Green talk is in the air in Canada these days, but investors are waiting for the public policy dust to settle and risk-reward metrics to improve before committing big money to what are still largely considered boom-or-bust companies.
Ontario’s government released a climate change action plan on Wednesday that it hopes will help cut pollution and encourage green industry, partly funded by a cap-and-trade scheme that puts a price on greenhouse gas emissions.
And Toronto is this week hosting conferences on responsible investing, sustainable business, and innovation, with the latter including an address from Prime Minister Justin Trudeau.
Trudeau has promised Canada would do more to curb its emissions, and must work with the country’s provinces to execute a plan that will make energy extraction a more expensive undertaking.
While the money he has committed to help fund the transition to a low-carbon economy are expected to turn into projects later this summer, money managers aren’t investing yet.
“This is an industry that is still in its infancy,” said Philip Petursson, chief investment strategist at Manulife Investments.
Those working in clean technology stress the opportunities available and the urgency to adopt them.
“Canada is perfectly positioned… with great understanding of resources and energy,” said Annette Verschuren, a former head of Home Depot Canada who runs energy storage company NRStor Inc.
But the inevitable and massive industrial pivot required for world leaders to hit the targets agreed to in last year’s Paris climate talks will take time.
“I have no doubt that in five years carbon pricing will be prevalent in the Western world,” said Mike Pedersen, who heads U.S. banking operations at Toronto-Dominion Bank.
Pedersen said TD has lent billions of dollars on green projects.
Globally, companies have combined revenues of $2.9 trillion from selling green goods and products, according to London Stock Exchange Group-owned, FTSE Russell.
The company this week launched a data model that measures the money being made adapting to, mitigating or remediating the impact of climate change, resource depletion or environmental erosion.
“What has been missing is a way to identify the growth, the pace, the scale and number of companies that are invested in green products and services to help enable this shift to a low carbon economy,” said Tony Campos, who heads the company’s environmental, social and governance operations for the Americas.
Such detailed classification of green exposure should help investors improve their risk models and therefore improve their decision-making when considering green investments, Campos said.
Source: REUTERS
