August 2021


The Global Risk Institute (GRI) yesterday published a paper titled “Climate-Related Legal Risks for Financial Institutions: Executive Brief” (the “Paper”), authored by Dr. Janis Sarra with the Canada Climate Law Initiative and Resilient LLP’s Lisa DeMarco. The Paper provides an overview of the many risks now faced by the financial sector including regulatory liability, securities law litigation, fiduciary duty risk, professional indemnity insurance risk, “greenwashing” litigation, commercial contract risk, litigation against governments, and civil lawsuits. The Paper also provides “best practice tips” for financial institutions, risk managers, and board risk committees to consider and implement as a means to limit their liability and reduce their climate-related risks. These recommendations include, among others: Undertaking a high-level assessment of litigation exposure across loan and policy books, investment portfolios, and operations; Embedding management of climate-related risks as part of core business risk management; Investigating and disclosing climate-related vulnerabilities in investment portfolios; and Creating an action plan to reduce Scope 1, 2, and 3 carbon emissions as evidence of a financial institution’s due diligence in addressing climate-related financial risk. The first page of the Paper appears below. The full text of the paper is available on the Global Risk Institute website here. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at

Hancock Natural Resource Group, a Manulife Investment Management company, today announced the acquisition of 89,800 acres of forested land in Maine, USA, for carbon sequestration and storage. Manulife indicated that this purchase is part of its integration of natural climate solutions (NCS) with investment decisions to further support its climate action plan. The investment is considered “impact-first”, as the forested land’s primary purpose will be to store carbon. As part of the transaction, Manulife will retain the option to (i) sell any carbon credits generated through carbon offsets from the forested land or (ii) use the carbon removals resulting from the project to meet its own net zero commitments. Manulife’s climate action plan includes directing its investment portfolio to net zero emissions by 2050, reducing its scope 1 and 2 emissions by 35 percent by 2035, and a commitment to the Science Based Targets initiative to guide its targets For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at

The Intergovernmental Panel on Climate Change (IPCC) yesterday released the IPCC Working Group 1 report, “Climate Change 2021: The Physical Science Basis” (the Report), part of the Sixth Assessment Report, providing an updated assessment of the physical understanding of the current state of the climate system and climate change. The Report predicts that global temperatures are likely to continue to increase beyond the 1.5-2°C target of the Paris Agreement without widespread and steep global reductions in greenhouse gas (GHG) emissions. This bulletin summarizes the Report’s key findings. The current state of the climate. The Report reiterates that the warming of the atmosphere, oceans, and land are human-caused, with rapid changes being observed in the atmosphere, ocean, cryosphere, and biosphere. In addition, the Report confirms that anthropogenic climate change is globally affecting weather and climate extremes, with increased heatwaves, heavy precipitation, droughts, and tropical cyclones more readily attributed to human influence. Possible climate futures. According to the Report, under all emissions scenarios, global surface temperatures will continue to increase until mid-century, with temperatures predicted to exceed 1.5-2°C this century without deep reductions of GHGs. As the climate warms, changes in climate systems will become larger, increasing the frequency and intensity of hot extremes, marine heatwaves, heavy precipitation, droughts, intensity of tropical cyclones, and reductions in Arctic sea ice, snow cover, and permafrost. The Report indicates that changes in the ocean, ice sheets, and global sea levels, resulting from past and future GHG emissions, will likely be irreversible for hundreds of years. Climate information for risk assessment and regional adaptation. The Report indicates that all regions are expected to increasingly experience concurrent and multiple changes in climatic impact-drivers amplified at 2°C compared to 1.5°C, with greater increases at even higher global temperatures. The Report also indicates that even “low-likelihood” outcomes such as…

The Government of Canada has issued a background paper and launched public consultations on border carbon adjustments (BCAs). The initial exploratory phase of consultations will involve targeted discussions with provinces and territories, as well as industry associations representing sectors most directly impacted (i.e., importers and exporters dealing in emissions-intensive goods). A limited number of labour and environmental organizations and academics with expertise on BCAs will also be engaged. The government intends to consult the broader Canadian public this fall and continue international engagement with trading partners and like-minded countries. Feedback is sought in relation to: Environmental outcomes. How adding BCAs to Canada’s climate policy toolbox could build on Canada’s existing climate change policies to deliver equivalent or better environmental outcomes. Economic pressures. What economic impacts BCAs may have, and the distribution of those impacts across sectors and regions, including for consumers. International engagement and trade relations. As a trade-dependent economy how BCAs may affect Canada’s trading relationships and areas where further work is required for cooperation on BCAs with trading partners. The federal government has indicated that four main inter-related objectives are driving its consideration of BCAs: (i) reducing the risk of carbon leakage; (ii) maintaining the competitiveness of domestic industries; (iii) supporting greater domestic climate ambition; and (iv) driving international climate action. The government signalled its intent to move forward with a two-phase consultation process on BCAs in Budget 2021. Canada’s recent focus on BCAs is aligned with work on similar policies in the European Union and the United States and we anticipate that BCAs will be a topic of significant discussion at COP26, beginning November 1, 2021 in Glasgow. For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at

The federal government has issued its strengthened benchmark stringency criteria in line with previously announced increases to the carbon price (rising at $15/tonne per year to $170/tonne by 2030). The government previously indicated its intent to strengthen the benchmark stringency criteria for the post-2022 period in September 2020. The government intends to seek confirmation from provinces and territories on whether they intend to maintain or implement a carbon pricing system for the 2023-2030 period and assess provincial and territorial submissions against the updated federal benchmark criteria in 2022 for the 2023 to 2030 period. The 2016 benchmark continues to apply for assessments of carbon pollution pricing system stringency for the 2018-2022 period. Provinces and territories must implement (a) an explicit price-based system (i.e., (i) a carbon levy on fossil fuels, or (ii) a hybrid system comprised of a carbon levy on fossil fuels and an output-based pricing system for industry) or (b) a cap-and-trade system. Partial explicit price-based system must be designed to fully replace either the federal fuel charge or the federal OBPS. Where a province or territory implements a partial system that does not fully replace the federal fuel charge or OBPS, the corresponding federal backstop system part (i.e., fuel charge or OBPS) will apply in full in the jurisdiction. The updated benchmark sets new requirements for both explicit price-based systems and cap-and-trade systems, in the following areas: Explicit price-based systems: (i) carbon price ($65/tonne in 2023, rising $15 per year to $170/tonne in 2030); (ii) common scope; (iii) price signal (no measures to offset, reduce or negate); (iv) stringency of output-based pricing systems (OBPS) for industry; (v) restriction on OBPS and performance-based rebate approaches under a carbon levy; (vi) offset credits; and (vii) public reporting. Cap-and-trade systems: (i) maximum emissions cap (corresponding at minimum to projected emissions levels…