Sustainable finance experts launch effort to bolster transition plans for Canadian companies

Several financial institutions and pension funds are backing a new initiative by some of Canada’s best-known sustainable-finance experts to bolster companies’ energy-transition plans as a way to win access to more global capital.

The idea behind the effort, called Business Future Pathways, is to give corporations guidance on international standards for developing business strategies that deal with climate risks and the shift to a low-carbon economy. The big investors will endorse the advice.

Organizers are scheduled to announce the project on Tuesday. They said U.S. President Donald Trump’s on-again, off-again tariffs have forced companies to focus on dealing with the resulting economic uncertainty, and that has pushed climate concerns down on corporate agendas.

Benchmarking studies have shown Canadian companies were already lagging their global peers – including many in the United States – in developing decarbonization plans and putting them into operation, said Barbara Zvan, chief executive officer of University Pension Plan Ontario and a driving force behind Business Future Pathways.

Ms. Zvan previously held a senior role at the Sustainable Finance Action Council, known as SFAC, which Ottawa created to develop plans to compete for tens of billions of dollars in global capital required to achieve the country’s emission-reduction targets. The new initiative is not affiliated with the government.

She said in an interview that the effort aims to move beyond the concept of regulatory compliance to turn climate strategy into a competitive advantage.

“This is about trying to help, similar to SFAC, get the financial community together to say what this could look like,” Ms. Zvan said. Technical experts will provide input and share it with finance professionals at companies across industries and show how standard practices can benefit both the corporations and their investors, she said.

Several institutions have signed up for Business Future Pathways’s advisory committee, including Addenda Capital, Mackenzie Investments, Vancouver City Savings Credit Union, Desjardins Group, University Pension Plan Ontario, among others.

The group is launching at a time when sustainable finance progress has slowed to a crawl. In April, many large investors expressed disappointment when Canadian Securities Administrators suspended its work aimed at making climate-related disclosure mandatory for public companies.

The CSA, which comprises the provincial and territorial securities commissions, cited the changing “global economic and geopolitical landscape” for the move.

“A lot of what we’re seeing right now, with everything that’s happening in the U.S., it’s creating a lot of uncertainty for Canadian business and investors,” said Jonathan Arnold, who will lead research for Business Future Pathways.

“At the same time, the climate risks and opportunities continue to forge ahead, and transition plans really provide a way to thread the needle on how businesses can respond in a way that manages this uncertainty.”

The group plans to issue a series of reports, with the first expected to be published this autumn, said Mr. Arnold, who is director of sustainable finance at Canadian Climate Institute. He also conducted research for SFAC, which wrapped up its work last year after designing a framework to serve as a guidebook for green and transitionary investments and calling for mandatory climate-related disclosure.

The initial Business Future Pathways report will make the case for why climate-ready business strategies are important, how future profitability could be dependent on them and other macroeconomic themes, he said.

“There’s lots of international guidance out there. I think a lot of it falls short in terms of specifics as it relates to some of the challenges that Canadian businesses face, and what we hope to do is ground this guidance in sectoral pathways,” Mr. Arnold said.

The Canadian Sustainability Standards Board has set out its first guidelines for climate-related reporting, based on the global sustainability and climate reporting baselines developed by the International Sustainability Standards Board.

The new group, meanwhile, will focus on strategies for dealing with plans for decarbonization, Ms. Zvan said.

“This initiative is not about creating any new guidelines, or any new standards or frameworks. It’s about showing how to use the existing standards and frameworks,” she said.