There was a time when banks were among the most frowned upon businesses. They had played so casually with fancy financial products that by the end of the 2000s, the entire economy collapsed. Although they have been much more discreet since then, having almost restored their reputation, now they are being challenged on the issue of climate change.
Two large NGOs have made it their target. Oxfam Quebec, in collaboration with the Institute for Research in Contemporary Economy (IREC), has just released a voluminous report which shows that they do indeed contribute to accentuating global warming.
The study comes out with the staggering figure of 1,906,741,640 tonnes of carbon weight emitted by the eight major Canadian banks, or “more than two and a half times the weight of Canada as a whole”, which would make them “the fifth most largest emitter of greenhouse gases in the world” if they formed a sovereign country. Oxfam France produced a similar report, which clearly shows that this is a universal problem.
Greenpeace also denounced the five largest Canadian banks, accused of financing “fossil colonialism”. The Royal Bank of Canada (RBC) is particularly in the crosshairs of the NGO, even more since the noble institution had the audacity to affix its logo on the jersey of the players of the Montreal Canadiens.
Big profit and nice promises
It may seem surprising at first glance that such wrongdoings are attributed to institutions whose objective is to make money grow almost essentially through digital tools, which we often imagine to be energy-efficient. But the banks are not very careful when it comes to accumulating profits: they seek ease, efficiency, high profitability. With real consequences on the climate.
The fossil fuels sector, which is still very vigorous, offers juicy profits. Of the 25 largest companies in the world by turnover, 10 are linked to the exploitation of hydrocarbons. Other sectors generously financed by the banks also contribute to disrupting the climate: agro-industry, transport, construction.
Attacking the environmental record of banks is all the more important as they try to show their credentials. Thus, the Association of Canadian Banks, on its website, indicates that the financial sector is “at the center of the transition to a low-carbon economy”. She claims that “environmental sustainability is a component of the social responsibility of banks in Canada”. RBC, a favorite target of Greenpeace, is one bank among many that boasts of being able to achieve net zero emissions by 2050.
The campaigns of Oxfam and Greenpeace reveal the extent to which this is not just empty rhetoric, but also a smokescreen in the face of really very harmful practices. One of Oxfam’s clearest requests to banks is that they abandon fossil fuels (among others) and direct their loans and investments towards renewable energies, green projects, the just transition.
In other words, banks must promote genuine good practices and good public image rather than immediate profitability. Existential question: is this a language that bankers can really understand?
Can banks be disciplined?
It is never easy to attack the appetite of the financial markets. People who, for example, have tried to take advantage of shareholder meetings to discipline company bosses even a little have often come out disappointed. These markets are off-limits to regulation. And if the big banks are very keen on giving themselves a positive image, they are easily satisfied with a good marketing operation, as demonstrated by the subterfuge of their projects claiming to contribute to the ecological transition.
Reacting positively to the revelations of Oxfam and Greenpeace would require a real reining in of the banks, robust regulations, real control of their lobbying activities. Basically what banks hate the most. All of this brings us back to the strategy of asking the main culprits of global warming, that is to say a large part of the transnational corporations, to become vectors of change themselves: a risky bias that is doomed to failure.
The very damaging role of the financial markets in climate change must therefore be recognized in all transition projects, and it requires firm actions and decisions accordingly.