Thirty Canadian and international institutional investors and pension funds representing approximately CAD $1.2 trillion of assets under management have issued a joint Declaration of Institutional Investors on Climate-Related Financial Risks. The declaration calls on publicly-traded companies in Canada to commit to enhanced disclosure on their exposure to climate risks and the measures they are taking to manage them.
Although the declaration is focused mainly on supporting low-emission economic development, water-related risks would also likely come to light as a result of the requested disclosure, given the interplay between climate change and water. For example, climate change in a water-stressed area may increase pressure on water resources and thus jeopardize a company’s continued access to water. Or, as surface waters warm and extreme weather leads to increased runoff and water pollution, a company may need to install expensive on-site pretreatment technology so that the water is of suitable quality for production processes. In this respect, water-related impacts are just one (albeit a large) subset of issues that create water risk for a company.
The signatories of the declaration intend to work with publicly traded companies in Canada to help them mitigate their climate change risks. By signing the declaration, they are advocating for other economic and financial institutions to join forces in order to stimulate sustainable world economic growth, while reducing their environmental impact.
“This declaration, which was led by Finance Montréal’s Responsible Investment workgroup, reflects the initiative shown by financial institutions. With more information at their disposal, investors will be able to better assess all the risks faced by their investment portfolios and design investment strategies that are adapted to the realities of climate change,” said Louis Lévesque, CEO, Finance Montréal. “This is a positive development for the financial industry in Quebec and Canada, and keeps us aligned with global trends.”
“I am proud to see the financial community rallying around this key issue. As institutional investors, we all have a role to play to promote increased transparency and better climate change disclosure practices from the companies we invest in,” said André Bourbonnais, President and CEO, PSP Investments, and Responsible Investment Lead, Finance Montréal.
The declaration remains open to new signatories who wish to endorse it. The full text of the declaration, as well as a complete list of signatories, is available here.