Canadian banks fail to meet climate standards set by UN coalition, says Greenpeace
Canada’s biggest banks could be kicked out of a UN-backed zero-emissions coalition if they don’t step up their climate commitments, according to a report released Wednesday by Greenpeace Canada.
The report focuses on updated standards released in June that more clearly set out the expectations of members of the Race to Zero coalition.
Greenpeace Canada’s senior energy strategist, Keith Stewart, said banks are currently not meeting the new, tougher standards.
“It’s really significant that the UN is basically … saying we’re not going to let our name be used to advance claims that are more public relations than reality,” Stewart said.
Last year, RBC, TD, CIBC, BMO and Scotiabank all joined the Glasgow Financial Alliance for Net Zero, led by former Bank of Canada Governor Mark Carney. The alliance, anchored in Race to Zero rules and criteria, commits banks to achieve zero net funded emissions by 2050 and to set interim reduction targets to be achieved by 2030.
When the banks joined, there was little guidance on these intermediate targets, although the alliance urged members to be aggressive in setting them, as the next few years are crucial in determining the severity of climate change.
However, Race to Zero’s June update calls for interim targets to be a « fair share » of the 50% cut in global emissions needed by 2030.
The update also highlighted the need for the targets to cover all types of emissions, direct and indirect, and the need for companies to restrict the development and financing of new fossil fuel projects.
In releasing the refined criteria, the group said it was making explicit what was previously implicit in the guidelines to « clearly show which actors are really moving forward versus those who are trying to find loopholes ».
Stewart said Canadian banks are falling behind those standards on both interim targets and their overall funding for the fossil fuel industry.
« Involvement in the race to zero criteria…is not new fossil fuels, and halves your fossil fuel funding by 2030, which is a much bigger step than anything most global banks are really doing right now, and certainly Canadian banks that are increasing their fossil fuel financing,” Stewart said.
Fossil fuel financing needed for the transition: banks
Four of Canada’s largest banks released their 2030 targets earlier this year, which range from 24% to 35% reductions in funded emissions, while RBC plans to release targets this fall.
The bank’s targets also run counter to the direction of having absolute reduction targets. In addition to part of BMO’s target, Canadian banks’ targets are intensity-based rather than absolute, which means that while emissions per barrel of oil produced may decline, the number of barrels financed may still increase. .
Banks have touted their continued funding of fossil fuel companies as necessary to facilitate the transition to more sustainable forms of energy, as noted in the Canadian Bankers Association’s response to the Greenpeace report.
“Banks will continue to work with their customers in the oil and gas industry to help them transition to a more sustainable future… by financing pathways to sustainability, banks are helping Canada phase in emissions reductions while helping meet energy demand in an unstable global context. . »
Individual banks also highlighted their role in helping businesses transition, with RBC saying « the biggest impact RBC can have is helping our clients transition. » CIBC said, « We are accelerating our efforts as we work with our clients through this transition. » And BMO said its climate ambition was to be its customers’ primary partner in the transition.
Stewart, however, said most Canadian bank financing to fossil fuel companies, which totaled $911 billion between 2016 and 2021, happens without any connection to the transition process.
« They give global lines of credit to these companies. And as long as the company has fossil fuel expansion programs on its books, that’s what it’s financing. »
Examination of the financing needed to avoid « greenwashing »
He said careful scrutiny of this funding will increase as groups like the Glasgow Alliance warn transition funding needs careful scrutiny to avoid ‘greenwashing of status quo funding activity’ .
The rules around membership criteria and what it would take to kick someone out of these international climate coalitions are still evolving. However, the pressure is increasing, especially as the deadly and destructive effects of climate change increase.
Along with extreme droughts in Europe, China, the Horn of Africa and the southwestern United States, this week extreme rainfall in Pakistan caused flooding that killed more than 1,000 people, including about a third of children.
UN Secretary-General Antonio Guterres said the floods were a climate disaster and action needed to be taken to prevent the worst from happening.
« Let’s stop sleepwalking towards the destruction of our planet through climate change, » he said in a statement.
“It is outrageous that climate action is being put on the back burner as global greenhouse gas emissions continue to rise, putting us all – everywhere – in growing danger.”