Hundreds of players in the financial sector are gathered for two days in Montreal to take part in the Sustainable Finance Summit. Safeguarding biodiversity, combating climate change and developing financial products that make the economy more sustainable are at the heart of discussions.
The world of finance is going through important changes: the protection of biodiversity and the fight against climate change must now be part of the equation when financial institutions, governments and investment funds allocate capital to companies.
This is one of the messages that the Minister of Finance, Éric Girard, launched to the hundreds of guests of the Sustainable Finance Summit in Montreal, during the opening of the event on Tuesday morning.
“In the past, we maximized the economy under the constraint of the environment, but now, in 2023, the environment has moved into the utility function”, indicated the Minister, adding that the environment must always be “at the heart of decisions”.
The workshops and discussions that followed the Minister’s speech focused on ways to develop financial products that will make the economy more sustainable.
Redirecting capital towards actions that will help protect biodiversity and fight against climate change “is not optional, it’s imperative,” said Megan Leslie, Canadian director of the World Wide Fund for Nature (WWF).
In front of hundreds of decision-makers and financial experts, the director of the WWF recalled that the gross domestic product (GDP) depends on the protection of the environment.
“Imagine a terrible forest fire destroying a community. This community will then have to invest in its reconstruction rather than, perhaps, buying the products of your customers. Imagine that another community experiences repeated flooding, this community will no longer be insurable. Or, imagine a community that has to recover from landslides, residents won’t be able to get to work for a while. So you see the negative impacts that climate change and biodiversity loss can have on entire sectors of the economy? “said Megan Leslie.
Four ingredients for sustainable finance
Another panelist, the President and CEO of Fondaction, proposed “four ingredients” for reforming the financial system and making it more sustainable.
According to Geneviève Morin, the first ingredient corresponds to the development of expertise, in order to understand new standards in particular, such as ESG (Environment, Society and Governance) criteria.
The second ingredient is the “catalyst”, which often comes from government authorities, explained Geneviève Morin. The carbon market, subsidies for low-emission projects or laws and regulations aimed at reducing greenhouse gas emissions are examples of catalysts.
“These are signals to say that it is in this direction that we must go and we need them because the natural human tendency is to stay in the state we are in, and if we want there to be change, there has to be this additional push. »
The third ingredient is scaling solutions.
“When you work on a small project, you have to ask yourself if you can develop it several times and allow it to grow,” explained the President of Fondaction.
“For example, generative agriculture, the circular economy, these are solutions which, at the moment, are often on a small scale, there are financiers who would like to get on board, but they don’t know how to do it, so we have to help the projects themselves to be able to grow, but also we have to find ways to put them together, to package. »
In this regard, she gave the example of large financial institutions which sometimes show little interest in “small projects” worth a million dollars, but when an investment fund like Fondaction brings together several of these “small projects these can become attractive to large funders.
The final ingredient for encouraging sustainable finance, according to the CEO of the Fondaction investment fund, is “collaboration” between the financial community, academics, businesses, government and civil society.
Highlighting the importance of collaboration, WWF Canadian Director Megan Leslie gave the example of the work her organization is doing with a Canadian beef producer.
The company in question wants to reduce its carbon footprint and has called on WWF to understand how it can achieve this.
The environmental organization has developed a geographical map that reveals where there is a lot of carbon stored in ecosystems. She therefore used this map to guide the company in its choice of location to produce its beef while minimizing the footprint of its activities.
A billion sustainable fund
On Tuesday morning, Innocap and Finance Montreal took advantage of the summit to announce their intention to launch a billion-dollar sustainable investment fund. The objective is to strengthen Montreal’s expertise in sustainable finance by entrusting capital to managers established in Montreal.
The Sustainable Finance Summit continues on Wednesday in the metropolis. In particular, former Bank of Canada Governor Mark Carney, who is now the United Nations Special Envoy for Climate Action Finance, is scheduled to meet with Guy Cormier, the President and CEO of the Movement. Gardens.