Greenpeace: Canadian banks are not respecting their climate commitments

MONTREAL — A new report from Greenpeace Canada warns that Canada’s big five banks are at risk of being kicked out of the United Nations’ « Net Zero » banking club because they continue to increase rather than decrease their financial aid for fossil fuels. .

Just ahead of the UN climate summit in Glasgow in October 2021, major Canadian banks joined the Net Zero banking alliance launched by former Bank of Canada Governor Mark Carney.

By joining this alliance, they have committed to aligning their loan and investment portfolios towards achieving net zero greenhouse gas emissions by 2050, as well as setting interim targets for 2030 or earlier.

But rather than changing their practices and reducing the financing of the fossil fuel industries, the banks are increasing their aid to this industry, deplores Greenpeace in a report published on Wednesday.

‘Banks’ current commitments fall far, far short of what the UN has set as minimum requirements’ and ‘either they make a serious commitment to phasing out their financial support to fossil fuel companies or they will be shut out from the Net Zero banking alliance said Keith Stewart, senior energy strategist at Greenpeace Canada.

In its report entitled “Aligned with Target Zero? The so-called net zero commitments of Canadian banks,” Greenpeace relies on data from the Banking on Climate Chaos study, published by a consortium of environmental groups last spring.

According to this study, between 2020 and 2021, the financial support of the five major Canadian banks for fossil fuels has increased to the point where they are now among the 20 largest financiers of fossil fuels globally.

“After a marked decline in 2020 in lending to the fossil fuel sector due to the pandemic, support from major Canadian banks for the fossil industry increased by 70% in 2021 and represented the largest increase in funded emissions globally. “, underlines the report of Greenpeace.

The RBC, for example, has practically doubled its aid to this industry from 2020 to 2021, from $19 billion to $39 billion, according to data from the Banking on Climate Chaos study.

Paradoxically, in the same year in October, RBC, BMO, CIBC, Scotiabank and TD Bank announced in a joint press release that they had « taken steps to work with their customers to reduce carbon, invest in renewable energy projects and support sustainable finance.”

Phase out fossil fuel financing

The Net Zero banking alliance asks its members to « reduce and phase out all fossil fuels that cannot be subject to emission control measures as part of a just transition », but according to Greenpeace, none of the major Canadian banks have a policy to eliminate funding for the oil and gas industries.

The criteria of the Net Zero banking alliance also exclude the financing of any new project related to the combustion of coal.

But according to Greenpeace’s Keith Stewart, the coal project finance policies of major Canadian banks are « weak ».

In an interview with The Canadian Press, he gave the example of CIBC, which indicates on its website that it intends to “limit” its support for “the construction of new coal-fired power plants”.

« But limiting does not mean eliminating, » argued Keith Stewart.

He added that “CIBC has US$4.8 billion in coal-related loans or underwriting,” citing the “Global Coal Exit List,” a report by German NGO Urgewald on financing the global industry. coal.

Financing companies that have a transition plan

The Net Zero Alliance guide “makes it clear that continued fossil fuel funding is only appropriate if the company receiving it has a transition plan in place that is aligned with the principle of carbon neutrality,” said Keith Stewart. .

Yet, he added, « Canadian banks are financing companies like Suncor or Imperial Oil, which have no real transition plan. »

According to the rules of the Net Zero Banking Alliance, many members “can and should go beyond 50% emissions reductions by 2030,” and must achieve an end state of net zero emissions well before 2050.

« It’s time for banks to step up their game on climate finance and at least meet the UN minimum standards, rather than advocating a race to the bottom, » the Greenpeace spokesperson said.

The UN is currently developing a procedure aimed at expelling members who do not meet the criteria, mentioned Keith Stewart, stressing that « Canadian banks will have a harsh awakening if they do not comply with the rules ».

The banks respond

In email exchanges with The Canadian Press, the five banks defended themselves by saying they were making progress in their lending and investment portfolios toward achieving net zero greenhouse gas emissions. by 2050.

Scotiabank referred The Canadian Press to a document called “Going Carbon Neutral 2022” in which it says it aims to reduce CO2 emissions intensity for its oil and gas portfolio by 30% by 2030.

However, this document emphasizes that the achievement of the various targets depends on several factors, including “government policies and incentives; the scope and scale of actions taken by customers or sectors; the social acceptability of major economic changes; the pace of technological innovation; changes in consumer demand; and a host of other economic and social factors over which the Bank has little or no direct control”.

TD also stressed that “the transition to a low carbon economy will require collaborative efforts across multiple sectors over the long term” and that it has “an important role to play in the transition to a carbon neutral world”. .

“The biggest impact RBC can have is helping our clients make the transition. We work with clients across all industries through advice and financing solutions to help them move to net zero,” said RBC communications director Rafael Ruffolo.

In response to questions from The Canadian Press, BMO sent out a document called « Climate Report 2021 », in which it is written, in particular, that the bank has set a target of « 33% reduction in the intensity of emissions from portfolio by 2030”, with the aim of reaching net zero in 2050.

CIBC responded that it is “committed to making meaningful progress towards a low-carbon future and has “begun to set clear and measurable goals” to achieve net GHG emissions from its operations. and financial by 2050″.

Asked to comment on the study which indicates that the financial assistance of the main Canadian banks to fossil fuels increased in 2021, none of the five banking institutions provided a response.