The below opinion piece originally appeared in ‘Our Resilient Future’, a collection of opinion pieces by Canadian thought-leaders as part of the ICLEI Adaptation Changemakers project. The full Our Resilient Future collection can be viewed here.
By Paul Shorthouse, Senior Director, The Delphi Group
Climate change risks and opportunities are impacting all industries, including reshaping the finance sector and its investment and lending practices. Changes to the finance sector will inevitably impact on cities and their residents. Will cities, for example, be able to afford their infrastructure needs as climate risk reshapes the market for municipal bonds? What will happen to homeowners (and property tax revenues) if mortgage lenders can’t estimate the impact of climate risk over the length of a 30-year mortgage and if there is no viable market for flood or fire insurance in impacted areas?
The need to apply a climate lens to urban planning is particularly urgent for cities because the many components of municipal infrastructure and service delivery – from roads to sewers to transit to emergency services – have been built for tolerances and weather conditions that do not align with the new climate reality. Applying a climate adaptation lens to a local government’s infrastructure and financial planning is essential to ensuring that a city remains economically viable and resilient over the long-term. This, in turn, means extending the climate change discussion beyond the engineering and sustainability groups to more actively engage the finance department.
Fortunately, a process for applying a climate lens to financial planning, reporting, and risk disclosure has now been developed for local governments in Canada. The recently published document by CPA Canada, entitled “Enhancing Climate-related Disclosure by Cities: A Guide to Adopting the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)”, is based on the TCFD framework originally developed for the private sector and is designed to help cities determine what climate-related information is valuable for internal decision-making to support budgeting and capital planning.
In this time of climate risk and uncertainty, the Guide is a useful tool for municipal government decision-makers to enhance the long-term resiliency and financial viability of their communities.