Detail of a high rise in Montreal. By Phil Deforges at

Sustainable Finance and ESG: From Policy Concerns to Transformative Tools Report on the Conference hosted by McGill’s Sustainable Growth Initiative’s (SGI) CIBC Office of Sustainable Finance and McGill’s Business Law Platform, McGill University, 24 Nov.

This blog post provides an in-depth summary of the inaugural Fall conference on ESG and Sustainable Finance at McGill University, November 2023.

The printable, fully referenced version can be accessed through SSRN:

  1. Introduction

On November 24, 2023, the SGI CIBC Office of Sustainable Finance hosted a Conference on Sustainable Finance, ESG and Canadian Businesses – Experiences and the Way forward. The Conference was hosted under the auspices of McGill’s Sustainable Growth Initiative (SGI) and the Business Law Platform (BLP) at the Faculty of Law at McGill. The SGI is an inter-departmental and interdisciplinary research, knowledge generation and outreach program designed to facilitate impactful collaboration between University members and industry partners, public institutions, NGOs and other civil society actors. The BLP brings together the Faculty of Law’s offerings in business law, including the Business Law “Meter” blog, the “Business & Society” Seminars and the McGill Research Papers in Business, Finance, Law & Society, published with the Social Science Research Network (SSRN).


The inaugural ESG/Sustainable Finance conference surveyed and critically interrogated existing and emerging strategies on coordinating public and private activities to progress towards ESG and sustainability goals. Over the course of three panel discussions, the well attended public event contributed to a cross-industry, cross-sector conversation with the premise and ground-rule: ‘No more business-as-usual.’ The Conference brought together a diverse array of experts in sustainable corporate governance, management and finance, responsible investing, and sustainability advocacy.


At the centre of the initial considerations which framed the discussions was the continued absence of a uniform definition of ESG and the contestation of whose interests are represented under its auspices.


  1. Defining ESG

As the conference convener, Professor Peer Zumbansen, highlighted in his introductory presentation, defining ESG by breaking the term down into its components ENVIRONMENTAL and SOCIAL and GOVERNANCE can only the very first step in an exercise of problematizing the current moment which continues to suffer from a breathtaking underperformance of both public and private actors to deliver on the aspirations that the three elements point to.


The evident failure to address the concerns of today’s youth and other vulnerable populations by putting in place measures that objectively and meaningfully reduce global warming remains one reason for the state of breathlessness we find ourselves in, said Zumbansen.


Paradoxically, however, the actual daily experience of breathlessness, noise and chatter is also caused by a flurry of activities, pronouncements, declarations, policies, codes of conduct, standards and ratings – some of which are being elaborated with good intent. As a veritable flurry of public and private norm production contributes to the thickening of the “alphabet soup” of competing, overlapping, complementing or conflicting ESG standards, the present situation can easily prove disheartening for seasoned policy makers, regulators and activists alike.


Zumbansen, who has been leading the Office of Sustainable Finance since late 2022, drew attention to a growing body of evidence to support that the ambiguous nature of endless climate change policy negotiations continues to feed into the already problematic state of public democratic attention and enthusiasm. What at times was a feeling of discontent which could fuel concrete action in our democracies seems to have given way to a sentiment of disillusionment, frustration and perhaps even cynicism.


As would become clearer still during the day, it is in great part due to the complicated landscape of climate change policy making across different public and private actors, and the involvement of today’s stunning variety of institutional actors, organizations, governments, supra-national norm creators as well as investors, unions, social and environmental movements and activist groups in climate change governance which makes the field unruly, unstable and vulnerable. Drawing on the late German sociologist Niklas Luhmann’s observation of a “society with neither peak nor centre”, Zumbansen pointed to the challenges for effective political intervention in this convoluted policy space: How can instruments be developed – and, by whom - which lead into transformational, political change? Change that is science-driven and acts on the notion of urgency and change that is democratically grounded?


The interpenetration and overlap of public and private forms of governance – with their omnipresent risks of inefficacy or ‘greenwashing’ – prompts a rethinking of democratic politics that goes beyond the confines of environmental law. Climate change law as much as the still more ambitious formula of a ‘law of the Anthropocene’ encapsulates a crisis of collective, inclusive and sustainable democratic governance. The acknowledgement of their sociology - the complexity of ‘law and governance,’ ‘hard and soft law,’ policy arenas, ESG ratings and sustainability standards as they are being promulgated by domestic, transnational and international actors at breathtaking speed – is only one dimension of what has to make up a robust democratic legal practice.An open-eyed engagement with the legal and normative pluralism of institutions and values at stake in this time of crisis is the foundation for a collective elaboration of instruments and practices of a sustainable democratic politics, Zumbansen argued with view to the significant role that unelected ‘leaders’ such as the Chairs of institutional investors play in the allocation of climate change-related resources.



  1. Missing Voices

Another dimension of the politics of crisis that the investigation into climate change has begun to render visible is the fragility of representation. Those who speak out in favor or ESG, carbon pricing or other climate change mitigation strategies – are they speaking for everyone? How can we assure, Zumbansen asked, that the policies under scrutiny today are based on input and through the inclusion of the most vulnerable constituencies impacted by climate change? Are climate change lawyers and policy makers in the sustainability universe heeding the lessons of longstanding postcolonial critique regarding the systematic exclusion and marginalization of those whose rights have been affected in disproportionate manner by economic ‘growth’ programs and their one-sided emphasis on extractivism and ROI (return on investment). How can present-day climate change mitigation be practiced in a way that incorporates and is actively shaped by those accounts of climate change we ought to hear in order to understand the true impact of long-coming, deeply-entrenched ecological transformation? Such practices would need to start by acknowledging that “climate change” is not a new or recent problem as the mainstream tends to ponder, but instead reaches back centuries. The climate change phenomena that today drive policy making and public debate are in fact deeply implicated in the evolution and progression of an exploitative, extractivist and exclusionary form of economic policy making that reaches back deep into the past. As many in the West are only recently beginning to discover and engage with the vocabularies of the Anthropocene, the period of time during which human activities have impacted the environment enough to constitute a distinct geological change, other societies around the world have long learned first-hand to develop a keen awareness of the state of the environment and its destruction. With that in mind, it was, Zumbansen noted, very regrettable that in particular representatives from Indigenous communities would be missing from the conversation at this inaugural conference due to scheduling conflicts. Their absence underscored the urgency of a robust institutional collaboration with indigenous peoples without whom any conversation about sustainability and responsibility would by default remain incomplete for now.


