Reading between the lines of the federal government’s new loan package for big business, there is a sense that Justin Trudeau’s minority government (with some strong shoves from the NDP, Green and Bloc opposition parties) is recognizing we can’t just go back to ‘normal’.
This is a hopeful sign. Normal was a world with growing inequality and an overheating planet. Parliament may have declared a climate emergency last year, but it is the pandemic response that is showing us what it means to treat a crisis like a crisis.
This starts with putting conditions on companies seeking public support in response to the COVID-19 crisis that lay the groundwork for rebuilding on fairer and more climate-resilient foundations.
The Good News
In contrast to the bailouts following the 2008 financial crash, the federal government says it will put social and environmental conditions on companies seeking public support.
Greenpeace Canada made a series of recommendations on how to protect workers and accelerate the transition to a low-carbon economy and a number of these are reflected in the federal government’s announcement. These include:
- Requirements to protect workers through commitments to maintain employment levels, respect union agreements and protect workers’ pensions.
- “Strict limits” on executive pay, dividends and share buy-backs so we know that public money isn’t simply being diverted to wealthy shareholders and executives.
- Hints at a crackdown on the use of tax havens that allow corporations to avoid paying their fair share.
- A requirement for recipient companies to publish annual climate-related disclosure, including how their future operations will support environmental sustainability and national climate goals.
Not so long ago, these kinds of conditions would have been unthinkable.
They are only there because of public pressure and a related shift in public opinion, with polling finding that a majority of Canadians expecting a broad transformation of society towards a greater emphasis on health and wellbeing in the aftermath of the pandemic.
Announcing conditions is the easy part. Implementing them in the face of concerted corporate resistance will be tough, which is why we have to keep the pressure on.
The Bad News
This could end up being a bailout for oil companies and airlines whose core business models expose us to greater collective risk by accelerating climate change, pollution and biodiversity loss.
By all means, we should support the workers in those industries including with a longer-term just transition plan. But we should not enable climate destruction courtesy of the public purse. In particular, companies (e.g. all members of the Canadian Association of Petroleum Producers) that are funding campaigns to undermine climate action or trying to use the pandemic as cover to roll back environmental regulations.
This is where the implementation question becomes key: will there be real teeth in those conditions or are they just really good public relations?
To Be Determined
The federal policy is being rolled out at record speed and this announcement came with no details on how it will be implemented. How much executive pay or tax evasion is too much? If companies take the cash then lay off their workers, do they have to give it back?
The toughest one will likely be the climate condition. The federal government said that companies would have to file reports “would be required to commit to publish annual climate-related disclosure reports consistent with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures.”
So far so good. Greenpeace Canada has argued that all large companies should have to file such reports, including an assessment of whether their business plans are aligned with the Paris climate agreement targets. Misleading the public about your green credentials is advertising but misleading investors about materially-significant matters is fraud, so it would be good to have them on the record and be able to compare and contrast reports from companies in the same sector.
The federal government also said that they would have to include an assessment of “how their future operations will support environmental sustainability and national climate goals.” At his press conference the Prime Minister made it clear that ‘national climate goals’ means achieving net-zero emissions by 2050.
We can’t leave it up to the companies to define what supporting climate goals means. Some oil companies have announced plans for net-zero, but an investor-led group who examined those pledges said they are mostly hot air.
With respect to the climate conditions in the announcement, Finance Minister Bill Morneau specifically mentioned Suncor as a climate leader but if you look at Suncor’s climate report, the company itself admits that if it were aligning with a low-carbon scenario it would stop investing in oil sands and we wouldn’t need new pipelines.
Investors aren’t fooled. On May 12, Suncor (along with the other oil sands heavyweights Cenovus, CNRL and Imperial Oil) became the first companies blacklisted by Norway’s $1.4 trillion Oil Fund on climate change grounds. The rationale was:
“Suncor Energy Inc is a Canadian company with a substantial output of oil from oil sand resources in Alberta, Canada. Oil production of this kind results in far higher greenhouse gas emissions than the global average, and the company has no specific plans that would reduce its emissions to this level within a reasonable period of time. The company’s greenhouse gas emissions are not subject to a regulatory regime that is as stringent as the EU ETS, and have a government-imposed cost that is considerably lower than corresponding emissions in the EU.”
To be credible on climate, these companies need a real plan to transition off fossil fuels and into renewable energy. Anything else is greenwashing.