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Finance and climate: Canada “lagging behind” | COP28: climate summit in Dubai

Natasha Kumar By Natasha Kumar Dec5,2023

Finance and climate: Canada 'lagging behind' | COP28: climate summit in Dubai

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Protesters awarded Royal Bank President Dave McKay the title of “climate traitor of the year” during a demonstration in Toronto, in October 2022.

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Non-governmental organizations believe that the Canadian financial sector is too slow to transition to renewable energy. An independent senator has introduced a bill to try to change things.

Environmental Defense was one of 100 signatories , this fall, with a letter that urged the Senate to study Bill S-243, which aims to align finance and climate change.

Sustainable finance is a missing piece in the plan to reduce our emissions in Canada, says Julie Segal, executive member of Environmental Defense. Even though several financial institutions have made commitments, many of them do not have a real plan to achieve it, underlines Ms. Segal. She says she fears a form of greenwashing.

Now, Canada is at lags behind other jurisdictions.

A quote from Julie Segal, executive member of Environmental Defense

For the environmental organization and several other groups, the entire sector of finance, i.e. pension funds, public organizations and, above all, the country's five major banks, continue their investments in fossil fuels.

COP28: climate summit in Dubai

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Reports produced on the subject seem to prove the environmental groups right. Each year, a report, entitled Banking on Chaos, analyzes the investments of the 60 largest banks in the world. A coalition of civil society groups has been producing this document for over a decade.

According to the most recent edition of this report, Canadian banks are among the largest lenders to the oil sector. For example, RBC invested more than $56 billion last year, an amount that is growing. Scotiabank injected nearly 40 billion.

For its part, the Canadian Banking Association affirms, on the contrary, that climate change is a critical problem and that the country's banks are committed to doing their part to face it.

The Standing Senate Committee on Banking, Trade and the Economy is currently studying Bill S-243, the Climate Commitments Act.

Independent Senator Rosa Galvez introduced this bill.

The oil industry receives billions per year in subsidies. The feds say they're going to stop. This should light up the lights at the banks.

A quote from Rosa Galvez, independent senator

I realize that they have a model which tells them that they must maximize the return, but that these models are really disconnected from reality, adds Ms. Galvez.

His bill is unlikely to be adopted in its current form. But that was not necessarily the senator's goal. To tell you honestly, my initial objective was for us to start talking about that, precisely in the banking committee.

She claims to have been approached by MPs who would be ready to support the tabling of such a bill in the House of Commons.

Professor at Olaf Weber directs the CIBC Chair in Sustainable Finance at York University. He has published numerous scientific articles on finance and climate change.

Mr. Weber acknowledges that the Canadian banking sector is slow in its efforts to move away from fossil fuels. But if Canada does not have a firm position on fossil fuels and tar sands, should banks play this role?, he asks.

In Professor Weber's opinion, if the federal government put in place a clear guideline, banks would comply.

He also believes that renewable energies represent a more fragmented investment sector. From a financial risk management perspective, big oil companies have known, stable structures, notes Mr. Weber. In the renewable energy sector, there can be hundreds of companies, and the structures are completely different.

It' is a change that can take time. Are they really pushing to change their investments? I don't know, I would have expected more proactivity from the banks, says Olaf Weber.

Environmental groups are hoping for a intervention by Prime Minister Justin Trudeau or the federal Minister of Finance, Chrystia Freeland, to force the banks to change their approach.

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Natasha Kumar

By Natasha Kumar

Natasha Kumar has been a reporter on the news desk since 2018. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Times Hub, Natasha Kumar worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my 1-800-268-7116

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