  1. From CSR to ESG: Which lessons have been learned?

Like similar events today on the highly mediatized sustainability circuit, the inaugural ESG-Sustainable Finance conference at McGill raised the question what kind of insights could realistically be gained from (yet another) semi-academic meeting? In order to address this challenge, the panels were designed to create a unique pluralism of represented stakeholders, ranging across legal, management, finance, labor and environmental policy and litigation sectors. All speakers came to the table with their own respective experiences and expertise in the previous battles around corporate social responsibility (CSR) and environmentalism and were thus ideally positioned to draw connections to the present-day excitement – and, frustration – over ESG. One obvious benefit of placing ESG in some historical context was the realization that neither the present climate crisis nor the seemingly overwhelming policy challenges associated with it have come ‘out of nowhere.’ Building on that realization, the next question had to be: Have we made any progress at all? And is the bulky formula of ESG the adequate and best possible tool to bring things forward?



In that regard, anyone speaking at such an event or otherwise implicated in the ESG corporate governance and finance industry must ask themselves whether it is the best they can do. That will eventually lead to the question what lies beyond the breathless and frantic production of yet more definitions, more standards, more certifications, and more ratings. The answer, likely, will be the search for a more public, democratic, inclusive and collective endeavor to embrace the question of climate change mitigation as one about how to live together – locally and globally – before it is too late.


In closing, Zumbansen drew an analogy between the day-long conference and a visit at the dentist. Regarding the latter, he invited all speakers to take on the role of the dentist taking on the drilling. For each panel the task should be to make a genuine effort to probe the bad teeth in their respective sphere of action. That would mean to reflect on whether everyone could honestly say that they were, in their particular individual roles, going beyond the franticness of the currently competing pronouncement of aspirational concepts, terms and promises and compare this franticness with the concrete goals we should be aiming at as part of your profession, organization or institution.





  1. Panel 1: Climate Activism at the Municipal Level, ESG Data, and B-Corp Certifications for Law Firms – How are private actors putting sustainability into action?


The first panel on "Climate Change Challenges for Public and Private Actors: How to put Sustainability from Theory into Action" provided valuable insights into the practical hurdles faced by the private and public sectors in addressing sustainability issues. The panelists were Ryan Hillier, founder & Partner at Novalez, Rosella Carè from the University of Waterloo, and Hope Moon, from Climate Reality Canada. The moderator was Marvin Shahin from Spiegel Sohmer.


  1. Ground-level challenges and localized approaches


Hope Moon, from Climate Reality Project Canada, articulated the imperative of enabling local activists to advocate for environmentally progressive policies within diverse municipal contexts. Moon highlighted the challenges faced by over 4,000 Canadian municipalities, each with unique capacities and limitations, particularly in the realm of budget allocation. Limited capacities affect municipal abilities to fund and execute crucial initiatives, such as green retrofitting, zoning and licensing reforms, affordable housing programs and green mobility projects.


Moon pointed out the gap in communication and influence between citizens and city council members. There is an often-overlooked discrepancy between ambitious climate programs, which demand public attention and involvement, and the challenges faced by citizens in accessing affordable housing, food, and services. This gap, she argued, hinders the public's ability to engage meaningfully in municipal decision-making.


Moreover, Moon delved into the complexities surrounding municipalities' understanding of climate science and its practical application in transformative projects. She highlighted the critical knowledge divide between the theoretical aspects of climate science and the practicalities of policy integration. There is a need to effectively translate scientific insights into actionable municipal strategies.


  1. Data and awareness as pillars of change


Following Moon's intervention, Rosella Carè, currently an Assistant Professor with a focus on sustainable finance at the University of Waterloo, delved into the challenges endemic to her research field. She highlighted two main challenges – the inadequacy of data and the lack of awareness in sustainable finance.


Firstly, Carè argued that the importance of data in finance was undeniable, as it formed the backbone of financial modeling. However, she pointed out that current ESG data often resembles "empty variables", failing to provide meaningful insights into corporations' operational activities. Inadequate data undermines the core purpose of ESG metrics, which is to provide a clear and accurate picture of a company's sustainability practices.


The root cause of this problem, as Carè highlighted, lies in the already mentioned "alphabet soup" of inconsistent metrics and methodologies prevalent in the industry. Specifically she pointed to the persisting lack of standardization, with different rating agencies and entities using varying criteria and scales to evaluate corporate sustainability. This inconsistency creates a scenario where the same company can be rated differently depending on the agency or the specific set of metrics used. Such variation leads to confusion and skepticism about the reliability and usefulness of ESG data.


Compounding this issue is the behavior of ESG rating agencies. Carè emphasized the widely discussed point that these agencies often provide conflicting and contradictory ratings, making it challenging for investors and stakeholders to make informed decisions. This inconsistency can stem from various factors, such as differing evaluation criteria, subjective judgment in the absence of clear-cut guidelines, or the varying weight given to different ESG aspects by different agencies. As a result, investments that are purportedly based on sustainable criteria may, in reality, be grounded in unreliable or skewed data.


