9 minute read
Bank rolling environmental crisis
INVESTING IN DISASTER
Banks are boosting emissions by funding fossil fuels
Canadian banks continued financing of the fossil fuels industry coincides with increased greenhouse gas emissions in Canada. PHOTO FROM PEXELS
CHRISTIAN KINDRACHUK ckindrachuk@cjournal.ca
Compared to banks in other countries, those in Canada have poor climate policies that result in them investing billions into greenhouse gas emitting fossil fuels projects. Some of those banks are taking steps to gradually make their climate change policies better.
However, individuals can help speed that process by putting pressure on banks to change their policies and practices so they are in line with international commitments to help reduce greenhouse gas emissions.
The poor environmental performance of Canadian banks was highlighted in a report prepared by the Rainforest Action Network, a San Francisco-based group dedicated to protecting climate and challenging corporate power.
According to that report, the 35 banks it surveyed “have together funded US$2.7 trillion into fossil fuels in the four years since the Paris Agreement was adopted” - a legally binding international treaty that commits signatories to limit global warming to well below two degrees Celsius.
As a result, the report concluded “the private banking sector as a whole continues to take a position of extreme irresponsibility in the face of the climate crisis.” However, even by this low standard, Alison Kirsch, one of the report’s lead architects, said Canadian banks are lagging behind in their policies and practices, having failed to follow the climate leadership of European banks such as Crédit Agricole, RBS and UniCredit by phasing out fossil fuel financing.
As a result, Canadian banks ranked the lowest in their climate policies. Toronto Dominion (TD) got the best score out of the Canadian banks with three points out of the 200 available to be given. The other banks - Scotiabank, the Bank of Montreal and the Canadian Imperial Bank of Commerce - were even lower, being awarded just half a point.
While Canadian and United States banks are peers in the banking sector, Kirsch notes the clearest difference in their policies can be found around coal.
“It’s just the fossil fuel that’s kind of most agreed to have no place in a climate stable future, and the Canadian banks really have very few policies on coal.”
While coal is one fossil fuel that contributes to climate change it’s not alone. Oil and gas are also warming the planet, along with emissions from other sources such as raising livestock and logging forests.
Those emissions need to be reduced around the world to curb the impacts climate change will have, as outlined in the Intergovernmental Panel on Climate Change (IPCC) 2018 special report. Those impacts will include more flooding and droughts across Canada, as well as increased global conflicts and mass migration.
While emissions need to go down, the connection between increased investments from banks in fossil fuels and increased emissions in Canada is evidenced by a report from the Canadian Energy Regulator.
The report from 2020 highlights the change that needs to happen in order for Canada to reach its international commitments and achieve net zero emissions by 2050. However, it shows how much oil sands emissions have gone up over the past decade instead of down.
“In 2005, the oil sands accounted for approximately five per cent of Canada’s GHG emissions. By 2018, it increased to approximately 11 per cent. Absolute oil sands emissions increased by 51 per cent from 2011 to 2018,” read the report.
The banks continued funding of oil sands projects provide little incentive for that to change, even as demand for their product declines.
“Acknowledging oil demand will not disappear overnight, most outlooks predict demand will plateau or decline within the next decade,” states a report from the environmental Pembina Institute. “Subsequent global shifts toward lowerintensity energy options are likely to put more carbon-intense crudes — such as the bulk of oilsands products — at risk over the next decade.”
Statistics based from the 2020 banking on climate change report, authored by Rainforest Action Network, BankTrack, Indigenous Environmental Network, Oil Change
International, Reclaim Finance, and the Sierra Club. GRAPHIC PROVIDED BY ALISON KIRSCH
SLOW PROGRESS
While emissions have been increasing over the years, that’s not to say the banking sector hasn’t taken notice of the climate crisis. Kirsch says some progress is being made with banks globally.
“Every year, there continues to be policy improvement. And one thing that’s notable is the rate of policy improvement is changing,” said Kirsch. “I’m saying it to show that whereas we used to see policies once every three years, now it’s normal for banks to update their policies once or twice in a year and so that’s good.”
This can be seen with TD, which has implemented a target to reach net zero greenhouse gas emissions by 2050 as part of their climate action plan. TD has also set a goal of not funding further development in the Arctic circle.
“They’re the first policies from Canadian banks on oil and gas. They’re the first time that the Canadian banks have set a red line and said, ‘Actually, here’s something we won’t do.’ And that’s important, both practically and symbolically for the message that it sends to the oil and gas industry, that they won’t always just have a blank cheque from all of their favorite banks, for whatever activities they want to undertake, banks will draw lines,” said Kirsch.
The Rainforest Action Network reflects bank policies from the four years prior to 2020. However, an updated report is expected to come out at the end of March. Kirsch believes international banks are starting to feel the pressure to improve their climate policies.
