(Toronto) Promising to stop emitting greenhouse gases has become so popular among large corporations that Canadian banks have made a commitment twice this year.
TD Bank had started the ball rolling towards the end of 2020, its competitors have followed suit throughout 2021. In November, they renewed their commitment by joining the Net Zero banking alliance launched by the former governor of the Bank of Canada, Mark Carney.
The UN and several other speakers recalled the importance of reducing greenhouse gas emissions during this decade. How will the big Canadian banks participate in this fight? We will only really know when they unveil their plan with precision, probably next year.
The banks have shown themselves to be stingy with details. Environmental groups are waiting to see if they come up with interim reduction targets and plans to achieve them.
In announcing their commitment, the banks did not state a target, but some indications could be revealed next year.
The pressures are mounting on large corporations as Canadians increasingly feel the impact of climate change. Environmental activists are increasingly focusing their efforts on financing the production of fossil fuels.
PHOTO CARLOS OSORIO, REUTERS ARCHIVES
Greenpeace activists blocked access to the Royal Bank’s head office in Toronto on December 7.
Governments also want to act quickly. Even US President Joe Biden has raised the specter of regulation if the industry does not move fast enough on this issue.
The financial sector is talking more and more about the importance of taking action. He wants to collect data and set standards that will enable important action to be taken on climate change.
“No one is aware of it anymore. Not a single continent that has not suffered the consequences of climate change, ”notes Margaret Franklin, the CEO of the CFA Institute, which unveiled a guide to sustainable investments in November.
“Cooperation is starting to take hold because of the urgency of the situation,” she adds. So far, we have seen chaotic, fragmented, scattered efforts, each offering something on their own. Now we are starting to see a centrifugal force to consolidate everything. ”
Despite all these wishes expressed by the big Canadian banks, they remain important investors in the oil industry.
Two independent reports released by environmental groups indicate that Canada’s five largest banks – Royal Bank, TD Bank, Scotiabank, Bank of Montreal and Canadian Imperial Bank of Commerce – have lent or subscribed nearly $ 700 billion to fossil fuel companies since the signing of the Paris Climate Agreement in December 2015.
Reducing access to capital is an important issue, as it will drive up project costs for this industry. Companies will then begin to consider solutions that emit less greenhouse gases, says Keith Steward, a senior strategist at Greenpeace Canada.
By stifling funding for fossil fuels, we create a greater need to find and launch alternative projects.
Keith Steward, strategist at Greenpeace Canada
Major Canadian banks have pledged to invest hundreds of billions of dollars in sustainable energy projects aimed at reducing greenhouse gas emissions, but Steward and others are concerned about the stringency of conditions. these loans. Canadian standards under development may be lower than those the European Union has already established.
Banks have been relatively slow to respond to climate change, he said. “They want to be able to sell gasoline to arsonists and water to firefighters,” he says.
Canadian banks prefer to talk about a prudent and balanced approach.
Lindsay Patrick, head of Strategic Initiatives at RBC Capital Markets, says the bank is trying to gauge the financial, social and environmental consequences of a project.
“The challenge is to determine the speed that a project can reduce emissions and its social and economic consequences. ”
She recalls that RBC, which has often been the target of environmental activists, does not plan to stop funding new projects.
“We continue to believe that this sector still has a role to play, especially if its products continue to be consumed every day by everyone. ”
Banks can expect even their shareholders to demand action.
The commitments they have made are a sign that they are well aware, believes Anthony Schein of the Shareholder Association for Research & Education. “They react to investors, policymakers and the direction of the wind. They have started to resume positive commitments over the past 12 months. But there is still a long way to go. ”
He says shareholders can turn their attention to bank commitments to stop funding new fossil fuel projects. They can also encourage them to present more detailed and ambitious interim targets more quickly. These short-term plans are necessary because 2030 is on the business horizon.
“It was yesterday that we needed to see their plans,” says Mr. Schein.