Merran Smith is executive director of Clean Energy Canada and a fellow at Simon Fraser University's Centre for Dialogue. She was in Paris for the United Nations climate-change conference.
Mark Carney took the stage midway through the recent international climate-change conference in Paris, and his presence turned a few heads. When the floor was opened to questions, someone asked him, "Why is a leader of a central bank here?"
The governor of the Bank of England didn't miss a beat. This new-found attention from the finance community is coming, Mr. Carney said, because "the world didn't take climate change [seriously] as a systemic risk the way it does now."
This wasn't just talk. Mr. Carney was in Paris as head of the Financial Stability Board (FSB), to announce a new global task force. Led by former New York mayor Michael Bloomberg, it's mandated with improving how companies disclose the business risks they face due to climate change.
In a way, Mr. Carney was bypassing the leaders and national delegations gathered in Paris. While they diligently negotiated the text of a high-level agreement for action on climate change, the FSB decided to go straight to the market, seeking to alter the calculus of specific investment decisions.
And it wasn't just Mr. Carney and Mr. Bloomberg who outpaced the negotiations. On the same day the two financial heavyweights spoke, mayors from 1,000 cities – including those of Paris, Las Vegas, Sydney and Vancouver – committed to sourcing 100 per cent of their electricity from renewable sources, such as solar and wind. Even without ambitious national targets for cutting emissions, local governments are acting boldly. As Mr. Bloomberg noted, "cities have already done a lot of what federal governments are promising" on this front.
The Paris talks were covered primarily as a political event – who negotiated for what, and which leaders attended – yet the real story was a business one. Clean energy is growing fast. A strong international climate agreement could accelerate that trend, but even without it, there are major implications for industries and investors.
After Paris, expect more good news stories from the clean-energy sector. Google, Facebook, France's La Poste and other corporate leaders have made the business decision to get their electricity from renewables, stressing that it is cost-effective now. More will follow.
Some stories will come from unexpected places. For example, Moroccan Energy Minister Abdelkader Amara spoke in Paris about his country's goal of moving to 52-per-cent renewable power. That marks a dramatic change from the past, when Morocco relied on imports to meet 98 per cent of its energy needs.
For energy companies that are heavily invested in fossil fuels, the post-Paris outlook isn't as good.
"Coal is in trouble," The New York Times reported recently, as the International Energy Agency made it clear that phasing out coal-fired power globally is among the best ways to cut carbon emissions. Similarly, oil "can't survive if demand is going down – and demand is changing," according to Mindy Lubber of Ceres, an investor coalition from the United States.
For those who are still skeptical, consider the following quote. It comes from a recent submission by one of Canada's largest oil companies to the Alberta government: "Cenovus shares the public's concern that climate change is one of the greatest global challenges of our times. Our product is part of the problem."
Yet there's also potential for a virtuous cycle in all of this. We're already seeing substantial investment in clean energy, along with market-shaping initiatives such as the one Mr. Carney announced. The global attention and effort that has mobilized around the Paris talks sends yet another signal to the market about where things are going, reinforcing that trend.
It's no coincidence that in October, the Toronto Stock Exchange launched three new subindexes to track companies that are either "carbon efficient" or don't hold fossil-fuel reserves. Leaders in the financial community, including some institutional investors, are already moving on this issue. As momentum builds, the rest of the herd will follow.
The transition toward clean energy is already under way throughout our economy. It's moving fast. And regardless of what has or hasn't been accomplished at the Paris summit, it will continue to accelerate.
Business leaders should therefore heed Mr. Carney's explanation of why he's pushing for more disclosure of climate risks. "It's a way to judge management," he said. "Do you have a strategy for this?"