“You really can see it in some of these banks, that their ambition is to be a leader on climate change, and not just to do the bare minimum and skate by with a greenwashing press release that they get credit for a second and then can go back into hiding. Some of them…have really taken that leadership step that we haven’t seen from the Canadian banks.”
She still worries their actions might not be strong enough. And even those weak actions aren’t being mirrored in Canada.
“I think [it] is both a recognition of that sort of embarrassing lack of action from the Canadian banks, as well as kicking the can down the road. Where what we feel is those 2050 visionary commitments are absolutely important, but need to be paired with those immediate 2021 commitments around what is your plan for financing fossil fuels today, tomorrow, and the day after that.”
“We have to transition off of fossil fuels and that’s just a fact,” she said. “Getting to net zero by 2050 means acting now.”
Transitioning from fossil fuels is important. The IPCC report states,if the world is able to keep warming below two degrees Celsius, the impacts of climate change will be lessened. The report also states that a transition is within reach.
“While acknowledging the challenges, and differences between the options and national circumstances, political, economic, social and technical feasibility of solar energy, wind energy and electricity storage technologies have substantially improvedover the past few years,” read the report.
BANK RESPONSES
TD:
“TD is committed to working with energy companies to help navigate the challenges, execute on their transition plans and capture the opportunities of the low-carbon future.”
CIBC:
“Our bank is at the forefront of financing new and innovative projects that contribute to cleaner, alternative or renewable energy supplies...We are committed to being part of the solution.”
RBC:
No response
SCOTIABANK:
No response.
BMO:
No response.
SOCIAL JUSTICE
According to Natural Resources Canada, Canada has committed to reducing greenhouse gas emissions by 30 per cent from 2005 levels by 2030. The IPCC special report notes in its key findings that “all countries are affected by global warming.”
PHOTO FROM PIXABAY
> Joe Vipond
Aly Sumar, who is pursuing his doctorate of business administration at the University of Calgary, thinks the future could be bright with an energy transition in line with climate targets.
“It’s important for all industries to be aligned here. And I actually think there’s a lot of good business to happen in the future, if businesses do pivot.”
RECOGNITION AND ACTION
Having banks recognize and adapt to climate change falls within their responsibility as a company to prevent further warming, according to Sumar, who is working on a thesis linking corporate social responsibility [CSR] with environmental measures.
He believes a bank’s CSR should be shown in their policies and practices that reflect their climate obligations, including what projects they might invest in.
“I’m looking forward to our economy transitioning...And I also think the CSR pressure is important, I think it’s important to keep it in the limelight, and people know that it’s important to them. And there is that tension to make sure that banks do change and regulation changes.”
While change is important, it doesn’t come without difficulties. Natural Resources Canada says we are a net exporter of oil because we produce more than we consume. The energy sector accounted for 10 per cent of Canada’s gross domestic product, and employed over 200,000 people in 2019.
“Canada is the fourth largest producer and third largest exporter of oil in the world,” according to Natural Resources Canada. “97 per cent of Canada’s proven oil reserves are located in the oil sands.”
“It’s no secret that we have a very resource based economy and because of that our banks are very resource focused,” said Joe Vipond, co-chair of Calgary Climate Hub. “It’s both a moral failing for our banks to be so heavily invested in the natural resources sector and it’s also financially unwise.”
Vipond has seen people become more aware of the problem over the years, as concern about the climate crisis increases.
“The main way to deal with some of the anxiety that comes along with the recognition of an existential crisis, like the climate crisis, is to get involved.”
Recognizing banking’s role in the climate emergency and taking individual action can be done by making the switch to a local credit union, which can allow money to stay within the community and offer a more transparent look as to what they invest in.
Before making the switch, Kirsch noted sending your bank a clear message as to why you are switching or leaving, such as a written letter, can go a long way in catching banks attention if your services don’t make much of a dent in the bank’s bucket.
“Being extremely clear about why you are moving your money, and that you will be convincing your friends and family to move their money unless the bank takes action. I think in that situation the banks absolutely do take notice,” said Kirsch.
“The more that these institutions are hearing from the public that this is a cause for concern, the more that they’re factoring it into their reputational risk equation, and that’s what banks do, they calculate risk all day.”
Concerns from the public are reflected in campaigns calling for banks to disinvest from fossil fuels. Examples include the Climate Pledge Collective’s bank switch challenge, For Our Kids network, which is aimed at parents looking to divest their savings, and the Fossil Banks No Thanks initiative calling on banks around the world to divest.
Vipond – who has been engaged in climate activism since 2012 – has divested his own finances into renewables and does not regret it.
“I think if you compare what’s happened in the stock markets from a carbon intensive versus carbon zero perspective, it’s been a good decade to be invested in renewables for sure.”
