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Climate activists protest outside of the first French leaders' debate on TVA, during the federal election campaign in Montreal on Sept. 2.Nathan Denette/The Canadian Press

There’s plenty of discussion in this election campaign about climate change, but little talk among the party leaders about the financial levers needed to put a major dent in emissions.

Despite this fall’s United Nations climate meeting in Glasgow – one in which high finance has a starring role – the leaders have underplayed its importance and some of the platforms have scant detail. Depending on the outcome of the election, Canada could be unprepared to respond to aggressive action among allies.

A large majority of Canadians want ambitious moves to deal with climate change, and that’s no surprise after a summer in which extreme heat, storms and wildfires pointed to a harsh potential future if greenhouse gas emissions aren’t slashed.

Former B.C. Green leader endorses Liberal climate plan, slams Green infighting

It is heartening that all the major federal parties include climate proposals in their platforms. The focus is on such things as expanding electric-vehicle sales, limiting emissions from the fossil-fuel industry, improving home energy efficiency and levying carbon taxes. The majority of the electorate can relate to these things.

The role of finance in efforts to curb emissions is more esoteric. Yet it is crucial as countries prepare to meet in November to address their Paris commitments from 2015 to cut greenhouse gas emissions.

The investment decisions of major banks, insurance companies and asset managers ultimately determine if enough money is directed to the transition to renewable energy, carbon capture and other technology needed to reach the goal of net-zero emissions by 2050. That will be a key focus of the conference.

Europe has been setting the pace, establishing reforms that oblige banks to ensure that climate implications are factored into investment decisions. Earlier this year, finance ministers and central bankers of the Group of Seven rich countries agreed to move toward making disclosure of climate-related business risks mandatory.

Canada is a member of that club, but has so far taken a light-handed approach to the financial sector under the Justin Trudeau government. On the topic of reporting and disclosure, the Liberal election platform mirrors the April budget. It includes requiring financial reporting from government agencies and Crown corporations that is in line with a framework established by the international Task Force on Climate-Related Financial Disclosures (TCFD), and trying to get the provinces to do the same.

The Liberals also say they plan to recruit experts to help develop a capital allocation strategy to determine public investments needed to get to net zero.

Having been in power for the past six years, the Liberals have a head start with these items.

The platform of Erin O’Toole’s Conservatives does not specifically address items such as climate risk disclosure and its role in financial decision-making. It is more trade-focused, aiming to align carbon pricing with the United States and to introduce carbon border tariffs for imports. The Conservatives also pledge to achieve leadership in environmental, social and governance (ESG) standards to meet the expectations of global capital markets.

The Green Party’s platform does not delve deeply into the topic. It says it would “mobilize Canada’s fair share” of international funds for helping vulnerable populations mitigate and adapt to climate change. That would amount to a contribution of $1.84-billion a year to 2025, and the Greens would seek to lead global talks on future targets.

The NDP has more detail on the financial implications of climate change than the other challengers. The left-leaning party would establish multiyear sectoral carbon budgets, and review financial legislation governing the Bank of Canada, Export Development Canada and the Canada Pension Plan Investment Board to ensure they are aligned to net-zero targets. It would also mandate transparency in carbon risk among publicly traded companies.

To date, despite occasional rumblings, the federal government has not forced the private sector to adopt the TCFD framework, the global gold standard for assessing climate risks and setting up processes to deal with them.

There’s no indication yet when global investors expect the framework to be part and parcel of corporate disclosure, but more companies clearly predict it at some point. New stats from the Montreal-based ESG consultancy Millani show 42 per cent of the 230 companies on the S&P/TSX composite index aligned their climate disclosure with the TCFD framework in 2020, up from 30 per cent the year before.

So there is progress without government forcing it. The question is whether the remaining uptake will be quick enough to keep up with other jurisdictions. If the government has to get tough as part of an international effort, it would be comforting to know the party in power is up to speed on the topic.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. Email him at jeffjones@globeandmail.com.

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