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As chairman of the Financial Stability Board for seven years until 2018, Mr. Carney, seen here, stepped up efforts to get companies to include detailed climate change-related risks in their financial reporting.

Mike Theiler/Reuters

For most of his stint as governor of the Bank of England, Mark Carney has moonlighted as a climate change crusader. So, it was no surprise to learn that he has signed on to become the United Nations special envoy on climate action once his current gig is up in January.

The exact timing of Mr. Carney’s departure from the BOE remains up in the air, given the uncertainty surrounding Britain’s exit (or non-exit) from the European Union. Whoever wins next week’s British election could ask Mr. Carney to stay on a bit longer, but it’s unlikely that would deter the former Bank of Canada governor from diving into his new job, anyway.

The UN post – which is part time and for which Mr. Carney will be paid the princely sum of US$1 – is one that is closer to his heart. As chairman of the Financial Stability Board for seven years until 2018, Mr. Carney stepped up efforts to get companies to include detailed climate change-related risks in their financial reporting. The FSB’s 2017 Task Force on Climate-Related Financial Disclosure (TCFD) ushered in a new era that promises to transform business and investing.

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“The most important thing is to move capital from where it is today to where it needs to be tomorrow,” Mr. Carney said in July. “Companies that don’t adapt – including companies in the financial system – will go bankrupt without question.”

To many in Canada’s oil and gas industry, those were fighting words. Mr. Carney, who has an intimate understanding of this country’s economy, knows how important that industry is to the standard of living of all Canadians. If he’s right, what do his comments mean for Canada?

Canadian Securities Administrators, the umbrella body for provincial securities commissions, was heavily influenced by the TCFD in updating its own guidelines this year for reporting of climate-related risks. The latter range from reputational risks that stem from how a company is viewed “as contributing to (or hindering) a transition to a low-carbon economy” to market risks that arise from “shifts in supply and demand of certain commodities, products and services” as consumers and investors increasingly make the environment a top consideration.

Perhaps the biggest risk of all, particularly for Canada’s energy sector, is the regulatory risk associated with government policies aimed at reducing emissions in line with commitments made under the Paris Agreement. Carbon pricing is the most obvious of these regulations, but it’s the one that is also perhaps the easiest to quantify.

Matters get much trickier when it comes to the Liberal vow to achieve net-zero emissions by 2050. That promise was almost a throw-away line in the party’s 2019 election platform, one of those promises too vague and distant to be taken too seriously by any voter. But companies and investors will now have no choice to take it very seriously, indeed.

Major energy projects seeking approval under the new Impact Assessment Act, better known as Bill C-69, now risk having to clear the hurdle of the net-zero emissions goal. Since upstream emissions must be considered in the impact assessment, any project that threatens to hinder Canada’s ability to meet the net-zero goal could face the axe. At the very least, the net-zero goal threatens to further deter investment in new oil sands projects and pipelines.

The Liberal platform commits to introducing a “Just Transitions Act, giving workers access to the training, support, and new opportunities needed to succeed in the clean economy” and “strengthening existing rules to cut emissions from Canada’s biggest polluters, including oil and gas.”

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The Liberal net-zero promise also dovetails perfectly with the goals Mr. Carney aims to achieve in his new UN role. “This provides a platform to bring the risks from climate change and the opportunities from the transition to a net-zero economy into the heart of financial decision-making,” he said in a statement on Sunday, at the opening of the COP 25 climate change conference in Madrid.

That didn’t make Mr. Carney sound like a friend of Canada’s oil sector. But then again, he would be doing Canada’s oil, gas and coal producers no favours by playing down the risks they and their investors face as the world moves toward a low-carbon economy.

That transition may look like it’s happening too slowly to justify rewriting the rules of financial disclosure. The climate-related risks facing Canada’s oil sector are almost impossible to accurately quantify, so why even try? Perhaps because it would be even riskier not to.

So far, Suncor Energy Inc. and Teck Resources Ltd. are the only two Canadian-based fossil fuel producers that are listed as “supporters” of the FSB’s Task Force on Climate-Related Financial Disclosure.

Can Mr. Carney, in his new UN role, persuade others to join them – for their own good?

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