This situation poses a significant challenge for sustainable finance. The reliability of ESG data is crucial for investors who want to support companies with sound environmental and social practices. However, when the data itself is questionable, it not only misleads investors but also undermines the broader objective of promoting sustainability in corporate practices.


Moreover, Carè observed a noticeable gap in the integration of sustainable finance within mainstream financial discourse. This is evident in the scarcity of sustainable finance topics in leading finance papers and journals. She echoed continuing concerns that top-tier academic journals rarely publish articles on climate finance. This disconnect is rooted in the reluctance of prominent academic institutions and schools, which significantly influence finance journals, to incorporate sustainable finance into their curricula and research. A key reason for this hesitancy is that sustainable finance is often perceived as being outside the traditional scope of financial study. Political dynamics further exacerbate this issue, as seen in the United States, where "anti-woke" regulations in many states hinder institutional investors from prioritizing or including sustainability criteria in their investment strategies. Specifically, these regulations often discourage investments in environmentally-focused initiatives by labeling them as socially or politically motivated rather than financially prudent, thus creating a challenging environment for ESG-focused investing. These regulations particularly affect corporations involved in the fossil fuel sector, pushing against activism for ESG divestment.


Carè critiqued the prevalent focus on superficial ESG metrics in sustainable finance. An overreliance on these scores overshadows more substantive, impactful actions. The challenge lies in both data problems, where ESG metrics may not accurately reflect a company's true sustainability, and awareness issues, where a deeper understanding of a company's actual impact is often neglected. Carè advocates for an approach that pushes for quantifiable impacts, which would offer a more accurate assessment of a company's sustainability efforts.


From Carè's analysis, it is clear that moving beyond the superficiality of ESG scores towards a focus on measurable impacts is vital for the evolution of sustainable finance – after COP28 more than ever. This shift requires a concerted effort from both the academic and corporate worlds to embrace more meaningful and impactful sustainable practices.


  1. Balancing profit with corporate purpose


Moving on from the financial to the legal perspective, Ryan Hillier offered a unique lens on the interplay between business operations and social impact. Hillier is the founder of Novalex - the first B Corp certified law firm in Quebec. The business model of Novalex is to provide one hour of probono work for every hour of legal services provided to paying clients. Novalex lawyers have thus provided free legal counsel to communities in Nunavik, advised non-profits on their governance, and advised social entrepreneurs on how to obtain funding at accelerators such as L’Esplanade and La Piscine, while also serving large corporate clients like John Deere or Canadian airport authorities.


Hillier examined the legal sector's limited awareness of climate issues, even in progressive firms, and highlighted prevalent greenwashing practices. Hillier’s analysis emphasized the gap in understanding and prioritization of climate concerns among socially forward lawyers, noting a stark absence of policies for impactful change in these firms. This ignorance and lack of prioritization mean that climate change is rarely discussed in law firms, and there is a notable absence of policies and procedures to make these firms influential and transformative in addressing environmental concerns. This neglect is more pronounced in larger, profit-driven law firms, where the misuse of "ESG" contributes to superficial environmental commitments. Hillier admitted that even when applying for the B-Corp certification, Novalex obtained high scores in community impact but low scores at the environmental level. Such certification schemes, although they are often used as marketing tools, can also serve as a point of reference for the firm when evaluating how it can improve its environmental performance. Ultimately, Hillier recognizes that while using certifications as a marketing tool are not always desirable: “You need to make more profit to make more impact.” The moderator Marvin Shahin also pointed out that certification schemes, while more aspirational or a public relations exercise at their inception, can grow to become industry standards with time. This was the case of the LEED green building certification.


Hillier characterized Novalex’s operational model as a complex balancing act. On one hand, Novalex addresses the pressing and immediate needs of access to justice for underserved communities, a mission grounded in addressing socio-economic inequalities and the historical insufficiencies in legal services for Indigenous populations. This focus demands an understanding of local issues, cultural sensitivities, and the provision of tailored legal solutions. On the other hand, law firms are increasingly expected to incorporate climate-change factors into their work. This involves not only recognizing worldwide environmental challenges but also cultivating expertise in environmental law and recognizing the uneven impact of climate change on vulnerable groups. Balancing these two priorities poses a unique challenge that pushes firms to innovate and adapt in ways that align their social justice mission with environmental advocacy.


  1. Concrete measures for action

The panelists also explored strategies to turn objectives into concrete action. With the shockingly low voter turnover for municipal elections (38% for Montreal in 2021), Moon stressed the need for individuals to gain a deeper understanding of local governance to get involved in participatory democracy at the municipal level and push for climate action. This involves educating citizens about how municipal governments operate, the processes of decision-making, and the significance of local bylaws and policies. For instance, understanding how municipalities manage resources, regulate land use, and implement environmental policies can empower citizens to advocate for and contribute to sustainability initiatives. Moon highlighted that this knowledge is not just about being informed but also about being equipped to participate meaningfully in the democratic process, influencing decisions that shape sustainable futures at the local level. Moreover, as municipalities decide which environmental initiatives to prioritize, Moon believes retrofitting cities’ building stocks should be at the forefront of government’s considerations, given that the carbon emissions associated with buildings approaches 30% of Canada’s total greenhouse gas emissions (GHG).


Carè advocated for educating younger generations and influencing policymakers to shape the trajectory of sustainable finance. Meanwhile, Hillier expressed interest for social impact bonds, which allow entrepreneurs to obtain funding from private lenders and the government for a social initiative. Repayment and return on investment for a social impact bond are contingent upon the achievement of desired social outcomes. Hillier also underscored the importance of a strategy of prioritizing social impact over profit by offering pro-bono legal services to support organizations committed to societal advancement. Actively promoting ethical investment practices that prioritize environmental and social governance criteria, along with fostering a corporate culture that values social responsibility, can lead to tangible improvements in achieving a more sustainable and equitable economic environment.


