If Canada’s eight major banks were a country, they would be the fifth-largest greenhouse gas (GHG) emitter in the world. This is one of the revelations of an exclusive report on the carbon footprint of Canada’s major banks, released today by Oxfam.
The report, produced in collaboration with Institut de Recherche en Economie Contemporaine (IREC), shows that bank assets, which include the saving and investments of Canadians, are the biggest source of pollution in the country, well ahead of transportation.
The report also reveals that:
- The total emissions financed in 2020 by Canada’s eight largest banks are more than twice the total carbon footprint of Canada as a whole, and nearly 23 times that of Quebec.
- One medium-sized Canadian bank alone is financing more polluting emissions than the entire Canadian transportation sector.
- Each investor is responsible for financing an average of one-third of a tonne of GHG per year for every $1,000 invested in a Canadian bank.
All the banks examined by Oxfam said they were going to go carbon neutral, but none have presented a real plan to get there, and so far none have disclosed the total emissions financed by their credit and investment portfolios, despite committing to do so.
Oxfam wanted to shine a spotlight on the issue by conducting this study, which is the first to quantify and compare total GHG emissions financed by all portfolios of the eight major Canadian banks.
A disappointing carbon impact ratio
The report also measures “emissions savings” investments made by banks to reduce and prevent GHGs, such as supporting energy efficiency projects or the development of green technologies. It is clear that banks still have a lot of work to do to meet the Paris Agreement climate targets. The report shows that:
- For all banks studied, emissions savings represent only a very small share of the total emissions financed.
- For every 100 tonnes of GHGs financed, banks “save” only five on average.
- To achieve carbon neutrality, “emissions savings” would have to equal 100 per cent of financed emissions, yet no bank has a ratio greater than 10 per cent.
None of the eight major banks have committed to withdrawing from the fossil fuel sector in the short or medium term. Even more worrying is the fact that they all present themselves as having sustainable finance projects or “green” investment activities aimed at decarbonizing the extraction, transformation, or consumption of fossil fuels.
Many mutual funds and exchange-traded funds offered by these banks, including funds focused on environmental, social, and governance principles (or so-called “green” funds) are still not aligned with the Paris Agreement targets to address climate change.
Six recommendations for banks and government
Oxfam is calling on the federal government to do more by developing the regulatory framework necessary for sustainable finance. The report makes six recommendations to governments and financial regulators and supervisors to help banks become key players in a greener and more just society.
Oxfam recommends that:
- Canadian banks disclose the carbon footprint of all their investments, not just their operations.
- Banks take climate risk into consideration in their investments.
- Banks be required by 2025 to publish an action plan to achieve carbon neutrality in their portfolios by 2050, with specific details on how they will achieve this objective.
- The federal government introduce clear standards for regulating financial products that are considered green, sustainable, or responsible, following the example of the European Union.
- Canadian federal and provincial governments, as well as their Crown corporations and other financial entities, fully divest from the fossil fuel sector by 2025.
- The final recommendations of Canada’s Expert Panel on Sustainable Finance be put into effect and that the proposed federal Climate-Aligned Finance Act (S-243) be adopted and implemented.
The report was submitted to each of the eight banks prior to its release. Oxfam-Québec and the finance sector agree that climate change is a collective responsibility, and that each individual has the power to influence and take action.
“To create an impact that is significant and rapid enough to achieve Quebec and Canada’s climate objectives, the big players have to get on board faster,” says Caron. “Our banks and large financial sector companies need to come out of the shadows and become key contributors in the fight against climate change.”
Canada has a duty to build a just and sustainable future, and it is up to us to demand it. Oxfam-Québec has launched a petition calling on Canada to stop financing polluting projects. Together, we can create a climate of justice and invest in an equitable future.