Leveraging Canada’s Investor Climate Action Plan for Sustainable Returns

SHARE has published a guide for investors to understand Canada's Climate Action Plans.
12 April 2024
Canada Climate Action Plans Montreal

The relationship between the climate crisis and investment strategies is increasingly becoming a focal point for investors, according to a recent report from SHARE Canada. SHARE, a non-profit organisation focused on mobilising investor leadership for a sustainable, inclusive, and productive economy, provides detailed insights into Canada’s Investor Climate Action Plans. For a thorough examination, read the full SHARE Corporate Climate Action Plan

Canada’s Investor Climate Action Plans

Following the Paris Agreement, climate considerations have become integral to investment decisions globally. In Canada, this trend is supported by regulatory bodies moving towards mandatory climate-related disclosure regulations, highlighting the growing recognition of climate risks and opportunities. Climate Action Plans (CAPs) are designed to help investors assess the resilience and sustainability of their investment portfolios in light of climate change.

CAPs, also referred to as climate transition plans, are strategic frameworks that outline how companies plan to adjust their business models, strategies, and actions to align with net-zero emission targets. These plans reflect a company’s commitment to emission reductions and climate risk mitigation. Effective CAPs are characterized by ambitious goals, including significant emission reductions by 2030.

Opportunities in a Low-Carbon Economy

The transition to a low-carbon economy offers various investment opportunities, as highlighted in the SHARE report. This includes sectors such as renewable energy and sustainable infrastructure, which are likely to benefit from changing consumer preferences, regulatory frameworks, and technological advancements.

Canada’s CAPs provide a systematic method for investors to evaluate climate-related risks and opportunities within their portfolios. According to the report, this can potentially enhance portfolio resilience and improve long-term returns, aligning with broader sustainability goals. The effective implementation of CAPs is noted as a critical factor in promoting climate-conscious investment practices.

Regulatory Changes and Disclosure Requirements

With changes to climate-related disclosure regulations anticipated in Canada, the regulatory environment is evolving. Investors may increasingly seek detailed disclosures on CAPs to better understand a company’s management of climate risks and opportunities.

CAPs serve as a crucial tool for investors to gauge a company’s sustainability and resilience. These plans can influence investment decisions, engagement strategies, and voting behaviours at annual general meetings. Integrating CAPs into investment approaches helps align investor portfolios with global sustainability objectives while managing climate-related risks.

Check out the full SHARE report here.

12 April 2024