Both Canada and the European Union have unveiled plans to rebuild their post-pandemic recovery plans that put sustainability front and center. Will other governments follow suit?
EU's €750B recovery fund to funnel investments towards climate action
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In a speech today before European Parliament, European Commission President Ursula von der Leyen unveiled “Next Generation EU” — a seven-year, €1trn budget proposal and a €750bn recovery plan that rely heavily on sustainable and digital transitions as a path not only toward recovery from the devastating impacts of the COVID crisis, but also a resilient future for Europe.
“The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalisation will boost jobs and growth, the resilience of our societies and the health of our environment,” von der Leyen said. “This is Europe’s moment. Our willingness to act must live up to the challenges we are all facing. With Next Generation EU we are providing an ambitious answer.”
The spending will be guided by a sustainable finance taxonomy, to aim to channel private investments into technologies and solutions that contribute to at least one of six pre-defined environmental objectives:
Climate change mitigation
Climate change adaptation
Sustainable use and protection of water and marine resources
Pollution prevention control
Protection and restoration of biodiversity and ecosystems
The taxonomy sets performance thresholds for economic activities, including that they make a substantive contribution to one of the six environmental objectives, and “do no significant harm” (DNSH) — which could in theory prevent investments into coal and other highly polluting fossil-based power sources. Approved investments must also meet minimum safeguards (e.g., OECD Guidelines on Multinational Enterprises and the UN Guiding Principles on Business and Human Rights).
Read more here.
Canadian companies must disclose climate impacts to qualify for COVID-stimulus funds
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Meanwhile, earlier this month, Canadian Prime Minister Justin Trudeau announced that Canadian companies seeking COVID-19 relief funding will be required to disclose their climate impacts and commit to continued attention to environmental sustainability.
To help protect the millions of middle-class jobs tied to large and medium-sized businesses, the Government of Canada has instituted the Large Employer Emergency Financing Facility (LEEFF) to help Canadian businesses weather the current economic downturn, and avoid bankruptcies of otherwise viable firms where possible. One condition of the relief package is that recipient companies with annual revenues of $300 million or more commit to publishing annual, climate-related disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures — including how their future operations will support environmental sustainability and national climate goals.
As Canadian Finance Minister Bill Morneau told CBC News, “Among the conditions are making sure that there [are] no share buybacks or dividends or excessive executive pay, but also that companies have financial disclosures on their climate situation and that they’re part of our long-term sustainability goals.”
All of which sounds great – but, as E&E News points out, the program does allow for some of the most-polluting industries, such as airlines and oil companies, to apply for loans of $60-90 million, as long as they abide by the rules.
As in many countries, energy politics remain a big part of Canada's national debate, and the Trudeau administration has been criticized by NGOs for bowing to industry lobbyists, even as it takes a strong public stance on the need for climate action.
At a news conference in Ottawa on May 11, Trudeau said, "People will be asking about what their risk-mitigation strategies for pandemics are as they invest in companies going forward," Trudeau said. "But we also know that climate change represents a significant risk to companies' bottom line, as well."
Read more about Canada’s LEEFF here ...