After five years, we believe investor accountability has reached its limits
For a full elaboration, including nine lessons learned about sustainable finance in Canada, see our wrap document here. Meanwhile, TLDR:
When we formed Investors for Paris Compliance we set out to test whether investor pressure could meaningfully enforce the wave of voluntary net zero commitments being made by Canada’s banks, insurers, asset managers, and largest emitters. We worked through shareholder proposals, report cards, regulatory complaints, and direct engagement with CEOs and institutional investors. Some things moved, for example:
- RBC retired its vague “sustainable finance” label in favour of specific renewables language
- National Bank made a $20-billion renewables financing commitment after sustained engagement
- Sun Life began examining links between climate events and health insurance claims
- And a consistent 20-25% of investors backed climate proposals across multiple AGM cycles
But the larger picture did not change much. Canada’s banks remain highly exposed to fossil fuels. Oil and gas companies continue to expand while maintaining implausible net zero narratives. Institutional investors talk about engagement while rarely escalating to real consequences. Regulators, when they act at all, prefer disclosure over intervention.
After five years, multiple approaches, and consistent engagement, we’re left with one conclusion:
Investor accountability, in the absence of regulatory change or legal consequences, is not sufficient to deliver net zero outcomes or manage climate risk at the system level.
Mark Carney’s “Tragedy of the Horizon” framed climate risk as a problem of timing. That diagnosis was true and important. But in our engagements with financial institutions, we encountered a second tragedy: companies and investors often know the system is heading in a dangerous direction, yet keep compounding the risk because competitors will otherwise do the same. That is the classic tragedy of the commons, and it requires a different response.
Shareholder advocacy has a role in exposing risk and testing disclosure but it cannot substitute for the regulatory, legal, and incentive structures needed to drive change at scale. The next phase must focus on those levers: litigation to assign liability for climate damages, regulatory action that reshapes behaviour, and accountability mechanisms that match the scale of the challenge.
Some of our team will take those things on in new initiatives. But first, a little break.
For those of you in Toronto, we’ll have a celebration party on June 11 – please come!
À bientôt. We’ll always have Paris.
