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A theme has emerged with two thorny aspects of global finance: As goes tax policy, so goes climate.

This week, finance ministers from the Group of Seven rich nations agreed to key regulations for making sure multinational and tech companies pay at least minimum tax rates in the countries where they operate. The multilateral measures are aimed at preventing public coffers being light of revenue as a result of abuse.

The G7, including Canada, made the declaration at the meeting in London, but other countries – including China, India, Brazil and Russia – are expected to join the discussions to solve a difficult problem that crosses many borders.

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Canada to tax tech giants as planned despite G7 deal to tax multinationals, Freeland says

It may not be finalized quickly as the world concentrates on recovering from the ravages of the pandemic, but there’s much at stake. According to the Organization for Economic Co-operation and Development, developed nations could gain US$47-billion to US$81-billion more in tax revenue. That is, if the two pillars of the proposal – a 15-per-cent minimum tax rate and new ability for countries to tax profits earned within their borders – get adopted.

Climate change, too, is at the top of the G7 agenda, as commitments its members made under the Paris Agreement draw ever closer and the world struggles to prevent some of the worst environmental effects. The tax moves look to be a good guide to how countries can make concerted efforts to deal with an overarching problem – and there are few bigger and more complicated.

A big question is whether Canada, its economy heavily dependent on natural resource extraction and exports, is ready to join in developing much tougher international rules for documenting and slashing emissions. An even bigger one: Is Canada able to live by them?

The G7 agreed on several climate-related proposals, including moving to mandatory disclosures of emissions consistent with the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures, the gold-standard template for reporting physical climate risks and those stemming from the transition to cleaner energy.

This is a major development in the finance world – there is much heated debate about standardizing reporting for countries and also individual companies as well as investment and pensions funds.

The group also said it committed to making the “structural change” to their economies to achieve the Paris objective of net-zero emissions by 2050, all while remaining competitive and creating jobs. This includes considering climate change and biodiversity loss as factors in financial decisions.

All of this is so much easier said than done. There are already regional differences in how tough governments and regulators are in demanding better disclosure and assessment of progress and risks. The European Central Bank, for instance, is compelling banks to align their strategies with the Paris goals. The Bank of England is telling financial institutions to run climate scenarios as part of day-to-day decision-making.

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Prime Minister Justin Trudeau’s federal Liberals have announced several climate initiatives, including a “net-zero accelerator,” but they have been less prescriptive with industry. Regulators have also largely taken a light touch as they study future moves.

In April, 160 global banks, insurers and fund managers that control US$70-trillion in assets used the upcoming United Nations climate summit in Glasgow, Scotland, as a hook to announce efforts to speed up the transition to a net-zero economy. Led by Mark Carney, the Canadian former central banker and now United Nations Special Envoy on Climate Action and Finance, the companies pledged to “mobilize” trillions of dollars needed to make the changes that will help countries meet their goals. Conspicuous by their absence at the launch of what’s called the Glasgow Financial Alliance for Net Zero were Canada’s big banks.

The country’s biggest struggle in meeting its climate goals is also one of its biggest economic drivers – the oil sands. The industry accounts for 11 per cent of emissions, but it has been slow to develop absolute emission-reduction plans that could help Canada be a serious player on climate policy with its G7 partners.

On Wednesday, the industry’s biggest producers, Suncor Energy Inc, Cenovus Energy Inc., Imperial Oil Ltd., Canadian Natural Resources Ltd. and MEG Energy Corp., announced they are adopting net-zero plans. It’s a big step that could help the country shed its image as a laggard on climate policy – that is, if they credibly achieve their targets.

Policing taxes across borders is hard to co-ordinate, given varying domestic rules and the influence of major corporations on governments, but the G7 took an important step. Climate will be harder, and Canada’s credibility in multilateral efforts will be dependent on its own performance.

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

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