  1. Future trends in decarbonization and impact assessment


Looking ahead, the panelists articulated their aspirations for decarbonizing cities, linking these environmental goals to broader social issues. They emphasized that understanding climate change politics involves recognizing its interconnection with efforts to address and transform socio-economic inequality. The state and public finance have a role to play in implementing specific strategies, such as building retrofitting and the promotion of alternative energy sources. These measures, according to the panelists, are vital and must be actively pursued by policymakers.


The panelists also highlighted the necessity of integrating climate considerations into every governance decision, in both public and private sectors. This includes actions such as revising building codes to enhance energy efficiency and encouraging sustainable practices within business supply chains. Such initiatives represent key ways to integrate climate considerations into governance decisions.


Hillier also emphasized the importance of technology in making legal assistance more accessible. Technology can make it possible to offer legal services as a virtual employment benefit, ensuring readily available access to legal support through virtual platforms for employees.


In a rapidly evolving landscape of sustainable finance, the focus is shifting towards a more concrete and outcome-oriented approach through impact assessments. This move represents a significant change from the traditional reliance on ESG frameworks. Therefore, impact assessment emerges as a crucial tool that focuses on the evaluation of specific, measurable outcomes of a company's actions in terms of sustainability. Impact goes beyond merely stating good intentions or establishing policies; it involves a critical examination of the real-world effects of these policies on the environment and society. For example, a “holistic view” to ESG factors entails an all-encompassing assessment that includes everything from a company's carbon footprint reduction efforts to the social impact of its community initiatives. This could involve measuring the decrease in greenhouse gas emissions due to a company's shift to renewable energy sources, or assessing the improvements in local community well-being because of the company's education or health programs.


The three first panelists’ contributions set a foundational tone for the conference. Their discussions highlighted the urgency and complexity inherent in shifting business models to be more sustainable, accentuating the need for clear, quantifiable outcomes that show a company's genuine commitment to making a positive impact on both the environment and society.



  1. Panel 2: Making the Aviation Industry and Real Estate Portfolios of Banks More Sustainable – A move away from shareholderism and harmonization of regulatory frameworks is needed


The second panel invited actors across civil society who are implementing sustainable practices in their business ventures. They spoke about their experiences making financial markets, private businesses, and finance education more environmentally sustainable. The panelists were René Demers from National Bank, Delia Cristea from Power Sustainable, Marc Barbeau from Air Canada, and Amr Addas from the John Molson School of Business of Concordia University. The moderator was Professor Robert Yalden from Queens University Faculty of Law.


  1. How can we make airlines and banks more sustainable?


René Demers and Marc Barbeau explained how they encourage a green transition in their businesses. As Executive Vice President and Chief Legal Officer at Air Canada, Barbeau is frequently confronted with sustainability challenges in the airline industry. He explained that, for economic reasons, increasing energy efficiency in planes has been a preoccupation of the airline industry long before recent pressures for ESG. Through its 2021 Corporate Sustainability Report Air Canada sets a net zero by 2050 goal, but such an objective requires 2 key innovations: aircraft energy efficiency, and sustainable aviation fuel.


The company tried to increase aircraft energy efficiency with its new Airbus A220-300, which is 20% more energy efficient than the plane it replaced. The Vice President states that there is consistent demand for lighter, more energy-efficient planes, but warns that innovation takes time, especially in the airline industry where any advancement must work hard to break the law of gravity - a task that inherently requires lots of energy. Barbeau estimates that it takes almost 10 years to develop a new plane.


Sustainable aviation fuel (SAF) and bio-fuel innovations already exist. SAF is a liquid fuel currently used in commercial aviation that reduces CO2 emissions by up to 80%. The challenge is scaling SAF production. Currently, only 1% of SAF needed is being produced. To truly make an impact, SAF companies must ramp up production. Scaling up production is also expected to make SAF less expensive, once supply keeps up with demand.


René Demers, through his position as Senior Vice President in charge of real estate financing at the National Bank of Canada, has thought deeply about increasing sustainability in banks. An important step, he says, has been to rethink the environmental impact of their offices. 3% of National Bank’s greenhouse gas emissions are from their own office building. Buildings impact the environment through energy consumption, water consumption, GHG emissions, raw materials (for the initial construction) and waste management. The Bank parted with its old head office building for a stunning LEED gold building at National Bank Place 800 St Jacques. To him, not taking action can be more costly than investing in new processes. An old building may regularly require expensive repairs and an old building makes it more difficult to attract new talent. The new building construction project encouraged local construction partnerships. The new office layout improved employee wellness.


With regard to the goal of environmental sustainability, for René, the biggest challenge is probably indirect emissions, as 97% of National Bank’s greenhouse gas emissions arise through whom it finances. If National Bank funds 50% of a client’s loan for a building that is emitting gas, this means that its investment works against its sustainability goals. To reach the goals of the Paris Agreement, the bank is thus not only committed to decarbonizing its own offices - it is committed to decarbonizing its portfolio. The risks of not decarbonizing its real estate portfolio include revenue loss as vacancy rates increase because of tenants leaving old run-down buildings, cost increases (financing, insurance, energy, taxes), asset obsolescence, loss of competitive advantage, difficulty in attracting talent (newer buildings are preferred workplaces), difficulties in negotiating with government authorities (such as for rezoning) and penalties (such as government fines).


