Canadians, ignore the cost of global warming at your peril

As the global average temperature rises and weather patterns change, the balance of nature is disrupted and risks to all life on Earth intensify.

Global warming is increasing the frequency and severity of droughts and floods, the frequency and intensity of heatwaves, and the frequency, intensity and magnitude of wildfires. Warming is threatening food security, biodiversity, and physical and mental health, and is exacerbating poverty.

The catastrophic weather events of the summer alone have led to a record 228,000 claims — a 406 per cent increase compared to the previous 20-year average. 

Insured losses for these events totaled more $7.2 billion: over $940 million for July flooding in Toronto and southern Ontario; more than $880 million for the Jasper wildfire; an estimated $2.8 billion for the Calgary hailstorm; nearly $2.5 billion for flooding in regions of Quebec; and greater than $100 million for August flooding in the Greater Toronto area and southern Ontario.

An additional $110 million in insured damage was added to the summer total by a Category 4 atmospheric river that led to intense flooding along the southern British Columbia coastline in October.

Indeed, insured losses related to severe weather in Canada have already set a new record this year, reaching over $7.7 billion. 

Irrefutably, there are considerable economic risks associated with climate change. Thus, investing in adaptation is prudent as each dollar invested returns $13–$15 in direct and indirect benefits. In fact, failing to invest in adaptation is a missed opportunity considering the adaptation market may be valued at $2 trillion per year by 2026. 

But more than that, the triple dividend of resilience — 1) avoided losses; 2) induced economic or development benefits; and 3) additional social and environmental benefits — cannot be undervalued. Research shows that the integration of socioeconomic-technological transitions, such as lowering energy demand, shifting to an environmentally-friendly food system, and energy technology progress, could effectively reduce or eliminate climate change mitigation costs.

Yet, Canada’s climate plan remains riddled with significant gaps — specifically in climate finance. While the government announced the long-awaited Canadian sustainable investment taxonomy in October, which is expected to help inform investors and unlock the capital needed to reach net-zero emissions, we also need stronger guidelines for the financial sector to fully tackle the climate finance gap. 

This issue is addressed in Bill S-243, the Climate-Aligned Finance Act (CAFA), which has been stalled at the Standing Senate Committee on Banking, Commerce and the Economy (BANC) since early May. Bill S-243 would establish clear objectives and requirements and create clarity for financial players, while giving them the right tools to fully participate in the transition to carbon neutrality. 

Furthermore, at BANC last month, when asked if we should be happy that Canadian investment money is increasing innovation and competitiveness elsewhere in the world, more than in Canada, Peter Routledge, Superintendent of Financial Institutions, stated that Canada could benefit from a climate-risk taxonomy that classifies assets along the dimensions of vulnerability to climate change. He goes on to say that, “[i]t would be great to have this accepted made-in-Canada taxonomy that we could use, as supervisors, to make common-sense changes to our capital rules […] to improve the investment for the future.”

Undoubtedly, by aligning investments with climate commitments, capital flows will necessarily shift toward sustainable and resilient projects that will contribute to emissions reduction and climate adaptation. 

Certainly, investment in the energy transition could bring sustainable, inclusive prosperity to Canadians.  Ultimately, the implementation of a framework that integrates economic, social and environmental legislation and policy in a way that seeks first to protect the environment, must be a fundamental part of Canada’s climate action plan. 

As the next federal election looms, parties’ platforms must demonstrate an understanding of the important link that exists between our environment and the economy, and the important role that investing in, and accelerating, our energy transition must play in creating the future Canadians deserve and want.

While the next election may stem from disputes centered on the carbon tax, the next government will be unable to ignore the cost of global warming to the Canadian economy.

The Honourable Rosa Galvez is a civil-environmental engineer and an independent senator for the province of Quebec.