Let’s Focus on Solutions – Climate Value Creation for Business and Communities
Andrea Moffat, Addenda Capital and Chad Park, Co-operators
We have moved beyond the debate on the need for a business case to act on climate change, to the need to focus on the solutions and systemic policies, standards and guidelines that support these solutions. The science and risks are clear:
- Seven out of nine Planetary Boundaries have been breached, making our world a more unstable place for our communities and economy. Climate change indicates 423 ppm atmospheric carbon dioxide, an unprecedented level over the 350 ppm planetary boundary, and the trend indicates an acceleration of global warming with no sign of stabilization.i
- Insured damage by severe weather events was greater than $8 billion in 2024 for the first time in Canada.ii
- Canada needs to mobilize approximately $200 billion per year to transition our economy towards climate competitiveness.iii
- Early estimates of Canada’s greenhouse gas emissions for 2024 shows that they are unchanged from last year versus decreasing. Oil and gas emissions rose 1.9 per cent in 2024 accounting for 31 per cent of national emissions which usurped any reductions from other sectors.iv
The scale and breadth of climate impacts and the energy system changes needed to rewire our economy, makes having a credible climate transition plan a must for many companies. However, we are missing a climate transition plan framework which will allow Canadian companies to demonstrate how they have integrated climate risks and opportunities into their business strategies and planning. The Business Future Pathways initiative has been established to fill this gap and is developing guidance based on international best practicesv that will provide a pragmatic approach for Canadian companies. Leaders from both Addenda Capital and Co-operators are members of the Financial Advisory Committee that is providing input to this initiative. An extensive outreach process to a wide range of businesses and other stakeholders is being launched to ensure insights and ideas from across the market are included in the development of the Canadian Climate Transition Guidance.
There are two aspects of the development of successful climate transition plans that we want to comment on in particularly, as they are important for demonstrating the depth of the business commitment to climate transition and they support the credibility of these types of plans.
The first area is alignment between a company’s climate ambition and how a company engages with governments and regulators on climate and energy-related public policy. For a company to demonstrate credibility with their climate transition plan they need to disclose what they are doing to support public policies that will provide the incentive for investing in emission reduction technologies or other business process improvements. For example, Addenda and Co-operators submitted a letter to the Canadian Prime Minister expressing support for industrial carbon pricing as a key foundation for building economic competitiveness while transitioning our high carbon economy.vi As organizations with climate investing targets and who are committed to meeting the goal of net-zero greenhouse gas emissions by 2050 or sooner, it is imperative that public policies are implemented for decarbonizing the economy.
The second aspect of climate transition plans that we wanted to highlight, is investment in climate solutions. Understanding how a company is budgeting or investing in its own business to reduce its emissions, or how it is developing a business strategy that increases revenues from catalytic technologies or services that help decarbonize its or other companies’ products or services, or will be needed in a net-zero economy, demonstrates a clear commitment to climate transition. Climate solution efforts can also include technologies, products and services that support resilience to climate impacts. For financial services companies, this includes how climate-related considerations are incorporated in lending or investment activities. Co-operators recently increased its commitment to invest in climate solutions from a $2 billion baseline in 2024 to $3 billion by 2030.vii This ambition demonstrates Co-operators’ commitment to decarbonizing the economy, accelerate climate adaptation and navigate the impacts of climate risks. They will implement this effort through the adoption of an updated investment framework co-developed with Addenda Capital.
Climate transition plans are a mechanism for understanding where climate risks and opportunities are fully integrated into business plans, how climate commitments are being implemented and where there are areas that have room for improvement. This knowledge will support business results and provide the credibility that customers, employees and investors need to understand management’s approach to climate change over the short and long-term.
References:
i Planetary Boundaries, Planetary Health Check 2025
ii Insurance Bureau of Canada, 2024 shatters record for costliest year for severe weather-related losses in Canadian history at $8.5 billion
iii Institute for Sustainable Finance, A Capital Mobilization Plan Refresh
iv Canadian Climate Institute, 440 Megatonnes Initiative, Canada’s Emissions Flatlined in 2024, Early Estimate Shows
v IFRS Transition Plan Taskforce Disclosure Framework
vi Our support for a price on industrial carbon emissions
vii Co-operators