National Bank sends out surveys to clients about their ESG scores, and if clients do not have a LEED gold-certified building in the office sector, National Bank will be more reluctant to finance them. When clients meet sustainability requirements, they can be given a green loan with preferential conditions (better interest rates and better amortization period). These extra costs for the bank are recuperated through green bonds (which are financial instruments combining all green loans together). 800 million green loans were issued in 2023, and next year, National Bank hopes to issue 1.5 billion. As Demers put it, “We want to push people to do better and better, for the global objective to decarbonize our industry.”


  1. Innovating to address the root of the problem: Sustainable asset management and education where it matters


Delia Cristea is a Partner, General Counsel, and Secretary at Power Sustainable’s Montreal office. Power Sustainable is a climate-focused alternative asset manager founded in 2019 and a subsidiary of Power Corporation, a financial services conglomerate. Power Sustainable gathers funds from pension funds and family offices and invests it on their behalf in projects that aim to address the climate crisis. To create positive outcomes for the climate, Power Sustainable ensures it only invests in environmental-friendly ventures. It controls the projects itself, through full control over the supply chain. Power Sustainable invests in growth equity primarily in small companies in the decarbonization space, an area significantly lacking cash flow. Another challenge for those small companies with limited resources is the burden of obligations of environmental disclosures. Power Sustainable also them develop their sustainable reports.


Delia deplores the challenges faced by companies advancing sustainable financial solutions like Power Sustainable. Indeed, as much as green portfolios are increasingly popular, finding capital to nurture them is still a struggle. The main issue is that pension funds and banks have fiduciary duties towards shareholders to make returns on investment. Pension funds and banks often believe their fiduciary duties prevent them from making sustainable investments.


Do the fiduciary duties of pension funds to shareholders really prohibit socially responsible investment? Legal academic Benjamin J. Richardson argues that socially responsible investment can often sit comfortably with fiduciary duties to invest prudently. Nonetheless, investors are doubtful about the extent to which their fiduciary duties allow policies that can sacrifice short-term financial return for socially responsible investment.


Recent changes in Canadian corporate law demonstrate a trend towards considering the interests of stakeholders, not only shareholders. In two key Supreme Court of Canada decisions - Peoples v Wise and B.C.E. - the Court clarified that directors' fiduciary duties require them to act “in pursuit of the realization of the objects of the corporation,” as opposed to the interest of shareholders exclusively. The takeaway? While directors' fiduciary duties in Canada are duties owed to the corporation itself, this no longer just means shareholders. Despite advancements in legislation and doctrine, Power Sustainable highlights a remaining difficulty in finding investment products that bring returns while still meeting fiduciary duties to shareholders.


Professor Amr Addas is a Strategic Advisor for Sustainability and a lecturer at the John Molson School of Business, Concordia University. During his career, he became an expert in sustainable finance, through the creation of sustainable investment education certifications. Elaborating on the need for more sustainability education, he underlines that greenwashing is still a rampant problem. He nevertheless notes progress in the matter, as companies like Goldman Sachs are slowly getting sanctioned for failing to follow their own policies and procedures for ESG investments. Like Cristea, he emphasizes the capacity needs that the green financing sector faces: there is a need for people across enterprise functions to be trained in sustainability. For instance, accountants need to be able to understand ESG reporting requirements.


If education on green investments is crucial in academia, it lacks a suitable body of professors and researchers. Lacking ESG data is the underlying cause. To publish in the finance field, a data-driven approach is crucial. Though we do have TCFD, ISSB, and SASB - holes in the data remain. As a result, finance faculty are hesitant to dedicate a career to finance-related topics. Since climate change is an existential threat that demands bold action, Professor Addas emphasizes that we do not have time to wait for a consensus on the data. Secondly, climate change is an interdisciplinary threat that requires interdisciplinary thinking. Knowledge of economics, finances, law, politics, engineering, and biology are required to properly understand and address challenges. Finally, professor Addas warns us about the lack of Canadian legislation to guide us through the crisis. High-emitting industries are still a cornerstone of our economy yet a fundamental threat to our planet. Leadership is necessary to adopt a unified and coherent plan on how to innovate industries for sustainability.


  1. Pressure for change


Among private pressures, Barbeau and Demers underlined that they face pressure from stakeholders and capital markets. In the case of the National Bank, the conjunction of the housing crisis with the growing interest of the Canada Mortgage and Housing Corporation (CMHC) for ESG (see the CMHC’s study on Sustainable Mortgage Bonds) is helping move the needle in the right direction. Additionally, Canada’s housing crisis is an effective social pressure. Professor Addas mentioned the existence of Concordia’s Sustainable Action Plan and explained that pressures from the dean and students encourage sustainability initiatives that go beyond the plan. More generally, BlackRock's position in the financial sector and Canada’s commitment to the Paris Agreement are recent examples of pressure for sustainable change in the financial sector.


Air Canada saw the recent incorporation of the ISSB and IFRS standards into Canadian law while National Bank faces pressures from government regulations, changing political climates, and capital markets. Nevertheless, all panelists agreed that Europe is currently 10-15 years ahead of Canada in sustainability regulation. According to Professor Addas, an oil-focused economy in Canada leads people to lobby against sustainable regulation, whereas in Europe, it seems that the majority of the public has moved on from the political debate and accepted the need for change.


Nevertheless, in an evolving world, the private sector cannot completely avoid sustainable regulations. The lack of policy from Canadian authorities does not immunize Canadian companies from foreign legislative changes. For instance, those selling in euros must abide by European rules, and the Toronto Stock Exchange thus finds itself exposed. If you want to do business in California, the 5th largest economy in the world, you must acknowledge the financial risks posed by climate change and explain how they are managing them. Thus the cost of Canada’s inaction remains significant. A large part of Canada’s economy is not investable for European investors. If businesses do not meet the criteria to break into the European market, it leads to investors missing out on opportunities.


