In a matter of a few years, it seemed nearly every company, government and investment firm in Canada made bold announcements to achieve net-zero carbon emissions by 2050.
But behind the scenes, a dedicated group of change makers has been toiling for decades, convincing stakeholders that climate change—as well as social issues like human rights and diversity—have economic implications that can’t be ignored.
Canada’s sustainable finance leaders have played no small role in helping to mainstream the environmental, social and governance (ESG) movement—the idea that business and investing can have positive impacts on society and the environment, and that neglecting these issues will have dire economic consequences.
Now, after decades of promoting the concept to business leaders, regulators and politicians, the movement is at a crossroads. A politically motivated ESG backlash in the U.S. has prompted some firms to soften their social and environmental commitments, threatening progress south of the border.
While Canada has its own challenges—including the government’s slow implementation of changes stakeholders say are desperately needed—these leaders are steadfast in their mission to bolster sustainable finance and business.
Here’s a look at some of the key players shaping the industry.
The policy influencer
Kathy Bardswick, chair of Sustainable Finance Action Council
Whenever the federal government needs guidance on climate change and the economy, Kathy Bardswick is sure to be on the shortlist of advisers.
The insurance industry veteran spent most of her career at The Co-operators Group, a network of companies that offer life, property and casualty insurance. As CEO—a position she held for 14 of her 38 years at the organization—she ushered in a culture of environmental, social and governance practices long before the ESG label was well known.
There, she was responsible for introducing flood insurance for homeowners, a first in Canada, despite pressure from the industry not to do it. Other insurance companies worried that if Co-operators offered flood protection, they would have to follow suit—at a huge cost to their organizations. “We were told by our peers that we were crazy to think about it,” she said. “But we forged ahead anyway.”
The initiative did in fact move the industry, said Bardswick. More insurers began offering flood protection, which she said helped deter homeowners and builders from floodplains by putting a price on the risks.
Bardswick technically retired in 2016, but she’s continued shaping policy behind the scenes. After helping create and lead the Canadian Climate Institute—a climate policy think tank launched in 2020—Bardswick shifted her focus to the Sustainable Finance Action Council (SFAC), another group Ottawa initiated that is charged with developing the government’s rulebook for green investing and financing.
As chair of the SFAC—which includes senior decision-makers at 25 Canadian financial institutions—Bardswick has been outspoken on the government’s lack of urgency in adopting fundamental recommendations from the group. The SFAC delivered a green taxonomy—which defines what qualifies as green or transition assets—nearly a year ago, but the government has yet to formalize it. The taxonomy is considered a critical tool to help the finance sector decarbonize portfolios and reach net-zero commitments.
“We are frustrated,” said Bardswick, noting that the council’s three-year mandate is up next spring and it’s about three to six months behind where she hoped to be. “Time is of the essence here,” she said.
The innovators
Mohamad Sawwaf, co-founder and CEO of Manzil
Growing up in Toronto, Mohamad Sawwaf said his parents had decided they would never own a home in Canada. Not because they couldn’t afford it or didn’t want one, but because there were no halal mortgage options.
According to Islamic financing rules, loans and other financial transactions must be interest free. That’s largely incompatible with traditional Western financial services, and can restrict Muslims’ financial success in Canada, said Sawwaf.
In a bid to help his community access more capital and build wealth, Sawwaf launched financial services firm Manzil in 2017, offering residential halal mortgages. Rather than charge clients interest on their loans, Manzil buys properties on their behalf and sells them back to them over a set period of time at a higher price than what the firm originally paid. The premium the client pays reflects the principal and profit, rather than principal and interest, said Sawwaf.
The profit-sale arrangement is common in markets outside Canada serving Muslim clients. Sawwaf—who previously worked for 15 years in the traditional banking sector—researched the model as a master’s student before launching the firm, and later earned a doctorate in Islamic finance.
Manzil now has close to 5,000 customers and about $75 million in assets under management. The firm has another 12,000 families on a wait list, accounting for about $7 billion in mortgage capital, he estimates. “The demand is definitely there,” he said, adding that it’s getting more funding to finance mortgages that’s the challenge.
Manzil initially raised capital through a retail fund for Muslims in the community. The firm now also has the backing of a Schedule I Canadian bank—a category that includes the Big Six domestic banks—and is finalizing an agreement with a credit union for at least $100 million a year, said Sawwaf. (He wouldn’t disclose the names of the funders.)
While halal financing is often left out of the ESG conversation, its basic principles—like transparency and accountability, and shared risk and rewards—are compatible with the broader responsible finance movement.
“It’s social impact, it’s community based,” said Sawwaf, who wants to turn Manzil into a one-stop shop for halal finance, eyeing an expansion of its exchange-traded funds and eventually launching chequing and saving accounts.
“We’re moving people from financial exclusion into financial inclusion.”
Laura Zizzo, co-founder and CEO of Manifest Climate
As an environmental studies student more than 20 years ago, Laura Zizzo figured her interest in solving the climate crisis would involve a career in ecology. Instead, she took a circuitous route through the legal sector—from a top Bay Street firm, to running her own environmental law firm—before landing in the C-suite, where she’s now co-founder and CEO of a software platform, Manifest Climate.
