Last month, the Intergovernmental Panel on Climate Change (IPCC) released its latest report warning that the window for preventing climate chaos is closing rapidly. It defines climate change as a global challenge requiring regional-scale solutions.
Importantly, the report asserts that climate change is as much a social problem as a scientific one, concluding that “climate-resilient development” must focus on decarbonization, adaptation, biodiversity preservation and social equity.
So, what’s Canada doing to create these regional-scale solutions? Our community sector has a big role to play.
The sector’s 170,000 charities and non-profits include hospitals, universities, philanthropic foundations, chambers of commerce, professional associations, cultural organizations, co-operatives and social enterprises. With 2.5 million employees and almost $170 billion in annual revenues, it’s an under-recognized wellspring of innovation, social capital, shared values and community well-being.
Canada’s community sector can help shape a ‘transition economy’ by funding organizations that produce social and environmental outcomes in addition to profits, by participating in rapid testing to generate evidence-based policy innovation and by supporting comprehensive community-transition initiatives.
The federal government will shortly name the organizations who will act as intermediaries for Canada’s Social Finance Fund (SFF) — a $755-million fund for putting capital to work in the social sector — based on the successful UK-model, Big Society Capital. Using SFF as a matching fund, the intermediaries will attract new capital to make loans and investments in social-purpose organizations.
Quebec’s l’économie sociale shows what this kind of transition economy could look like. In a province with a GDP of $365 billion, 11,200 social economy organizations generate $48 billion in revenues. They work in areas ranging from the arts and agriculture, to retail, restaurants, manufacturing and IT — prioritizing the common good over private profits.
Also at issue is how social and economic systems can be adapted or replaced to produce better outcomes for people and the planet.
In their 2019 book Good Economics for Hard Times, Nobel Prize-winning economists Abhijit Banerjee and Esther Duflo advocate for policy innovation informed by experiments that test solutions to real problems. This is a principle behind social impact bonds (SIBs), where private investments enable community coalitions to test new approaches to complex challenges, with governments, foundations or corporations repaying investors based on results. When SIBs establish goals but not the precise steps for achieving them, they can be a useful form of social research and development.
The Deshkan Ziibi Conservation Impact Bond is a good example of a SIB focused on climate resilient development. This groundbreaking initiative works on biodiversity protection and investment in a reconciliation economy across a large swath of southwestern Ontario. Partners include Carolinian Canada Coalition, the Chippewas of the Thames First Nation, Thames Talbot Land Trust, VERGE Capital and Ivey Business School. 3M Corporation serves as the outcome buyer.
Social impact bonds have also been used to improve high school completion rates; reduce the number of Indigenous children placed in foster care; and stem the spread of chronic disease. Concerns that SIBs lead to privatization of public services have not been borne out.
With their capacity to both grant and invest for modest returns, philanthropic foundations are well-positioned to support SIBs in collaboration with governments and community partners.
At MaRS Centre for Impact Investing — a Canadian social impact bond developer — Jason Sukhram, director of impact measurement and management, says: “SIBs remain an under-utilized tool for public sector innovation. They can also empower social purpose organizations to measurably improve outcomes in areas where there’s room and urgency for progress.”
Finally, comprehensive, consultative collaboration among community stakeholders can serve as both a test bed and bedrock for a transition economy. This is the premise behind initiatives such as Second Muse’s Future Economy Labs, Low Carbon Cities Canada, Future Cities Canada, and the Tamarack Institute’s Community Climate Transitions program.
Tamarack Program Director Laura Schnurr recently wrote: “With jurisdiction over buildings, transportation, waste and land-use planning, municipalities have influence over approximately 50 percent of Canada’s emissions. They’re more nimble and closer to the ground than higher levels of government, enabling them to act quickly in a crisis and engage directly with residents. They’re also natural environments for piloting innovative climate solutions that can be scaled elsewhere.”
To meet Canada’s international climate commitments, we need regional solutions. Canada’s community sector can help us get there.
Stephen Huddart is a founding member of the Transition Innovation Group hosted by Community Foundations of Canada. He lives in Montreal.