Management at the Segal Graduate School on February 26.

The event featured a guest panel comprising keynote speaker Sharan Burrow, General Secretary, International Trade Union Confederation; Ken Georgetti, Chair, SHARE; Pat Hibbitts, Vice President VP Finance and Administration at Simon Fraser University; Sagarika Chatterjee, Associate Director of the United Nations-backed Principles for Responsible Investment (PRI); and Amanda Petrie-Hayes, Director of Sustainability at the City of Vancouver.

After an introduction from Hibbits, Petrie-Hayes spoke briefly about her role leading a team to help Vancouver achieve its goal of becoming the greenest city in the world by 2020. She revealed that the City holds around $800 million in cash reserves in its treasury, and that a formal policy had been created to ensure the City’s investments align with its environmental policies.

Burrow revealed her admiration for Vancouver’s progressive thinking on sustainability, stating that climate change is an imperative for the entire world. Without urgent and ambitious action, the Earth will face a temperature rise of more than four degrees this century. Warning that there will be no jobs on a dead planet, she cautioned that climate change is already causing the loss of life, viable agricultural land, and jobs in certain communities.

On a more positive note, she noted that efforts to battle climate change merit cause for cautious optimism. “The industries of today can be the industries of tomorrow in a zero-net carbon world,” she said. “Cities already generate around 80 percent of global consumption, and within decades a billion more people will live in them. To make these mega cities livable, people, communities, and workplaces need to have a plan.”

Citing Germany as the only country to have designed a nationwide energy plan – revealing that in less than three years the country has created some 200,000 jobs in renewable energy and related manufacturing and services – she offered hope to the assembled audience, claiming that Canada’s diverse economy and massive land mass affords great opportunity. “Canadian companies can be on the leaderboards to decarbonize economies, while also providing decent work to workers here and around the world,” she said.

The key to all of this, she said, is renewable reliable energy. The transition from fossil fuels will not happen instantaneously, and though the planning must start today, the majority of people currently working in these industries will see out their lives in these jobs. There will, however, be jobs in energy for future generations – but these will have to be in new technologies.

“A price on carbon is necessary and inevitable,” she warned. “Revenues must be used to support the most vulnerable, including the retrofitting of households to be more energy efficient. Unions will be key, and will demand a seat at the table – we have examples from all over the world that are already shaping industrial change.”

In response to Burrow’s keynote speech, Chatterjee discussed how her proposed changes – focusing heavily on inclusion of workers’ needs – would mean for investors. While revealing that PRI is beginning to see the early investment in renewable initiatives required from investors, it is simply not possible to turn off the tap on fossil fuel investment, and a transitional period is necessary.

PRI has taken steps to encourage this transition already, last year launching the Montreal Carbon Pledge, an initiative asking investors to commit to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis.

“If you are an investor and haven’t developed your plan for climate change, now is the time to think about it,” she said. “It is not possible to make changes overnight, but it is the time to start developing what the plan should be in the future.”

Answering an audience question as to whether there are any examples of oil companies investing in renewable resources, Chatterjee revealed that both Shell and BP are diversifying their energy resources remarkably. Indeed, she said, both are putting forth a fascinating narrative, stating that climate change is real, and that it is inevitable that we have to focus on renewable energy – but with the caveat that it cannot possibly meet the world’s energy demands at present.

Hibbit agreed with this sentiment, arguing further that the oil companies have to redefine themselves as being in the energy business and not the oil business. Ultimately, she said, it comes down to innovation.

For more information on the Centre for Corporate Governance and Risk Management visit beedie.sfu.ca/ccgrm/