OTTAWA/TRADITIONAL, UNCEDED TERRITORY OF THE ALGONQUIN ANISHNAABEG PEOPLE — Canada’s key financial regulator, the Office of the Superintendent of Financial Institutions (OSFI) announced the second phase of the Standardized Climate Scenario Exercise (SCSE) consultation.
Karine Peloffy, Ecojustice Sustainable Finance Project Lead, responded to the release of these guidelines, saying:
“It is good to see the federal regulator collaborating with the Autorité des marchés financiers (AMF) and staying on track with its timeline of climate scenario analysis requirements despite industry pushback. However, it is disappointing to see the approach essentially unchanged despite a growing number of expert publications pointing out the inadequacy of conventional macroeconomic models to ascertain the true extent of the financial risks posed by global climate breakdown.
“Indeed Nobel-prize winning economists Nicholas Stern and Joseph Stiglitz have been vocal critics of such models, saying that they show ‘systematic biases, with costs of climate action overestimated and benefits underestimated’.
“Rather than leave it to financial institutions to pick and choose when it comes to internal scenario analysis, we would have hoped to see explicit references to more recent and adequate models that take into account global tipping points such as catastrophe models or a diversity of modelling techniques like those employed in the European Union which is years ahead of Canada on this issue.”
“This situation underscores the need for the federal government to show leadership by passing laws – like the Climate-Aligned Finance Act (CAFA)– currently before the Senate, which require big banks, pension schemes and insurance companies to align their business with a livable climate.
“If CAFA was law, OSFI would be tasked to focus on the only scenario that matters which is a rigorously defined pathway ensuring more than a coin-toss chance of limiting global temperature increase to 1.5˚C above pre-industrial levels with no or low overshoot. Such critically important details are still lacking in the SCSE. OSFI and AMF can help align Canada’s financial system with a climate safe future by strengthening their approach during this second round of consultation.”
For more information see Re-Generation Submission to SCSE and Rethinking Climate Economics: A Summary of Recent Literature.
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Ecojustice uses the power of the law to defend nature, combat climate change, and fight for a healthy environment. Its strategic, public interest lawsuits and advocacy lead to precedent-setting court decisions and law and policy that deliver lasting solutions to Canada’s most urgent environmental problems. As Canada’s largest environmental law charity, Ecojustice operates offices in Vancouver, Calgary, Toronto, Ottawa, and Halifax.
