Clients can pressure banks to align with Paris Agreement
It was a beautiful Thanksgiving weekend, something to savour and be thankful for. Yet for me it also felt somehow nostalgic, a moment soon to pass, filtered with news of Typhoon Hagibis wreaking havoc in Japan, a freak snow storm in Winnipeg, forest fires in California, all still somewhat reassuringly far away.
Later in the week I was woken by the deafening sound of heavy rain during the night, its pounding perhaps a portend of our future.
“The climate system that raised us, and raised everything we now know as human culture and civilization, is now, like a parent, dead… The devastation we are now seeing all around us is a beyond-best-case scenario for the future of warming and all the climate disasters it will bring,” writes David Wallace-Wells, author of The Uninhabitable Earth.
We are now feeling the effects of just one degree of warming, with over $1 trillion in related losses in the last few years (Munich Reinsurance Co., 2015-18 weather catastrophe data).
The global financial system has financed carbon-producing projects that would engender a catastrophic four degrees of warming – more than double the Paris Agreement figure – which if completed would cause a nine metre sea level rise, searing heatwaves and droughts, serious food supply issues, and the extinction of half of all plant and animal species. (‘Bank of England Boss Says Global Finance is Funding 4C Temperature Rise’, The Guardian, Oct. 16 2019).
It is estimated 3.7 degrees of warming would produce $551 trillion in damages. (The Uninhabitable Earth).
Mark Carney, the Bank of England governor and widely respected former head of the Bank of Canada, has been raising the alarm about the potential devastating impact of climate change for several years now, noting “the risks are existential.”
“I don’t normally quote bankers, but James Gorman, who is the CEO of Morgan Stanley, said…’If we don’t have a planet, we’re not going to have a very good financial system.’ Ultimately, that is true.” (‘Firms ignoring climate crisis will go bankrupt, says Mark Carney’. The Guardian, Oct. 13, 2019) “Banks overexposed to the sunset sectors will suffer accordingly… The commitment of all actors in the financial system to act will help avoid a climatedriven ‘Minsky moment’ – the term we use to refer to a sudden collapse in asset prices.”
Carney is optimistic strong climate action can both mitigate the worst effects of the climate crisis and simultaneously bolster economic growth. Carney and the Bank of England are at the vanguard of a sustainable banking movement, which the Bank of Canada recently joined. Our central bank’s updated financial system health report flagged climate change as an important vulnerability for Canada’s economy. (Financial System Review Summary, Bank of Canada, May 16 2019).
Canada’s banks have taken note. Following the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), a key part of Canada’s move to sustainable banking, the six major Canadian banks have begun to implement TCFD’s recommendations. TD Bank Group has since committed to a financing target of $100 billion in low-carbon lending, financing, asset management, and other initiatives by 2030, RBC to provide $100 billion in sustainable finance by 2025 and CIBC to $150 billion in environmental and sustainable finance by 2027 (‘Responsible Banking,’ SHARE, Oct. 10, 2019).
However, TD, Scotiabank and RBC have already together financed over $100 billion in fossil fuel business since 2016, sharing the dubious honour of being in the 10 biggest lenders in
this category in the world (BMO and CIBC make the top 25). Of Canada’s major financial institutions, currently only National Bank of Canada and the Desjardins Group have signed the UN’s Principles of Responsible Banking to fully align their business with the Paris Climate Agreement goals. With the role of Canada’s next government in question, individual actions may be more vital than ever.
If you are interested in nudging your bank towards an improved timeline for investing in a low carbon future both the planet’s health and their own financial viability, writing to the CEO is a start – I still have not heard back from my letter to TD’s CEO Mr. Masrani ([email protected]) – the more they hear from their clients and shareholders, the more likely change will happen.
Moving your mortgage and accounts to a less carbon heavy bank or credit union is another option that some local trailblazers have already undertaken.
TD’s bequest of their Creemore building to the community was a laudable local gesture. To see them sign the UN’s Principles of Responsible Banking and become a Canadian leader in the move to a sustainable economy would be a remarkable national one.
Suzanne Wesetvik is a country dweller, mom and goat lover writing on climate change and action for a future where all kids are alright.