The company helps firms take stock of their impact on global warming, and how global warming in turn impacts their business. It packages those results for clients to report to stakeholders and suggests how to better improve to comply with global standards.
This practice—known as climate-risk reporting—is becoming the norm among companies, as regulations loom and the economic toll of climate change becomes blatantly obvious.
That collective urgency wasn’t there when Zizzo began this work two decades ago. “I felt like I was on the bow of a sinking ship, but there was no one else there,” she said.
That dearth of corporate knowledge and concern on the topic was a reason Zizzo’s legal practice morphed into environmental consulting and, ultimately, the disclosure platform that’s now Manifest Climate.
The company raised $30 million in 2022 from a group of venture capital investors, including BDC Capital and Climate Innovation Capital, OMERS Ventures, Garage Capital and Golden Ventures, to build out its software. That involves integrating artificial intelligence into its platform, which has compressed the time it takes to review a client’s climate disclosure from 30 hours to 10 minutes. Zizzo said AI has accelerated the firm’s growth by 10 years ahead of where she expected to be at this point.
As more companies become comfortable with climate risk disclosure, Zizzo hopes Manifest can fill other gaps, like how companies plan for climate change and communicate investment risks to shareholders. “We’re super excited about the ways we can partner and fill some of that white space,” said Zizzo.
The venture capitalist
Tom Rand, co-founder and partner at ArcTern Ventures
Tom Rand is in good company among venture capital investors keen to fund cleantech companies. But that wasn’t the case when he started his first climate-focused fund, VCi Green Funds in 2005, or even in 2009 after setting up the cleantech practice at MaRS, a Canadian innovation hub in Toronto.
Rand said he was working with great cleantech startups at the time, but there wasn’t money in the VC ecosystem to finance them. Rand would invest small amounts of his own capital into companies he believed in—like energy storage firm Hydrostor and software and hardware firm Morgan Solar—and encouraged friends to do the same. “But that’s a very ad hoc solution to what I thought was a systemic problem, which is the lack of early-stage capital for climate tech,” he said.
Now, his Toronto-based VC firm ArcTern Ventures is helping fill that gap. The firm cobbled together $30 million for its first fund in 2012 from “super angels.”
“I wanted to show the broader investing community that if you did it right, you can make money betting on cleantech,” he said.
ArcTern now has close to $800 million across three funds, with backers including Canada’s biggest institutional investors such as CPP Investments, BDC Capital, Investissement Québec and OMERS.
Rand said there’s now plenty of technology that, if funded adequately, can chip away at the climate crisis. But that doesn’t mean it’ll be easy, or that funding new inventions isn’t necessary. “The vast majority of the work is just lifting, doing, renovating,” he said. “Magic bullets are great, but that doesn’t mean we don’t have 10 years of work between now and then to get done.”
The institutional investors
Adelaide Chiu, head of responsible investing and ESG services at NEI Investments
Adelaide Chiu learned early in her investment banking career that she had the power to influence how companies responded to climate change and social issues.
A chartered accountant, Chiu had studied the intersection of climate and the economy as a university student, but didn’t see a professional application for the topic when she began her career 20 years ago. But as factions of the finance sector started taking ESG more seriously, Chiu wanted to be at the forefront.
Today, Chiu leads the responsible investing team at Toronto-based firm NEI Investments, overseeing a team of 10 people to set NEI’s ESG strategy. The firm has prioritized responsible investing for three decades, said Chiu, which makes her job less about establishing ESG practices and more about fine-tuning them.
That involves accounting for the social and environmental costs of all investments, she said, rather than viewing ESG as one-off investments in cleantech firms or social enterprises, for example.
Getting portfolio companies to think this way is a big part of Chiu’s job. It can take years of engaging with their boards and managers to compel a company to change.
Chiu said the team is trying to make human rights assessments a standard process for Big Tech companies, too.
Outside her corporate engagement work, Chiu sits on the newly formed Canadian Sustainability Standards Board where she uses her accounting chops to further the ESG movement. The group is working with the International Sustainability Standards Board on global rules for financial reporting and accounting practices related to ESG, and then decides how those rules should apply in Canada.
“A huge focus will be on the just transition and Indigenous peoples,” said Chiu.
The board is meant to help establish clarity in a sustainable finance system that’s rife with ambiguity and prone to greenwashing. Chiu said that kind of high-stakes problem solving has always motivated her. “I want to have an impact on what is being done.”
Barbara Zvan, CEO of University Pension Plan Ontario
Last year, as scores of companies and investors congratulated themselves for pledging net-zero emissions by mid-century, Barbara Zvan, CEO of the University Pension Plan Ontario (UPP) decided her fund—then just one year old—could do better.
UPP—which manages over $10 billion in assets on behalf of nearly 40,000 members and retirees of universities and education sector organizations—unveiled an ambitious plan to eliminate net carbon emissions from its portfolio by 2040, a decade sooner than the international standard adopted through the Paris Climate Agreement.
