As the planet experienced the hottest temperatures on record last year, Canada’s major banks stand out for their “profound” aid to the fossil fuel industry and continue to be among the largest financial backers of this sector globally, according to data from the most recent Banking on Climate Chaos study.
Financial aid from the world’s 60 largest banks to the fossil fuel sector would have reached US$708 billion for the year 2023, bringing the total since the Paris Agreement to US$6.9 trillion.
Of this US$6,900 billion granted since 2016, “a disproportionate contribution” of $911 billion comes from the five main Canadian banks, according to the latest report from Banking on Climate Chaos, published Monday by a consortium of environmental groups.
Three Canadian banks in the rankings
The report published Monday highlights that the prize for the largest lessor of the fossil industry goes, for the year 2023, to the American JPMorgan Chase, which increased its financing from 38.9 billion dollars in 2022 to 41 billion dollars. dollars in 2023.
Three Canadian banks are part of the list of 12 major financiers of the fossil fuel industry.
The Royal Bank of Canada (RBC), which occupied 2e place in the ranking in 2022, is now at 7e ranked with US$28.25 billion in investment.
Scotiabank is at number 10e rank with US$24.29 billion, followed closely by Toronto Dominion, at 11e ranked with US$20.25 billion.
The Bank of Montreal (US$15.754 billion) occupies 15e rank and CIBC is at 16e rank (US$15.506 billion) of the 60 major fossil fuel financiers.
Major tar sands lessors
The report highlights that globally, financing for oil sands companies declined in 2023 compared to previous years. However, four Canadian banks continue to invest heavily in this sector, to the point of occupying the first four places in the ranking in the oil sands category. CIBC, RBC, Scotiabank and TD each invested between $516 million and $523 million in this sector in 2023, according to the report.
Expansion plans
According to data from the Banking on Climate Chaos report, RBC (4e) and Scotiabank (6e) are both among the top 10 backers of fossil fuel expansion projects in 2023.
They would have funded US$14.9 billion and US$14.7 billion respectively to companies that intend to build new infrastructure that will add greenhouse gases for decades to come.
The report also highlights that four Canadian banks stand out by disproportionately financing fossil fuels.
“Given the size of their assets, some banks disproportionately finance fossil fuels, including Scotiabank, CIBC, BMO and RBC, outpacing their US counterparts like JPMorgan Chase, Citi and Bank of America,” it says. read in the report.
Stranded Asset Risks
According to Alex Walker of the Environmental Defense group, by continuing to “plow billions into fossil fuels, Canadian banks are exposing themselves to stranded asset risks.”
A stranded asset is an investment that loses its value before the end of its useful life due to the impact of changes in society, such as the energy transition required to combat climate change.
“It looks like the banks haven’t gotten the memo that the future is not in fossil fuel industries,” argued Alex Walker.
The Canadian banks that appear in the Banking on Climate Chaos ranking are nevertheless part of the Net Zero banking alliance, a United Nations initiative.
Institutions joining this alliance must commit to aligning their lending and investment portfolios towards achieving net zero greenhouse gas emissions by 2050, as well as setting intermediate targets for 2030 or earlier.
But for Alex Walker, the fact that “the main Canadian banks invested more than 100 billion in the fossil fuel industry last year underlines that voluntary initiatives do not work” and that we must “regulate the banks”.
An opinion shared by Karine Peloffy, project manager in sustainable finance at Ecojustice, for whom regulation of the financial sector “is the missing piece” of Canada’s climate policy.
“Our financial institutions are adding fuel to the fire” and “we risk suffering the disproportionate impacts of a climate crisis and a financial crisis when the rest of the world has made the transition,” he said. she indicated, also referring to the risks of stranded assets.
Bank reactions
The Canadian Press has requested a reaction to the new report from the Canadian Bankers Association.
Spokeswoman Maggie Cheung said “Canadian banks recognize the important role the financial sector plays in a smooth transition to a low-carbon future” and that by “financing current and new green projects , banks are helping Canada achieve carbon neutrality.”
A recent study by the think tank InfluenceMap, however, shows that between 2020 and 2024, the five largest Canadian banks have invested four times more in fossil fuels than in low-carbon energy supply projects.
A law to regulate banks
Mme Peloffy is one of the authors of Bill S-243, introduced by Senator Rosa Galvez.
This bill would notably impose on banking institutions the obligation to develop action plans against climate change, to have greenhouse gas emissions targets and to submit progress reports to fight against the climate crisis.
In the spring of 2023, MPs from the main federal parties, with the exception of the Conservative Party, united in supporting the bill.
S-243 is currently under review in the Senate.
Meanwhile, the House of Commons Standing Committee on Environment and Sustainable Development began a study last Thursday of the impact of the Canadian financial system on the climate and the environment.
The leaders of Canada’s five main banking institutions are called to testify.