The Puck Was Never There

CommentaryThere’s an old hockey expression for the player who chases the puck to where it was, not where it’s going. In hockey, you lose the play. In financial regulation, you lose something considerably more valuable: the retirement savings of millions of Canadians who trusted the people managing their money to have checked the foundational assumptions. Canada’s financial regulators have an assumptions problem, and a recent, seismic development in climate science has made it impossible to ignore.In April 2026, the ScenarioMIP committee responsible for developing the emissions scenarios that feed the UN Intergovernmental Panel on Climate Change (IPCC) officially retired its most extreme emissions pathways—RCP8.5, SSP5-8.5, and SSP3-7.0—declaring them “implausible.” These are not fringe scenarios. They are the foundational inputs that shaped climate-related stress testing, capital requirements, and disclosure mandates across the global financial system, including Canada’s.Representative Concentration Pathway 8.5 (RCP8.5) described a future in which global coal consumption expands at least five-fold by 2100, driving catastrophic warming of up to 5°C. It was widely labelled “business as usual,” the baseline from which responsible institutions were expected to plan.But energy economists were flagging RCP8.5 as implausible as far back as 2017. Coal was already losing market share, not gaining it five-fold. As researchers Roger Pielke Jr. and Justin Ritchie documented, “RCP8.5 represents not just an implausible future in 2100, but a present that already deviates significantly from reality.” The ScenarioMIP committee’s new highest pathway projects emissions roughly 45 percent below RCP8.5 and SSP5-8.5 by 2100—a staggering gap between what we were told and what was always plausible.This is a crucial distinction. RCP8.5 did not become implausible because the world changed. It was built on assumptions inconsistent with available evidence at the time—a worst-case political fiction dressed up as a scientific baseline.The uncertainty runs deeper than any single scenario. Climate sensitivity itself, how much warming a doubling of CO2 produces, remains genuinely unresolved, with peer-reviewed estimates ranging from roughly 0.5°C to 4°C. The low end implies modest, manageable change. The high end implies serious disruption. Canada’s financial framework was built as if only the high end existed.Canada’s Office of the Superintendent of Financial Institutions (OSFI) embedded climate scenario analysis into Guideline B-15, drawing on IPCC scenarios and the Network for Greening the Financial System (NGFS). Canadian banks must now stress-test against climate scenarios, disclose Scope 1 (direct emissions from sources that are owned or controlled by an organization) and Scope 2 (indirect emissions associated with the purchase of electricity, steam, heat, or cooling) emissions. They must report Scope 3 emissions (indirect emissions that occur in an organization’s broader value chain) by fiscal year 2028. The NGFS “Hot House World” pathway was calibrated to RCP8.5, and this same framework drives stress tests at more than 140 central banks worldwide.The problem compounds downstream. Tens of thousands of peer-reviewed studies used RCP8.5 as their primary scenario. None will be retracted, yet they remain embedded in the regulatory guidance connecting a discredited scenario to the capital requirements of a Canadian chartered bank.The flawed climate science was the premise. The financial results are the verdict.A 2026 peer-reviewed study in Finance Research Letters examined 20 years of S&P 500 performance. The lowest-ESG-scored quintile returned 923 percent from 2005 to 2024; high-ESG portfolios returned 89 percent. The S&P 500 itself returned 306 percent—more than tripling the “responsible” portfolio. Even on a risk-adjusted basis, high-ESG portfolios showed no advantage. Two decades of data suggest that systematically screening for ESG scores has cost beneficiaries real money, without compensating reduction in risk.Fiduciary duty means one thing above all: act in the sole financial interest of the people whose money you manage. When regulators require stress-testing against scenarios built on implausible assumptions, the question of whether fiduciary obligations have been met deserves serious examination. The system did not apply to its climate risk inputs the same scrutiny it applies to other material assumptions—and the people who paid for that gap were the beneficiaries.RCP8.5 is being quietly retired. ESG as a label is losing institutional support. But the underlying premise, that minimizing a portfolio’s carbon footprint justifies overriding the beneficiary’s financial interest, is not being dismantled. It is being rebranded: “sustainability,” “responsible investing,” “impact.” The vocabulary evolves; the fiduciary problem persists. The tell is always in the foundational question: does the framework ask what maximizes returns for the people whose money I manage? Or does it ask what reduces the carbon footprint of my portfolio? As 20 years of data confirm, those questions frequently point in opposite directions.Canada’s banking system earned its global reputation for stability through rigorous, evidence-based supervision. That reputation is now staked on premises that have not been adequately examined. We all relied on scenarios presented as authoritative. They were not. The question is what we do about it now.First, OSFI should commission an independent review of the scenarios underlying Guideline B-15, assessed by energy economists—not just climate scientists—for basic plausibility.Second, any scenario used in mandatory stress testing must be validated against current emissions data, energy market trends, and demographic projections before it can ground a binding obligation.Third, when the next rebranded framework arrives—and it will—the foundational question must be asked first: does it begin from the financial interest of Canadian beneficiaries, or from somewhere else entirely?The puck was never where we were told it was. It’s time for Canada’s regulators to skate to where the evidence actually is.Tom Harris is Executive Director of the International Climate Science Coalition – Canada.Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.