The target was based on Zvan’s belief that the economy isn’t decarbonizing fast enough. It’s a sentiment UPP’s members share, said Zvan, 80 per cent of whom said they wanted the pension to be equally or more ambitious on climate change than its peers.
Zvan began thinking seriously about ESG working in her previous role at Ontario Teachers’ Pension Plan after attending COP15 in Copenhagen in 2009. During an event for international investors at the climate conference, she saw just how far behind Canada was on sustainable finance. “I kid you not, me and my colleague from Canada, we were probably the only ones who hadn’t visited the oil sands,” said Zvan. “They were already talking about the impact of climate change. They were thinking much longer term than anybody was talking about in North America.”
Zvan returned from the conference and began implementing ESG practices at Teachers’ and influencing the broader investment community to do the same. She helped start the Canadian Coalition for Good Governance and co-wrote the first ESG handbook for board directors.
Her work pushing the industry to improve hasn’t stopped. If there’s a task force or coalition studying sustainable finance, chances are Zvan is involved. Recently, she helped start Climate Engagement Canada: the group of 38 investors, which manages a combined $4.6 trillion in assets, uses its collective power to influence high-emitting companies to align with the Paris Agreement.
Zvan also sits alongside Kathy Bardswick on the Sustainable Finance Action Council, where she is pushing Canada to adopt clear ESG guidelines for the financial sector quicker. The group estimates that Canada needs $115 billion a year to fund the energy transition. “Today we can’t even measure how much money goes into anything,” said Zvan. “Passion, it’s there. Tools, frameworks, infrastructure—not so much.”
The corporate governance whisperer
Helle Bank Jørgensen, CEO and founder of Competent Boards
It usually takes strong corporate governance for a company to address pressing environmental and social issues. That’s why Helle Bank Jørgensen has devoted her career to help firms build strong boards of directors that will press companies on the biggest challenges facing the economy and society.
Five years ago, the Toronto-based CEO founded Competent Boards, a network of directors, executives and investors who train their peers on how to lead socially and environmentally responsible companies.
That means evaluating and improving a company’s track record on topics like human rights, climate change, diversity, equity and inclusion, cybersecurity and AI.
The network is approaching 1,000 members in over 50 countries, with about 180 faculty who have led some 750 directors and aspiring directors through training. Among them are Fortune 500 companies as well as small businesses and non-profits.
Jørgensen said the issues boards face today are far more complex than in the past. Climate change, for example, is perhaps companies’ most pressing challenge, but it isn’t just about reducing emissions or eliminating plastic—it’s connected to myriad social and geopolitical issues, said Jørgensen. “It’s no longer: we can deal with tobacco, asbestos or something else,” she said, referring to past governance practices of addressing issues independently from each other.
Globalization adds another layer of complexity, she said. One director she works with likes to ask companies, “How many slaves work for you?” referring to forced labour in the global food, textile and electronics supply chains. Most business leaders have never been asked these questions, she said.
Beyond helping boards ask and answer the right questions, Jørgensen advises global regulators, standards-setters and agencies on ESG issues, including the World Economic Forum, Nasdaq and the UN Global Compact network, where she previously served as chair and executive director for Canada.
The small business steward
Sandra Odendahl, senior VP and head of sustainability, diversity and partnerships at BDC
Sandra Odendahl wants to make the Business Development Bank of Canada the one-stop shop for entrepreneurs who need resources and advice to build a sustainable business.
Odendahl—who joined the Crown corporation as its first head of sustainability and diversity in April 2022—said her plans for BDC are ambitious yet pragmatic. It’s an approach she’s taken throughout her career in sustainability, dating back to her environmental assessment work, first as a chemical engineering student and later in the financial sector.
Odendahl likened her early work to “pushing a rock uphill.” Convincing bankers that environmental and social issues presented material financial risks to their business was a decades-long process. In the early 2000s, banks were more focused on addressing acute issues on a case-by-case basis, like contaminated properties.
Odendahl wanted the sector to go beyond what she described as “dirty dirt” assessments and consider broad environmental and social factors in risk management. That involved collaborating with other banks in Canada and the U.S. to develop sustainability policies and best practices. At RBC, Odendahl helped start a $10-million social impact fund for early-stage companies in 2011. Later at Scotiabank, she was part of creating ScotiaRise, a $500-million fund launched in 20210 to invest in economic resilience for communities over 10 years.
Odendahl said there’s now a general consensus that the financial sector plays an important role in creating an inclusive and environmentally sustainable society. But the attention on ESG has added noise to the space, she said, making it challenging for clients to navigate.
As a lender and investor working with one in 12 small- and medium-sized enterprises in Canada, BDC has massive power to guide businesses through these challenges.
“If I’m an entrepreneur and I want to green my operations, or serve more diverse clients or attract more diverse people to my team,” said Odendahl, “I want [BDC] to be a place where we’re going to cut through the noise for you.”
