Canadian banks provided almost US$104 billion in fossil fuel funding last year despite the urgent need to reduce the greenhouse gas emissions driving the climate emergency, says the latest annual Banking on Climate Chaos report.
The report out Monday from a coalition of climate groups said the total includes US$28.2 billion from the Royal Bank of Canada to place it seventh globally and US$24 billion from Scotiabank to rank 10th.
The top 60 banks together poured a mind-bending $6.9 trillion of lending and underwriting into fossil fuel projects in the eight years after the 2015 Paris climate conference, “driving climate chaos and causing deadly local community impacts,” the report says.
In 2023, they committed US$708 billion, The Canadian Press reports.
For most of Canada’s five biggest banks, 2023 was among their lowest levels of oil and gas financing in the eight years since the Paris deal.
BMO had its outright lowest year of fossil fuel financing since 2016, but still came up with US$15.8 billion. CIBC, TD, and RBC each had their lowest with the exception of pandemic year 2020, while it was the fourth-lowest year for Scotiabank.
While the numbers are lower, they’re still stark, Richard Brooks, climate finance director at Stand.earth, told CP.
“There’s still massive amounts of money on the scale of, you know, tens of billions of dollars that are flowing into extreme forms of oil and gas, that are flowing into expansion projects that lock us in for a long time.”
In a statement, Canadian Bankers Association spokeswoman Maggie Cheung maintained Canadian institutions understand their important role in helping lead what CP calls an “orderly transition” to a low-carbon future.
“Firm commitments are required to accelerate clean economic growth and that’s why banks are implementing climate action plans that set specific targets to meet the demands of this global challenge,” she said.
But the CBA’s statement didn’t quite line up with testimony last week before the Senate banking committee by former Bank of Canada governor Mark Carney. He said Canada “is jeopardizing its competitive position by dragging its feet on major climate-related financial policies as allies quickly adopt global standards and green investing rule books,” the Globe and Mail writes.
International corporate sustainability standards were put in place last year, and are on track to cover more than 100,000 companies worldwide, Carney told senators. “In contrast, Canadian climate disclosure efforts have been patchwork, delivered late and falling short of international standards,” said Carney, who founded and now chairs the Glasgow Financial Alliance for Net-Zero (GFANZ).
CP says the banks’ climate targets are fairly long-term, including their net-zero emissions goal of 2050. Only BMO has set an absolute reduction target before then.
The reduced fossil fuel funding last year could be due to shifts in the oil and gas industry. There are no major new oilsands projects on the horizon, while oil and gas companies have also been reaping major profits that help them self-fund costs and rely less on lenders.
Funding levels could fall further this year as major projects like the massively controversial and over-budget Trans Mountain pipeline expansion and Coastal GasLink pipeline are now finished.
The Banking on Climate Chaos report says the companies behind those projects were among the top recipients of fossil fuel expansion funding globally. TC Energy raised US$15.3 billion from the 60 banks covered in the report, while Trans Mountain raised US$9.54 billion.
Calgary-based pipeliner Enbridge Inc. ranked first with US$35 billion raised, though the report counts money it used for acquisitions as well as expanded pipeline capacity.
While the trends in the oil and gas industry could mean less funding is needed from banks, Brooks said it’s still important for the institutions to put policies in place to ensure they reduce their financed emissions.
He said he was concerned banks are instead walking back policy commitments, including BMO, which curbed restrictions on lending to coal producers.
“If there’s no policy in place that limits financing intentionally, then when a new project comes up, who’s going to be first in line to finance that project?”
This report by The Canadian Press was first published May 13, 2024.
