G7 Executive Talk Series Branded Story / CPA Canada
Building Trust through Climate Action
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rust forms the bedrock of our society and economy. It is essential for rational discourse and evidencebased decision-making in the public interest. With the proliferation of fake news, media distrust and increased demands for transparency, public and private sector institutions need to focus on building and maintaining trust with their stakeholders. During Canada’s 2018 G7 Presidency, Canada has an opportunity to build trust and lead on a number of themes through the lens of climate change. An inclusive and just transition to a resilient low-carbon economy requires investing in growth that works for everyone and preparing for jobs of the future. Combatting climate change can create new economic opportunities and jobs for Canadians if efforts are supported by thoughtful and well-informed policies that consider a broad range of stakeholders. However, trust across the G7 countries is in decline. According to the 2018 Edelman rust Barometer, all G7 nations fell into the category of “Distrusters” on the Trust Index 2018, with less than 50% of the general population trusting their country’s institutions. The Edelman Trust Barometer is a 28-market index that tracks the level of trust in institutions annually for the past 18 years. This year, the United States experienced a record-breaking drop in public trust. Falling by nine points to the bottom quartile of the 30 ❙ g20g7.com
index, it was the steepest decline in US since the survey’s inception. Society’s expectations of corporate leaders are evolving. Nearly 7 in 10 respondents say that building trust is the top priority for CEOs and nearly two-thirds say they want CEOs to take the lead on policy change instead of waiting for government. In order to encourage behavioural shifts in our society, climate change actions must focus on relevant facts and evidence. Canadian Perspective As a signatory to the Paris Agreement, Canada needs to work harder to achieve greenhouse gas emission reduction targets of 30% below 2005 levels by 2030. Further, there is an opportunity to build a nationwide strategy to adapt to the impacts of climate change. In March 2018, Canada’s auditors general issued a collaborative report on Perspectives on Climate Change Action in Canada – an unprecedented effort to work together to examine government responses to a critically important issue. According to the auditors general, “the impacts of a warming climate and extreme weather events are already being felt in Canada and are forecast to become more severe and more frequent… Beyond environmental and physical impacts, climate change is also expected to have significant
economic and social impacts.” Their findings noted more than half of governments did not have greenhouse gas emission reduction targets, and most governments had not fully assessed climate risk, nor developed adaptation plans. This is concerning for a country like Canada. The rate of warming in Canada is about twice the global rate – a 2 degree Celsius increase (the goal of the Paris Agreement) translates into a 3 or 4 degree Celsius increase for Canada. Canada is already experiencing roughly 2 degrees Celsius of average temperature rise and an increase in extreme weather events causing record-breaking economic losses according to the Insurance Bureau of Canada. The time for climate action is now and trust will be the foundation for effective collaboration. Public & Private Sector Collaboration Climate change continues to be one of the top global risks identified by the World Economic Forum in its 2018 Global Risks Report. Climate-related risks will amplify over time due to their linkage with other global risks such as resource scarcity, increasing energy demand and large-scale involuntary migration. With a world population forecasted to reach almost 10 billion people by 2050, we must collaborate and be innovative in our response to climate change. It is not the sole responsibility of government to address climate issues – it is a shared responsibility among government, business and consumers. According to Mission 2020, led by Christiana Figueres, former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), $1 trillion in annual investment in climate action is needed to meet the goals of the Paris Agreement and about 80% will come from the private sector. Transparency and the Role of Business Global business leaders and investors recognize climate change as a business issue. The impacts of climate change are ubiquitous, extending across markets and borders. Climate-related risk is systemic and its impacts can be direct and indirect. The importance of mitigating and adapting to climate change cannot be understated due to the economic value at stake. According to the US-based Sustainability Accounting Standards Board (SASB), 93% of US equities
