Thank you for the opportunity to speak with you today.
My name is Keith Stewart, and I'm a senior energy strategist with Greenpeace Canada. I'm also a sessional lecturer at the University of Toronto, where I teach a course on energy and environmental policy.
While green finance and taxonomies may seem like particularly arcane areas of policy, they are incredibly important in the current moment. Finance is the lifeblood of the fossil fuel industry, and where there is this kind of money and power in play, there are going to be politics. That's the way the world works.
In my time today, I would like to highlight how we cannot understand the current state of play of green finance independently of some those politics.
Last week, Greenpeace Canada published a report entitled “What to do about Canadian banks ‘quiet quitting’ their climate commitments?” Copies have been circulated to the committee.
When I first started working on it, it was focused on how Canada's big five banks weren't meeting the UN's science-based net-zero criteria. This was in spite of the fact that they are members of the Glasgow Financial Alliance for Net Zero, whose membership criteria were set by the United Nations. They have a program called Race to Zero, which sets criteria for a number of these types of voluntary initiatives by municipalities, corporations, banks and investors. Those criteria included an immediate end to the funding of fossil fuel expansion projects and cutting financed emissions in half by 2030.
That is a steep hill for Canadian banks to climb. Their support for fossil fuels has, in fact, been growing since the Paris Agreement was signed. Last year, RBC was the largest funder among global banks of fossil fuels in the entire world. The other four big banks all made it into the top 15 of global banks. Collectively, Canada's big five banks' share of fossil fuel funding among the 60 largest banks in the world went from 14% in 2016 to over 20% in 2022. In fact, we're playing a bigger role globally in the funding of fossil fuels than we used to.
The UN was taking a hard line against this kind of what it called greenwashing and gave GFANZ members until June 15, 2023—two days from now—to meet the UN criteria or risk getting kicked out of the Race to Zero initiative, so the banks quit quietly.
Last October, GFANZ changed its membership criteria from “all GFANZ members must align with the Race to Zero criteria” to they must “take note of the advice and guidance of...the Race to Zero.” In other words, big-money players can now do whatever they want and call it net zero without an overarching bar they have to meet.
The rationale for this change was the threat from Republican politicians and some state governments in the United States to sue GFANZ members under antitrust legislation for colluding against fossil fuels. To be clear, these politicians aren't using antitrust laws to go after the tech giants or drug manufacturers for abusing market power, but they are targeting banks and investment managers for potentially dialling back their investments in fossil fuels.
There may be a temptation to say, “Oh, this is just those crazy American culture wars.” That would be naive.
When the New York Times reviewed over 10,000 pages of documents and emails related to the rise of the anti-ESG movement, they found that it was the oil, coal and gas companies and their industry associations that had weaponized—a New York Times word, not mine—Republican state treasurers against fossil fuel divestment. In many cases, it was the same organizations, like the Heartland Institute, that were at the core of earlier climate denial campaigns and are now leading the charge against ESG and green finance.
Indeed, the campaign against green finance is best understood as the latest incarnation of climate denial. It is a well-funded, coordinated campaign to defend the interests and profits of the fossil fuel industry by delaying the transition to clean energy. We should not, however, fall for this particular bag of tricks again.
I would like to suggest to you that in painting voluntary net-zero commitments as collusion, the fossil fuel lobby has overplayed its hand. It's laid bare the limitations of industry self-regulation.
If an initiative like GFANZ actually changes “business as usual” in a significant way, members will be sued for collusion—half the insurance companies that are members of GFANZ have quit over these concerns—and yet you can't be accused of collusion for meeting regulatory requirements. The only viable path forward at this moment is for governments to set and enforce clear rules that will align private finance with our climate commitments. The banks won't like it, but the public does. According to polling undertaken by Greenpeace Canada, 70% of Canadians support regulation to align finance with our climate commitments.
In our recent report, we point to the work of my colleague, Julie Segal, from Environmental Defence on how to begin that process under existing legislation. We also point to how we can deepen it via legislation like that proposed by Senator Rosa Galvez.