  1. Calls for future policy change


Leading the panel's opinion on the matter, Cristea deplores the lack of a regulatory framework defining sustainable investment. Without a harmonized ESG framework, people follow the European Union’s Framework - the SFDR. On his part, Demers calls for a reform of the National Building Code of Canada and provincial Codes (see QC’s Construction Code) to integrate green taxonomy rules. Overall, rules will be necessary to force institutional investors to assess the risks for the climate in every choice they make, even if it’s inaction. On that matter, the question of the mining industries and a proposal for a carbon tax were addressed and might be the way forward.


More generally, the second-panel intervention lets us wonder about the future of green finance. Multiple concrete solutions were put forward in an optimistic stance by panellists but many questions remain. On which industry should the government focus? Innovation seems to be the key, but innovation takes time and as panelists have stated, we’re running short of it. Will we be able to adapt the market to climate necessities before it’s too late? Moreover, as green financing is on the rise, some environmental destructions are still unaddressed. More than carbon emissions, shouldn’t we care for the destruction of ecosystems, species extinctions and acidification of oceans? The market is used to restricting itself after a crisis hits it, but this crisis will have detrimental consequences on our planet, is it time to switch the norm and make sure we anticipate crises rather than adapt to them?


  1. Pension Funds: Charting a path towards sustainable investing, with some help from government


Panel three brought together academics, activists, lawyers and representatives of pension funds. They spoke about the greatest challenges encountered in advocating for pension funds’ shift away from shareholder maximization. The panelists were Kevin Skerrett from OMERS, Professor Olaf Weber from the Schulich School of Business, Simon Archer from Goldblatt Partners, Sebastien Betermier from McGill’s Desautels Faculty of Management, and Krystel Papineau from the Coalition Sortons la Caisse du carbone. The moderator was Shivani Salunke, currently a DCL/PhD candidate at McGill’s Faculty of Law and a Research Fellow at the Business Law Platform and the SGI CIBC Office of Sustainable Finance. A consensus emerged out of the discussion for the need for more decisive governmental interventions, including through legal reform.


  1. Continuing Strengthening of standards: single materiality vs double materiality

Professor Olaf Weber noted that when he first became interested in the impacts of the financial industry on sustainable development, in the 1990s, it was still possible to use contaminated land as collateral for bank loans and later sell it, with no regard for whether it was safe or not. The financial industry first concerned itself with the environment through risk management—with the first goal of protecting its business interests rather than the planet. Banks incorporated sustainability indicators into credit risk management to predict losses from borrowers’ default given that sustainability risks increasingly influenced the risk of loans.


This is an example of the (single) materiality standard, which stands in contrast with the more recent double materiality standard. As Krystel Papineau from the coalition Sortons la Caisse du carbone explained, single materiality assesses the impact of social and environmental factors on the financial performance of the company. For instance, higher future carbon taxes could increase production costs and a greater number of weather-related catastrophes, such as floods and storms, may increase the cost of insurance and the likelihood of property damage or trade disruption. Double materiality, on the other hand, adds on to the standard of single materiality considerations of the impact of the company on the environment and social welfare.


  1. Can institutional investors effectively promote double materiality?

Investors, especially institutional investors like pension funds, exert a large influence over corporations to which they provide funding. They thus have the capacity to impose environmental standards and disclosure obligations on those corporations, thus helping shift the economy towards sustainability. The “Universal Investor” theory suggests that pension funds might even have a financial incentive to do so, because given the sheer size of their portfolio, they might suffer from supporting a company that externalizes its social and environmental costs when these externalities adversely affect other assets in its portfolio.


Professor Sebastien Betermier from the Desautels Faculty of Management at McGill has focused in his research on the investment practices of pension funds in Canada. He notes that while most pension funds have made a pledge to be net zero by 2050, there is no agreement on how to achieve this target most efficiently.


On one end of the spectrum, there are investment funds that have embraced the complete divestment of fossil fuel industries as advocated by climate activists. These funds hope to raise the cost of capital for those polluting firms and channel funds to greener ventures instead. This is the approach advocated for by the coalition Sortons la Caisse du Carbone which seeks to put pressure on the Caisse de dépôt et placement du Québec CDPQ to divest from fossil fuels, beyond oil production. Although the CDPQ has already liquidated all its assets in the oil sector in 2022, it remains invested in hydrocarbon transport infrastructures such as pipelines and the gas industry, which the Coalition deplores. The challenge with the total divestment approach is that it can only be successful if it is followed by a majority of funds. Otherwise, the outcome is simply a shift of capital around the market.


On the other end of the spectrum, certain funds attempt to force the decarbonization of companies from within. They hope to use their weight as a big capital provider to force the high carbon industries to go greener. This can be done, for instance, by choosing to hold many stocks in a select few polluting companies rather than spread out across many companies, to exercise greater influence and control in the management of those companies. Weber disagrees that it is possible to engage with the fossil fuel industry and change it from within. Instead, we should be thinking about how to reorient workers of this industry, such as the tar sands workers in Alberta.


The challenge, for Betermier, is to coordinate the actions of those different funds and to encourage them to have a longer-term focus. In a competitive market, institutional investors have difficulties coordinating their activities towards a common altruistic purpose, such as fighting climate change. Government intervention may still be necessary to outweigh the countervailing market pressures to act self-interestedly and for the short-term.


Moreover, Kevin Skerrett from OMERS expressed concerns about the divergence between official climate plans and statements and real actions undertaken to meet them. In September, the Ontario Municipal Employees Retirement System (OMERS) launched its new climate action plan with the target of achieving net zero carbon emissions in its portfolio and operations by 2050, but Skerrett is skeptical about the real impact of the plan.


Funds increasingly advertise their socially responsible behaviour in a mere public relations exercise which leads to risks of “greenwashing.” Greenwashing can be broadly defined as misrepresentation, misstatement and false or misleading practices in relation to environmental, social and governance (ESG) credentials of corporations and other market actors.


