(Montreal) Canadian politicians continue to “drag their feet” in aligning the country’s financial system with climate targets, according to a hundred academics and organizations who signed a letter asking the Senate to study the Bill S-243.
Five Canadian banks are among the 15 largest financiers of the fossil fuel industry in the world for the year 2022 and Bill S-243 would notably impose on these banking institutions the obligation to develop investment plans. action against climate change, to have greenhouse gas emissions targets and to submit progress reports to combat the climate crisis.
Last spring, MPs from the main federal parties, with the exception of the Conservative Party, united in supporting Senator Rosa Galvez’s Bill S-243.
Five months have passed since this public release, but little progress appears to have been made, according to the senior manager of the climate finance program at the Environmental Defense group.
We are lagging behind other jurisdictions. Climate finance in Canada is stagnating and we risk falling behind in terms of economic competitiveness, so we are asking senators to act more quickly.
Julie Segal, head of the climate finance program at the Environmental Defense group
The signatories argue that the European Union and the United Kingdom have disclosure policies and require transition plans for the financial sector and that the US Treasury recently published guidance for transition plans for this sector to carbon neutrality objective.
A risk for the economy
Canadian banks “are the biggest investors in climate disaster, but they also take a big risk with our money,” said Julie Segal.
With an investment of US$42 billion last year, the Royal Bank of Canada (RBC) was the largest financier of fossil fuel projects globally in 2022, according to data from the latest Banking on study. Climate Chaos, published a few months ago.
Still according to this study, Scotiabank is in seventh place with investments of 29.5 billion, closely followed by TD Bank in eighth place (29 billion).
The Bank of Montreal (19 billion) occupies 13e rank and CIBC is at 14e rank (17 billion).
All this money invested in past energies represents a risk for the country’s economy, according to Environmental Defense.
“The Canadian economy will face a risk of stranded assets of at least $100 billion if we move too slowly in the energy transition,” argued Julie Segal, citing data from a Nature Review study. published in May 2022.
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 imposed by the fight against climate change.
“Many of these assets, which come in particular from large pension funds, put the economy at risk” because these assets “will no longer be useful” in the future economy, added Julie Segal.
Delayed action would amplify “the impacts”
In January 2022, the Bank of Canada and the Office of the Superintendent of Financial Institutions (OSFI) published a report in which they analyzed different scenarios to improve the ability of financial institutions to judge the economic and financial risks to which they could be exposed due to climate change.
All the scenarios analyzed show that “the transition will involve significant risks for certain economic sectors” and “that an erroneous assessment of the price of transition risks could expose financial institutions and investors to sudden and significant losses”.
According to the two institutions, delayed political action would amplify “the economic impacts and risks to financial stability” and “the public and private sectors must join forces to ensure that the economy and the financial system are fully prepared for the transition to a low-carbon economy.
Canada has committed to reducing greenhouse gas emissions by 40 to 45% by 2030, as required by the Carbon Neutrality Accountability Act.
“While the Government has set out emissions reduction trajectories for all sectors of the real economy as part of the Emissions Reduction Plan, aligning the financial sector with emissions reduction commitments is a key missing piece of Canada’s climate plan,” argue the signatories.
The Trottier Foundation, the Climate Action Network, Oxfam Quebec, Mères au front and Greenpeace are among the 100 signatories of the document.
No response from the conservatives
When Senator Rosa Galvez presented her bill last spring, Liberal, Bloc, New Democrat and Green MPs accompanied her and gave their support at a press conference.
The Canadian Press asked the leader of the Conservative Party of Canada at the time if he supported the approach of the senator and members of the other parties. Pierre Poilievre responded that he was unaware of the content of Bill S-243 and that he was “ready to read the law” and “give an answer on it.”
On Tuesday, The Canadian Press again asked the Conservative leader for his opinion through his press secretary, but did not obtain a response.
A bill must pass five stages in the Senate; the one presented by Senator Galvez has passed the second reading stage.