Bank CEOs might be expected to read the terms of a contract before signing, but apparently that’s too much to ask when it comes to committing to the climate. This neglect risks excluding Canadian banks from the UN Net Zero club.
Scientists tell us that reaching Net Zero by 2050 can limit global warming to 1.5 ̊C, but we need to get out of fossil fuels and end deforestation. According to, this scenario is feasible, but “requires rapid, profound and unprecedented changes in all aspects of our society”.
Canadian banks seem to have missed this detail.
When our five big NetZero Banking Alliance banks launched by the United Nations in October 2021, they must have thought this was a simple, high-profile way to show, or have us believe, how much they care about the climate.
They used all the right words … but just follow the trail of the money and a completely different story emerges, as detailed by Greenpeace Canada. By 2021, Canadian banks will cut their fossil fuel funding by 70% (to $ 167 billion), so they are now among the top 20 fossil fuel lenders in the world.
And the UN is far from being deceived. As part of its “Race to Zero” initiative ─ which establishes the membership criteria for NetZero Banking Alliance and a number of other actors involved in Glasgow Financial Alliance for Net Zero ─ last June he published his policy which clarified the prerequisites for remaining in the Net Zero club.
This is a major blow to Canadian banks, which have claimed to be able to maintain the status quo. The update can be read as a statement along the lines of “it should go without saying, but we’ll write it in black and white because you pretend you don’t understand”. First, the UN says it “makes explicit the obligation to phase out all fossil fuels in a just transition, which was previously implicit”.
Hence, the UN specifies at what pace this requirement is to be implemented. Since the year 2050 is still a long way off, member banks are therefore required to set intermediate targets. Four of the five Canadian banks have published targets for 2030, which promise to reduce the intensity of financed issues in a range of 24 to 35%.
It is far from sufficient. To align bank liabilities on a net zero trajectory by 2050, the United Nations says emissions resulting from bank loans and investments. On the other hand, these must be absolute emission reduction targets and not carbon intensity targets, which allow for absolute emissions growth. Since the intensity is calculated based on the amount of CO2 needed for the production process, this means that if banks finance more barrels, the intensity remains the same as total emissions increase.
The UN also calls for the alignment of lobbying activities to the “Net Zero” principle. With Canadian banks working side by side with oil companies, it will be an interesting story to follow. Faced with strong criticism, Scotiabank however announced earlier this year that it was ending its membership of the Canadian Association of Petroleum Producers, known for its extensive lobbying experience aimed at delaying or even blocking climate policies. However, on the whole, Canadian banks continue to defend fossil fuel projects, including those facing fierce resistance from indigenous peoples, such as the Coastal GasLink pipeline and the Trans Mountain pipeline expansion project.
Having lost patience with the banks’ attempts at greenwashing, the United Nations has introduced a procedure to exclude climate cannonballs from their Net Zero club.
Banks now have to choose: waste valuable time mobilizing their forces to counter the new criteria or publish a credible climate plan by June 23, 2023.
Greenpeace believes that such a plan should include an immediate end to all support for new fossil fuel projects, a minimum 50% reduction in funded absolute emissions by 2030 and respect for indigenous peoples’ rights, as well as protection and protection strategies. restoration of biodiversity.
The ball is in your court, dear bankers.
Keith Stewart, Senior Energy Strategist at Greenpeace Canada