Many financial institutions appear to embrace socially-responsible investing (SRI) only superficially or sporadically. While they may sign SRI voluntary codes of conduct or publish investment policies (or plans) that take into account social and environmental concerns, they are not yet making serious and fundamental changes to the composition of their investment portfolios or their day-to-day investing practices. Papineau points out, for instance, that the CDPQ in 2022 voted 67% against environmental resolutions, despite being part of the global Climate Action 100+ initiative, a group of institutional investors committed to putting pressure on the world's most polluting companies to significantly reduce their greenhouse gas emissions. This is why citizen groups like the coalition Sortons la Caisse du carbone continue to push funds to be more ambitious in their climate goals. The Coalition would like to see the CDPQ calculate its emissions not in terms of investment (per $ invested), but in absolute terms (total emissions), and account for direct and indirect emissions (Scope 3 emissions). Skerett ruefully remarks that the composition of the panel is not reflective of the pension fund sector which is laggard or even adversarial.



  1. Is double materiality limited by shareholder primacy? The case of the failed Canadian pension plan reforms

Is sustainability only a weak balancing factor to the primary role of companies to maximize returns for their shareholders? For Betermier, shareholder value maximisation is not an issue per se. The question, rather, is whether shareholder value maximisation is measured on the short-term or on the long-term. Most ESG investments only produce returns in the long-run and the pressure of quarterly reports keeps investors focused on the short-run. In this context, government’s use of fiscal tools can help skew the market in favour of long-term ESG investments.


Canadian corporate law does not neatly follow the American model of shareholder primacy. The Canadian Business Corporations Act (CBCA) requires management to act in the “best interests of the corporation” (s. 122(1)(a)) which requires considering the interests of various stakeholders, including the environment and the long-term interests of the corporation.

The Act, however, does not provide further guidance on how management are to consider stakeholder interests, and courts have been reluctant to find any binding obligation. Akintunde & Janda, in their report on corporate purpose for the David Suzuki Foundation, have proposed that the CBCA be reformed to require corporations to state a social purpose, and that the fiduciary duty of directors and officers be extended to pursuing this purpose.


Pension funds have a similar fiduciary duty towards pensioners as investors, but not, as Professor Gupta from the McGill Law Faculty points out, towards pensioners as humans. It is in this perspective that the Coalition Sortons la Caisse du carbone calls for a modernization of the CDPQ Act to include social and environmental objectives in the CDPQ's mandate beyond profitability and Quebec's economic development.


An alternative approach to having the interests of stakeholders taken into account would be to have other stakeholders (e.g.: employees, members of the community) represented on the board of directors, which would allow them to better protect their interests. This was the approach of the labour movement for reform of pension funds. Contributors, realizing that pension funds were being deployed in ways that were harmful to their own interests, sought to regain control over their pension plans and investment plans. The result was the Joint Governance of Public Sector Pension Plans Act, which transitioned the Local Authorities Pension Plan (LAPP), the Public Service Pension Plan (PSPP) and the Special Forces Pension Plan (SFPP) to a joint governance structure. Joint governance gives employee and employer stakeholders equal say in the design and management of their pension plans (benefits, rules, eligibility and contributions). Changes to future benefit plans will be determined by sponsor boards, not government, and will be subject to discussion and agreement between employer and employee sponsors. Skerett describes this joint governance ambition largely as a failure—workers still have virtually no control over how their funds are invested.


On the other hand, downloading too much investment responsibility on workers is not a solution either. The growing shift from the traditional defined benefit (DB) pension plans to the defined contribution (DC) has meant that individuals are taking on all the investment risk where the employer used to and have to make investment decisions and track their investments where an investment professional used to. The result is diminished retirement savings security.



  1. Where do we go from here? The need for more public sector involvement

Maybe we shouldn’t rely on the goodwill of private sector funds to propel us into the green transition. The panelists were unanimous in their desire to see Canadian governments at all levels take the lead.


Betermier lauds the Inflation Reduction Act (IRA) signed into law by the US Congress in August 2022 providing $369 billion in climate and energy spending. The IRA proposes clean energy production and investment tax credits, in addition to consumer rebates for home electrification and EVs and climate justice grants to help disadvantaged communities mitigate the effects of urban heat islands.


In response to the US IRA, the Canadian government set up the Canada Growth Fund (CGF), a $15-billion federal program created in 2022 with the intention of supporting low-carbon finance initiatives.


The first recipient of the CGF announced in October 2023 is a Calgary-based geothermal company, Eavor Technologies Inc. Eavor received $90 million from the federal government to help it scale its geothermal technologies at the commercial level… in Germany. Eavor has begun drilling for its new geothermal plant near the town of Geretsried, Germany. Eavor’s closed-loop geothermal system extracts heat by drilling deep into the earth’s crust, which can then be used as a clean source of heating, cooling and electricity. Eavor CEO and co-founder John Redfern said the company has been exploring starting geothermal projects in Alberta and other areas of Canada, but “that’s just not one of the ones going right now.” Weber expressed his disbelief that green technology developed in Canada with public funding is being first implemented elsewhere, often in Europe.


He cites another example: the Ontario-based hydrogen generation and fuel cell products developer Hydrogenics Corporation secured in 2015 a €50 million contract with French train maker Alstom to develop and commercialize hydrogen-powered commuter trains in Europe. Two years ago, Alstom rolled out the first result of that collaboration, the zero-emission Coradia iLint commuter train, the world’s first hydrogen-powered train. Meanwhile, Professor Weber still has to ride diesel-powered train from Toronto to Montreal to come speak to us at this panel. Although recent collaborations have been announced this year between Alstom and the Ontario and Quebec governments for hydrogen-powered trains to run in Canada by 2025, they come 10 years after the technology has been developed in Europe.


