Stream 2: Corporate Strategy

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LCR Framework / Action Pathway 2

ACTION PATHWAY 2:

Corporate Strategy

Action Pathway 2: Corporate Strategy is useful for communities looking for guidance on how to mainstream climate action across their organization and future-proof decision-making. This pathway explores how local governments can adopt a low carbon resilience (LCR) lens in corporate strategy to enable shifts in governance systems, foster innovative procurement policies, and develop more resilient economic practices.

Climate change is no longer a far-off threat. Cities, towns, and villages are grappling with wildfires, flooding, unpredictable weather events, and local economic hardships. Local governments are already seeing the impacts of these events in their operational budgets—for example, costs incurred from service disruptions or cleaning up after severe weather events, health impacts on vulnerable populations and ecosystems, and as losses in key economic drivers such as tourism due to wildfire smoke. These events will continue to increase in frequency and intensity and the recovery time between events will shorten, leaving communities with less time to recuperate and dampening overall resilience.

To improve resilience and prevent runaway climate change, local governments must not only anticipate and buffer climate impacts, but slash corporate and community emissions while doing so. Yet conventional governance structures don’t often facilitate these interconnections. Local governments tend to work in silos, making uncoordinated policy decisions, actions and investments that can hamper or contradict effective responses. This lack of strategic, systems-based approaches often prompts local governments to react using piecemeal approaches that duplicate spending, misdirect investment, and escalate costs.

Fortunately, there is a more comprehensive and systemic way forward called low carbon resilience (LCR). Effective LCR responses will buffer communities against the impacts of climate change, lower greenhouse gas emissions, and address other community priorities like health, biodiversity loss, rising inequity, and clean economic development. This can be done by co-evaluating adaptation and mitigation strategies and mainstreaming climate action throughout the organization.

In this pathway, we discuss how local governments can adopt an LCR lens (see Figure 1 below) in corporate strategy to enable transformative shifts in governance, foster innovative procurement policies, and develop more resilient economic practices. 

  1. Transformative Shifts in Governance  
  2. Innovative Procurement Practices 
  3. Resilient Economic Practices 

Figure 1: Low Carbon Resilience Lens

The figure above illustrates the three pillars of the LCR approach; reducing climate risk and vulnerabilities, reducing emissions and advancing co-benefits. In essence, this approach aims to embed these three additional criteria into all decision processes. By asking these relevant climate questions alongside cost and feasibility considerations in decisions made now, leaders can reduce climate risks and projected damage costs into the future, transition toward zero emissions targets, and transition towards resilient and sustainable communities.

Climate change adaptation (risk and vulnerability reduction) refers to actions that reduce the negative impact of climate change, while taking advantage of potential new opportunities (NRCAN, n.d.).

Climate change mitigation (emissions reduction) is achieved by limiting or preventing greenhouse gas emissions and by enhancing activities that remove these gases from the atmosphere (IPCC, n.d.).

 A low carbon resilience approach co-evaluates risk and vulnerability and emissions data to prevent policy contradictions and identify opportunities for synergies. In turn, synergistic policies can result in positive social, economic, and ecosystem benefits, which are referred to as co-benefits (ACT, 2021). Common co-benefits include improving biodiversity, promoting a circular economy, or enhancing community livability, to name a few. For more examples, see LCR: Advancing the Co-benefits of Climate Action Tool

A. Transformative Shifts in Governance

Conventional, hierarchical governance structures have been developed with siloed departments, creating the conditions for uncoordinated policy decisions, actions, and investments that may end up being contradictory and costly. Alternatively, an LCR approach asks local governments to work collaboratively to address climate change and mainstream climate action, acknowledging that every department will be influenced by climate change, and that every department contributes to climate change. This collaborative and systemic mindset change can catalyze changes to corporate structure, sparking a shift from hierarchical management to cross-cutting and collaborative team-based management (see the Case Study at the end of the page). Systems-level benefits of streamlining climate action in governance processes include: 

  • Fostering strong relationships. An LCR approach clarifies that is the responsibility of everyone within the organization to act on climate change. Adopting an LCR lens in decision making helps facilitate conversations about the priorities of different departments and identify synergies for climate action and co-benefits, which can streamline existing work and budgets. For example, bringing parks planners and engineering together can lead to collaborative opportunities for nature-based solutions, providing adaptive potential via flood absorption, carbon sequestration, and co-benefits like increased habitat or biodiversity, helping meet conservation targets.

  • Building cost saving and co-funding opportunities. Integrating climate projections into projects and investments across the organization is a fiduciary responsibility of government to ensure that future decisions are systemic, rather than reactive (see the LCR Decision Tool for more on systemic decision making). Streamlining planning processes can save local governments time and money. The City of Port Moody for instance, estimated that by pursuing one integrated process instead of three, they saved 50 per cent of funds and approximately one year of time. Streamlining can also expand opportunities for co-funding among conventionally disparate departments and the co-benefits of integrated climate action can be a conduit for even more funding opportunities.

  • Improving climate literacy and accountability. Moving climate action out of a siloed position within the sustainability or environmental department improves climate literacy amongst all staff and makes the connection between climate change impacts and individual department’s respective work clear. In turn, this can help move actions in implementation by building shared accountability for climate action and increasing climate action buy-in (see Figure 2). Numerous ICABCCI case communities noted that engaging with their finance department from the outset has been instrumental in for building in climate accountability and advancing organization wide LCR practices. 

