As Canada and other countries around the world strive to reach net-zero emissions by 2050, Scotiabank is committing $1.25 million in funding to support the Institute for Sustainable Finance (ISF), a multi-stakeholder collaboration hub at the Smith School of Business at Queen’s University. The ISF’s goal is to align mainstream financial markets with the country’s transition to a low-carbon economy, and help increase Canada’s sustainable finance capacity.
The ISF, which officially launched in November 2019, is the first collaborative hub in Canada that brings together academia and the private sector through four pillars – research, education, collaboration and outreach – with the purpose of innovating for Canada’s future in sustainable finance.
Sustainable finance – which looks to integrate environmental and social factors into business decisions and financial processes such as through adjustments to lending and investing activities– will play a key role in funding the transition to a low carbon economy. Such changes need to take place for Canada to reach Paris Agreement targets, said ISF Executive Director Sean Cleary.
“What gets financed, gets built,” said Cleary, who is also Founding Director of the Master of Finance program at the Smith School of Business.
Financial institutions, as well as public financing, dictate where capital flows, and in turn, what projects are developed to drive needed change, he added.
“Finance is not the entire solution by any means, but it's an important part of the solution to environmental and social issues.”
Scotiabank’s five-year partnership with the ISF will be an important element of the bank’s Climate Change Centre of Excellence, which aims to mobilize collaboration, dialogue and information sharing to support global efforts to address climate change, says Sandra Odendahl, Vice President of Social Impact & Sustainability.
“We can only move towards a sustainable future and transition by working with others – we can’t do it alone. We are committed to helping advance research and collaboration on climate change and sustainable finance, and the ISF is a great platform to bring like minds together. We see lots of opportunity for growth, and we want to help put Canada on the world stage.”
One way the ISF intends to put Canada on the map is by helping to tackle the Recommendations of the Expert Panel on Sustainable Finance, released by the Canadian government last year. Tiff Macklem, now Governor of the Bank of Canada, sat on Scotiabank’s Board of Directors while chairing the federally appointed Expert Panel. The Expert Panel’s 15 recommendations were intended to spur the actions needed to bring sustainable finance into the mainstream, so that climate change opportunity and risk management eventually become business-as-usual in financial services.
The Institute is helping bring these recomemndations to life. One example is the recently released research report, the Capital Mobilization Plan for a Canadian Low Carbon Economy, which estimated that Canada requires an investment of $128 billion over the next 10 years to achieve its 2030 emission reduction targets of 30% below 2005 levels.
The ISF’s capital mobilization report broke down the proportion of the investment needed by sector, ranging from 41% from the transportationn sector to 0.4% by the land use and forestry industry.
“The next thing is to do a deep dive into some of the key sectors in terms of the required investments, and work with people who are experts in those sectors,” Cleary said.
As part of its mandate, the ISF established the Canadian Sustainable Finance Network (CFSN), an independent formal research and educational network for academics, industry and government. This network now has 65 members from more than 20 universities across Canada, and hosts a monthly, publicly available webinar series on sustainable finance-related topics.
Cleary said the institute is very excited about, and appreciative of, the funding from Scotiabank and other corporate partners.
“We have a broad mandate. We've got a lot of research ideas that we would like to capitalize on, as well as educational pursuits and collaborative opportunities.”