This article was published by The Energy Mix on April 23, 2023.
By Mitchell Beer
Canadian banks’ failure to fight climate change on their own is the best proof that the sector needs to be regulated through federal legislation, two of Canada’s top climate finance experts write in a Globe and Mail op ed this week.
“While in 2021 all of Canada’s Big Five banks committed to reduce the climate-related emissions from their investment and loan portfolios to net-zero by 2050, the three years since have demonstrated a concerning trend of climate-related backsliding,” write Sen. Rosa Galvez (ISG-Quebec), whose Climate-Aligned Finance Act (CAFA), Bill S-243, is now before a Senate committee, and Julie Segal, senior climate finance manager at Environmental Defence Canada, who was called to testify on the bill last week.
“The Big Five Canadian banks remain among the largest financiers of oil, gas, and coal globally,” Galvez and Segal state. “They also underinvest in the clean energy sector, favouring fossil fuel investments over clean energy investments at a ratio of 3.9 to 1. In the absence of policy action, there is little to hold banks accountable to deliver on their green promises.”
The op ed appeared on the same day that 17 banks, including Canada’s Vancity, signed on to the Fossil Fuel Non-Proliferation Treaty. The institutions are all members of the Global Alliance for Banking on Values (GABV), and have operations in 14 countries.
“The Fossil Fuel Treaty is a binding agreement, signalling that businesses are ready and willing to make this commitment,” said GABV Chair David Reiling, CEO of U.S.-based Sunrise Banks, in a statement released by the treaty secretariat. “By signing onto this treaty, we are levelling the playing field and driving a global and equitable transition to meet our 2050 net zero commitment.”
Segal’s appearance last week before the Senate Committee on Banking, Commerce and the Economy came more than two years after Galvez first introduced Bill S-243, and scarcely a week after three Canadian senators, MPs from four of the five parties in the House of Commons, and a handful of national and international dignitaries celebrated the bill’s anniversary by urging Parliament to pass it now. The testimony, delivered on less than 24 hours’ notice, appeared to receive a sympathetic reception from a couple of committee members and a more critical one from several, including committee chair Sen. Pamela Wallin (CSG-Saskatchewan).
“To be clear, Canada is lagging international allies and competitors when it comes to sustainable finance policy,” Segal said, in reply to a question from committee deputy chair Sen. Tony Loffreda (ISG-Quebec), who previously served as vice-chair of the Royal Bank of Canada. “Canadian banks are actually quite significantly critiqued internationally for moving too slowly on the climate transition and investing excessively in fossil fuels,” and “policy like CAFA would simply bring Canada up to speed with the economic directions of countries that are moving forward to keep their economies competitive.”
Segal distinguished between a draft, and hotly-criticized, climate disclosure standard released last month by the Canadian Sustainability Standards Board (CSSB) and the binding authority of legislation. “CSSB is not a regulatory initiative,” she explained. “It’s a private sector-led initiative,” under which provincial securities regulators would make their own, voluntary decisions on how and whether to comply.
“CSSB is not a regulator, so it does not have a democratic mandate, as government institutions do, to move forward on solutions,” she added. “And that’s a very important point.”
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