Canada is facing the worst wildfire season on record, according to minister of natural resources Jonathan Wilkinson. Scientists and prime minister Justin Trudeau have drawn the link between the fires and climate change, and Canadian banks continue to be pulled up for a lack of climate action and their considerable investment in fossil fuel projects.
None of Canada’s biggest banks, including RBC Capital Markets, the Canadian Imperial Bank of Commerce or Scotiabank, replied to questions about fossil fuel policies and the fires. Instead, the Canadian Bankers Association offered a written statement.
“Climate change is a critical issue of our time and banks in Canada are committed to doing their part to address it,” said the association. “Banks understand the financial sector is central to securing an orderly transition to a low-carbon economy while also ensuring the continued resilience of our country’s financial system.
“Canada’s banks acknowledge that firm commitments are required to accelerate clean economic growth and to meet the goal of a net-zero economy,” it continued. “That’s why banks have begun implementing climate action plans that set specific targets. This includes working with clients across industries to help them decarbonise and pursue energy transition opportunities. By financing the climate transition, banks are helping Canada meet its net-zero ambitions while also helping society meet interim energy demands in a volatile global context.”
No meaningful action
Richard Brooks, director of climate finance at Stand.earth, a Canadian non-profit, said it was “horrendous” banks have proposed “no changes in lending policies, no changes in fossil fuel financing, no meaningful action”. The banks “remain a major part of the problem and this is why we are naming them as partially responsible and culpable for the smoke, turning our air hazardous in the city where they have their headquarters”, he adds.
Mr Brooks cited a study published in February by BloombergNEF that analysed the ratio of fossil fuel financing by banks to their financing of low-carbon energies. “For the RBC, the ratio was 0.4:1, while most pathways say we need to be at 4:1 right now,” he says. “This speaks volumes on how off-track Canadian banks are.”
Mr Brooks suggests three factors are responsible for what he considers to be the “lack of action” by Canadian banks “even in the face of orange skies, hazardous air quality, devastation and fires played out on the daily news”.
The first factor is “greed”, he suggests, highlighting the profits still being made from fossil fuel financing. “The banks defend these lines of credit and debt issuances by saying they are helping their clients transition and reduce emissions,” says Mr Brooks, even if “virtually none of the clients of RBC, for example, have viable transition plans”.
virtually none of the clients of RBC, for example, have viable transition plans
The second factor, he says, is a lack of regulation in Canada to “prevent the level of fossil fuel financing that made RBC the largest fossil fuel financier in the world in 2022 and the other Canadian banks consistently in the top 15 banks funding fossil fuels”.
Third, Mr Brooks blames “insufficient, to date, corporate customer and institutional shareholder pressure”. This situation is, however, beginning to change, he says, highlighting the climate resolutions filed at RBC and other Canadian banks this year. “Institutional investors are beginning to become aware that Canada’s top bank, which sets the bar for all the other major banks in Canada, is lagging.”
“I don’t know how any Canadian bank CEO can look out of the window of their headquarters in downtown Toronto and barely be able to see the CN Tower because of the hazardous smoke in the air due to the fires burning across Canada and not feel compelled to finally take action by reducing their financing of fossil fuel companies,” says Mr Brooks.
“Every dollar they continue to allow to be put in coal, oil and gas companies is a dollar spent on fuelling this crisis that is causing harm to communities across Canada and costing our country billions,” he continues.
Huge cost
Federal data published on July 7 showed that more than 34,000 square miles of Canada had burned since the fires broke out this spring, breaking the 1989 record of just over 30,000 square miles. And as temperatures rise and drought continues this summer, the fires are set to continue to burn.
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The damage will come at a huge financial, environmental and human cost. Dealing with forest fires costs Canada around $C1bn ($760m) annually. The Canadian Forest Service expects costs to be higher this year. Meanwhile, Health Canada has warned of the potential health impacts from the smoke.
In a world where the ultimate goal is net-zero emissions, by the end of June, the Canadian forest fires had generated nearly 600 million tonnes of carbon dioxide, equivalent to 88% of the country’s total greenhouse gas emissions from all sources in 2021, said the EU’s Copernicus Atmosphere Monitoring Service.