Figure 2: The City of Edmonton's Carbon Budget

The City of Edmonton adopted a Carbon Accounting Tool as part of its Carbon Budgeting Framework to track the impact of actions across sectors (e.g., residential, transportation, waste) against its overall carbon budget. This framework integrates emissions implications into city governance, builds carbon literacy within the organization, and provides greater accountability by tracking emissions, enabling transparent reporting, and identifying trade-offs and synergies between finances and emissions. Image and information from the City of Edmonton Information Brief: Carbon Budget and Accounting, November 2019. 

Governance 

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“We’re finding that part of the benefit of this process is the cross-departmental exchange to collaborate towards high priority actions… Even [Finance] have become climate action champions on the budgeting side of things, to make sure climate action is integrated into our processes.” – LCR Champion

B. Innovative Procurement Practices

As purchasers of significant goods and services, governments play an important role in the Canadian economy. Public procurement accounts for over 13% of Canada’s GDP and nearly 33% of total government expenditures (Clean Energy Canada, 2019). The procurement of goods and services represents a key function of government and a strategic opportunity for governments to lead by example, drive innovation, and advance priority policy goals. 

In recent years, the concept of ‘green procurement’ has gained global attention as governments of all sizes have updated procurement practices to mitigate damages to the environment. This has led to growing adoption of tools such as full lifecycle assessments, total cost of ownership, and sustainability criteria, which foreground environmental considerations alongside questions of price, availability, and quality. While this uptake reflects an important movement in global environmental consciousness, the full potential of procurement as a strategic lever for climate action remains untapped.

Green procurement efforts are often fragmented across organizations, siloed from other community priorities, and critically missing considerations of climate impacts and vulnerabilities. Public investments in assets, infrastructure and operations that do not embed considerations of climate risks represent a risky and inefficient use of taxpayer dollars. As governments face increasingly complex and overlapping challenges, a significant opportunity exists to leverage public procurement as a strategic tool to synergistically advance climate priorities alongside procurement objectives. 

Applying an LCR lens (see Figure 1 above) in procurement via corporate purchasing, investments, and partnerships can help future-proof decision-making, avoid costly contradictions, and maximize synergies with other policy priorities and goals. The highly influential nature of procurement on both internal operations and organizational culture makes it a strategic entry point through which LCR can be mainstreamed across all departments and levels of decision-making. Guiding principles for LCR procurement include:

  • Embedding an LCR lens into procurement policies and frameworks. Identify opportunities to embed an LCR lens into official procurement policies, processes, and frameworks. Use the LCR Decision Tool (e.g., does this action increase, maintain, or reduce risk?) in different stages of the procurement process, such as in technical specifications, definitions of need, supplier selection criteria, and/or contractual obligations, to prompt the co-evaluation of climate risk, emissions, and other community co-benefits. 
  • Demonstrating how proposals/plans meet LCR outcomes. Public procurement has been shifting towards outcomes-based approaches to promote innovation and allow for flexibility among suppliers and proponents. Outcomes-based LCR procurement awards contracts based on proponents’ ability to meet or exceed defined LCR outcomes. Establishing desired LCR outcomes and objectives can require decision-makers to consider these factors when initiating procurement cycles; for example, challenging project proponents to demonstrate how their product or proposal will meet the criteria of reducing climate risk & vulnerability and emissions, and/or advancing co-benefits. By not pre-determining a specific pathway to the desired LCR result, governments can create opportunities for innovation.
  • Consider creating a high-level LCR procurement strategy that outlines public procurement objectives and priorities, and how they contribute to LCR outcomes. Include clear and relevant definitions, objectives, and targets. Emphasize alignments with other corporate plans (such as the Community Energy & Emissions Plan and Hazards, Risks, & Vulnerabilities Assessment) and determine public procurement contributions to achieving stated goals.
  • Building staff awareness and competencies. Updates to procurement policies, guidelines, and directives will lack impact if they are not accompanied by staff training and awareness. A focused effort on communicating key messages to staff, suppliers, and proponents can go a long way in contributing to a cultural shift. Aim to build an organization-wide understanding of the LCR concept and how it relates to procurement processes. Guide each department in understanding the role they play in contributing to a low carbon resilient future. Gain the support of senior leadership across the organization to promote the adoption and commitment to LCR procurement practices. Host training sessions or create resources to increase staff competency and awareness of LCR. Clear and consistent messaging is key to building momentum and shifting internal attitudes, behaviour, and culture.

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Canada’s federal government is leading the way in LCR procurement practices. Under Canada’s Greening Government Strategy, investment decisions on all new construction and major retrofits must be based on total cost of ownership, which includes consideration of climate adaptation, mitigation, and resilience (Government of Canada, 2020).

The strategy mandates that:

  • All new federal buildings (including build-to-lease and public-private partnerships) will be net-zero carbon unless a life-cycle cost-benefit analysis indicates net-zero-carbon-ready construction
  • All major building retrofits, including significant energy performance contracts, require a GHG reduction lifecycle cost analysis to determine the optimal GHG savings (the lifecycle cost approach will use a period of 40 years and a carbon shadow price of $300 per tonne and be maintained at all project stages)
  • All new federal buildings, infrastructure, and major building retrofits, including significant energy performance contracts, require a climate change risk assessment that incorporates both current and future climate conditions in the analysis

 

This leading-edge example highlights how LCR criteria can be embedded into procurement decisions.

 

[1] Government of Canada (2020). https://www.canada.ca/en/treasury-board-secretariat/services/innovation/greening-government/strategy.html

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Applying an LCR lens to procurement is not an “additional” process; rather, it builds upon and within existing procurement procedures to integrate consideration of climate criteria and co-benefits into decision-making.

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Community Call Out

Case Study

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Implementing Inner Image

Regulatory Frameworks

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