For Weber, these examples highlight the need for Canadian governments, at the federal, provincial and municipal levels, to take measures to create a market in Canada for these green energy projects. While it is important for governments to create incentives for the business and entrepreneurial world to develop green technologies, governments should also commit to purchasing the final product of those grants and implementing the new technology in infrastructure projects across the country. Otherwise, we risk continuing to finance start-ups with Canadian taxpayer money that will leave the country and implement their ideas elsewhere. Additionally, Weber believes that the financing for those green initiatives should not come solely from the government, and that more public-private financing is needed. The risk is that the government financing is withdrawn after a change in administration (see the Trump mandate). Having private actors participate in the funding might exert pressure on governments to stay invested.


Archer similarly proposes that the Canadian government take the lead by setting up a pan-Canadian sustainable fund that would set a precedent for the private sector. He deplores the trend of deregulation and privatization and calls for political leaders to return to the same ambitious mindset that led to building the energy system through public ownership (see Hydro Quebec in the 1960s). Archer advocates that the government should bear the initial cost and risk of launching a sustainable fund so that others following suit do not have to. This also seems to be what Weber is suggesting when advocating for governments to take the lead in creating a market for sustainable technologies. Both seem to appeal to advanced theories of economic growth based on increasing marginal returns. If government bears the initial market-development costs, these theories indicate that each new increment of investment by will be more productive than the previous one. The appeal of greater returns for “followers” than for “pioneers” encourages more private sector actors to get involved in the government’s wake.


The case of Tesla to which Weber referred to is a prime illustration of these theories of increasing marginal returns. When Tesla started out in 2003, there were no electric charging stations, no promotion and marketing for electric vehicles (EVs), no subsidies or tax incentives from governments. Now, twenty years later, the infrastructure for EVs is well established, and almost every other car brand is entering the market with their own EV models. Tesla spurred a shift in economy and in consumer behaviour, out of pure profit-seeking motives. If the government takes on Tesla’s role in other areas of sustainable development, but motivated by providing a green and just transition for its constituents rather than profit, its impact can arguably be even greater.


Archer adds that Canadian governments at all levels could also chose to pursue litigation against Carbon Majors using a strategy similar to tobacco litigations of the 2000s. The BC Tobacco Damages and Health Care Costs Recovery Act passed in 2000 authorized actions by the government of British Columbia against manufacturers of tobacco products for the recovery of health care expenditures incurred by the government in treating individuals exposed to those products. Similar legislation was passed in other provinces, including Quebec. Archer mentioned that the state of California is currently pursuing such a climate lawsuit against oil giants Exxon Mobil, Shell, BP, ConocoPhillips, and Chevron, as well as the American oil industry’s biggest lobby, the American Petroleum Institute. In its suit, filed in September 2023, California claims that the companies misled the public for decades about climate change and the dangers of fossil fuels by investing billions to spread disinformation. Executives in those companies were aware of the link between fossil fuel consumption and rising global temperature since the 1960s, as evidenced by industry-funded reports on climate change. The complaint alleges that "Their deception caused a delayed societal response to global warming." It demands the companies help fund recovery efforts related to California's extreme weather events, from rising sea levels to drought and wildfires. It is only a matter of time before such litigation makes its way to Canada.


All panelists therefore argued for an understanding of climate change that cannot be separated from politics. They wish to see a boost in the role of the state and public finance in supporting long-term ESG investing, promoting the development of green energies, creating a domestic market for green technologies, and holding Carbon Majors accountable through strategic litigation.



  1. Future Outlook


In conclusion, the inaugural Fall Conference on Sustainable Finance, ESG, and Canadian Businesses held by the SGI CIBC Office of Sustainable Finance and jointly hosted by McGill's Sustainable Growth Initiative and McGill’s Business Law Platform provided a robust platform for in-depth discussions on the challenges and opportunities in steering businesses and financial actors towards sustainability.


In panel 1, Moon emphasized the imperative of local activism and bridging the communication gap between citizens and municipal decision-makers. Carè brought attention to the inadequacy of ESG data, urging for standardization and a shift towards measurable impacts in sustainable finance. Hillier exposed the limited awareness of climate issues in law firms and the balancing act required for businesses to align profit with corporate purpose.


Panel 2 delved into specific industries, focusing on the aviation sector and real estate portfolios of banks. Barbeau and Demers underscored the challenges in making these sectors more sustainable, ranging from energy-efficient planes to decarbonizing office buildings. Cristea and Addas accentuated the role of innovation, education, and the pressures for change, both from stakeholders and regulatory environments.


Panel 3, centered on pension funds and sustainable investing, expanded the discourse to the financial industry's evolving approach. It navigated through the historical context of financial industry concerns from single materiality to double materiality. Panelists Skerett, Weber, Archer, Betermier and Papineau highlighted the critical role of pension funds in influencing corporate behavior, posing questions about divestment strategies versus engaging with high-carbon industries to drive change from within.


Across all three panels, a common call for decisive governmental interventions, regulatory harmonization, and a re-evaluation of fiduciary duties emerged as imperative for achieving sustainability goals. The interconnectedness of climate change and politics underscores the need for a broader societal shift. The importance of the role of institutional investors, asset managers, academia and activists in steering corporations towards sustainable practices was recognized, yet challenges in achieving net-zero targets and concerns about greenwashing persist that require a little extra push from government. A collaborative approach between the public and private sectors is needed.


As the participants at this exceptionally well attended conference have returned to their home institutions, and as this written report comes to a close, the challenge and responsibility remain collective: to translate these insights into actionable strategies, fostering a sustainable future that transcends business-as-usual.


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