Canada’s biggest banks could be pushed out of a UN-backed, net-zero emissions coalition if they don’t boost their climate commitments, a report released Wednesday by Greenpeace Canada says.
The report focuses on updated standards released in June that lay out more clearly the expectation of members of the Race to Zero coalition.
Greenpeace Canada senior energy strategist Keith Stewart said the banks aren’t currently meeting the new, stricter standards.
“This is really significant that the UN is basically … saying we’re not going to let our name be used to advance claims that are more PR than reality,” Steward said.
Last year RBC RY-T, TD TD-T, CIBC CM-T, BMO BMO-T and Scotiabank BNS-T all joined the Glasgow Financial Alliance for Net Zero, led by former Bank of Canada governor Mark Carney. The alliance, which is anchored by the Race to Zero rules and criteria, commits the banks to reaching net-zero financed emissions by 2050 and to set interim reduction targets to be achieved by 2030.
When the banks joined there was little guidance around those interim targets, though the alliance urged members to be aggressive when setting them as the next few years are crucial in determining how bad climate change will get.
The June update from Race to Zero however, calls for interim targets to be a “fair share” of the 50 per cent reduction of global emissions needed by 2030.
The update also emphasized the need for targets to cover all emission types, both direct and indirect, and the need for corporations to restrict the development and financing of new fossil fuel projects.
In releasing the refined criteria, the group said it was making explicit what had previously been implicit in the guidelines to “clearly show those actors who are truly moving ahead versus those who are trying to find loopholes.”
Stewart said Canadian banks are falling behind those standards both on the interim targets, and their overall funding for the fossil fuel industry.
“The implication in the Race to Zero criteria … is no new fossil fuels, and cut your finance fossil fuels in half by 2030, which is a much bigger step than anything most global banks are really doing right now, and certainly the Canadian banks who are increasing their funding of fossil fuels,” Steward said.
Four of Canada’s biggest banks released their 2030 targets earlier this year, which range from 24 per cent to 35 per cent reductions in financed emissions, while RBC says it expects to release targets this fall.
The bank targets also go against the guidance to have absolute reduction targets. Other than one part of the BMO target, Canadian bank goals are intensity based rather than absolute, meaning that while the emissions per barrel of oil produced may be going down, the number of financed barrels can still go up.
Banks have framed their continued funding of fossil fuel companies as being necessary for the transition, as stated in the Canadian Bankers Association’s response to the Greenpeace report.
“Banks will continue to work with their clients in the oil and gas industry to help them transition to a more sustainable future … by funding pathways to sustainability, banks are helping Canada progressively reduce its emissions while also helping meet energy demands in a volatile global context.”
Individually, banks also emphasize their role in helping companies transition, with RBC saying “the biggest impact RBC can make is helping our clients’ transition,” CIBC saying “we are accelerating our efforts as we work with our clients through this transition,” and BMO stating its climate ambition is to be its clients’ lead partner in the transition.
Stewart, however, said that most Canadian bank funding to fossil fuel companies, which between 2016 and 2021 totalled $911 billion, is being done without any required links to a transition to a net-zero world.
“They’re giving blanket lines of credit to these companies. And so as long as the company has on their books fossil fuel expansion programs, that’s what they’re funding.”
He said scrutiny of this funding will increase as groups like the Glasgow alliance warn transition funding requires vigorous scrutiny to avoid the “greenwashing of business-as-usual financing activity.”
The rules around membership criteria, and what it would take to kick someone out of these international climate coalitions, are still evolving. Pressure, however, is increasing, especially as the deadly and destructive effects of climate change increase.
Along with extreme droughts in Europe, China, the Horn of Africa and the U.S. Southwest, this week saw extreme rainfall in Pakistan that has killed over 1,000 people, about a third of them children.
United Nations secretary-general Antonio Guterres said the flooding was a climate catastrophe and action needs to be taken to prevent worse to come.
“Let’s stop sleepwalking towards the destruction of our planet by climate change,” he said in a statement.
“It is outrageous that climate action is being put on the back burner as global emissions of greenhouse gases are still rising, putting all of us – everywhere – in growing danger.”
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