Talking climate with the Heads of G7 ECAs

Every international meeting is different. They take on the flavour of the host nation, the location, and of course, they’re affected by the chemistry of the attendees. These meetings are an important opportunity for participants to connect, build relationships and share priorities. For the host nation they’re a particular challenge. They’re a lot of work to organize, planning agendas can be complicated, and people are often coming a long way to be there. They’re opportunities you don’t want to waste.

For two days at the end of October in downtown Toronto, Export Development Canada hosted the heads of the export credit agencies (or, ECAs) for the G7 group of countries – the US, UK, Germany, France, Italy, Japan and Canada. This is a gathering that happens every year. (Last year’s official host was Germany, though the meeting was entirely virtual, thanks to pandemic restrictions; next year’s will be in Italy.) In the planning for this year’s session, EDC leadership felt it important to put the focus on a policy area where our fellow ECAs could have the biggest impact. As agencies charged with promoting international trade, the potential list of hot topics is a lengthy one – global supply chains, inflation, inclusive trade, and the very critical topic of Russia’s invasion of Ukraine and measures that we can all take to support the besieged country, now and when time comes to rebuild.

And while we did allocate important time to discussing these matters, one item dominated: climate change, and our roles as ECAs in responding to it.

For the last decade, EDC has undergone an important evolution in its approach to the climate challenge. In addition to meeting our mandate to promote inclusive and sustainable Canadian exports, we are equally bound by the additional expectations of the Government of Canada to help this country meet the challenge of global warming. In addition to dramatically reducing our support for the international oil and gas sector since 2018, we have joined other signatories supporting last year’s COP 26 statement to end export credit support for the international unabated fossil fuels sector by the end of this year. Just this summer we also issued our interim targets for the oil and gas and airline sectors, adding clarity to our net zero 2050 commitment.?We continue to review our lending portfolio, making decisions on where to divest, and where to end current relationships that are inconsistent with our low-carbon goals.

Of course, we think very carefully about where we choose to invest as well. These choices have made EDC one of Canada’s largest financial backers of cleantech. Over the last ten years, we’ve facilitated approximately $20 billion in cleantech exports. In fact, last year, for the first time, our support for cleantech surpassed our support for the oil and gas sector. It’s a trend we expect to continue.

This is the perspective EDC brought to our G7 discussions, raising the fundamental question – what can ECA’s around the world do to help reduce carbon emissions of our respective economies? In addition to our own voice, we invited other influential thinkers to share their perspective. One of these was former Governor of the Bank of Canada and the Bank of England, and currently, UN Special Envoy for Climate Action and Finance, Mark Carney. Mr. Carney’s most high-profile project of late has been GFANZ, the Glasgow Financial Alliance for Net-Zero, which so far has convinced financial institutions around the world with assets in excess of $130 trillion to make the pledge to divert these funds in a way that supports the UN’s net-zero goals for 2050. In his recorded remarks to we Heads of G7 ECAs, Mr. Carney put it plainly:

“There is no net zero world without a sustainable trading system, and therefore no net-zero world ultimately without ECA’s helping to make the rapid progress needed to finance the investment the world needs.”

He encouraged my fellow ECA leaders to think about the economic transition as not simply generating finances for “green assets”, as important as those are. Rather, he encouraged us to go “where the emissions are” to help finance the companies that need help transitioning from high emissions to lower emissions. This effort, he said, is “what needs to happen not just to get emissions down but to support communities at home and abroad.”

It was an important message for all of us to hear, and it was a view echoed by many of my colleagues in the room. The opinion even found its way into our final communique: “…the ECA Heads recognized the need for bold contributions to climate action, and discussed alignment of shared climate policy obligations and ongoing efforts to support companies through the global energy transition.”

The words alone, of course, will not be enough. The real proof of progress will be in the actions we take. But I still think words, and the conversations we had in Toronto over those two days last month, will matter. These are conversations that are happening all around the world – most prominently in just a few days from now at COP27 in Egypt. EDC and other ECAs, I’m proud to say, will be represented there too, helping move the conversation forward.?

As long as these conversations continue, I believe there is hope for progress – just so long as the words are followed by action.??