Climate and recession: Canadian banks already affected

Events like the hurricane Fiona which hit the Maritimes and the Magdalen Islands hard last weekend is forcing Canada’s major financial institutions to react. They will have even more to do if they want to participate more actively in the changes that will affect the Canadian economy in the coming years, believes the President and Chief Executive Officer of Desjardins Group, Guy Cormier.

The big boss of Desjardins was invited to talk about the role of future generations in solving the labor shortage during the C2MTL business event, which takes place from September 26 to 28 at the Fairmont The Queen Elizabeth, in Montreal. The discussion quickly veered to future climate and economic issues, other problems whose solution, it seems, is largely in the hands of young people, according to him.

“Climate change, we are seeing it right now,” he later explained to the To have to. “Before, the main risk against which we insured our customers was the risk of fire. Today is the risk of flooding. It’s quite a change. We also have a big role to play in supporting our members financially » through crises like the hurricane. Fiona.

The greater frequency of such events is leading to awareness in the Canadian financial sector, assures Guy Cormier, even if the industry is increasingly accused of laxity, if not bad faith in its slowness to disengage from polluting industries such as fossil fuels.

Before, the main risk against which we insured our customers was the risk of fire. Today is the risk of flooding. It’s quite a change.

“I’ve seen an awareness in our industry over the past 12 to 24 months that I’ve never seen before,” says Cormier. In 2021, Desjardins Group published an action plan to achieve a “net zero emissions” balance sheet by 2040 for its operations, financing and investments.

Not all Canadian banks have the same commitments. The five largest institutions in the country – RBC, Scotiabank, TD, BMO and CIBC – for their part increased their support for the fossil fuel sector by 70% in 2021 compared to the previous year, observed Greenpeace Canada earlier. this year.

Another slack period

In addition to the climate, the economic uncertainty of the coming months could also worry the banking sector. Mortgages and financial assistance to individuals and businesses become more precarious each time the Bank of Canada raises its rates, and if we are to believe the experts, it is not done pushing its key rate, so well that a recession is expected to hit the Canadian economy by 2023.

Desjardins Group also foresees more difficult economic conditions in the coming months and has already put measures in place to avoid the worst. Its president indicates in particular that its agents are trying to communicate with customers most at risk to help them anticipate rising costs and falling revenues in the coming months.

Already heavily affected by two years of a pandemic which caused them to close for several months, businesses in the catering, accommodation and tourism sector could once again have to tighten their belts, warns Guy Cormier. “We have identified these sectors how those that could suffer the most [d’une éventuelle récession] over the next six to eight months,” he says.

Soon, we will have to pay as much attention to the ESG report as to the quarterly financial report

The businessman from the cooperative community hopes that this repetition of past and future turbulence will make it clear that the current economic model, where companies promise eternal growth every new quarter, may not be sustainable. It will be necessary to take more account of the climate cost in the measurement of economic activity to try to reconcile the business world with that of the climate, if not disasters like the hurricane Fiona will be more and more damaging.

The arrival in Montreal of the International Sustainability Reporting Standards Board (ISSB) is a step in this direction, believes Guy Cormier. “Soon, we will have to pay as much attention to the ESG report as to the quarterly financial report,” he predicts. “I am convinced that it will happen before the end of the decade. »

If so, the younger workers will probably have to be thanked who could radically change the world of work and business, he hopes, optimistically. “The last time we made so much room for young people in the economy and politics, it gave the Quiet Revolution. See how we’ve changed the business world in just two and a half years. This is very encouraging for what awaits us in the coming years. »

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