A shareholder advocacy organization is calling on Canada’s banks to continue reporting their investment emissions, as the finance sector steps away from its past climate disclosure pledges.
“For investors looking to understand climate financing by these influential institutions—not to mention navigating the new landscape of greenwashing regulations in Canada—nothing can replace a dollar-to-dollar comparison of a bank’s core financing of the energy sector,” said Amanda Carr, associate director of climate advocacy for the Shareholder Association for Research and Education (SHARE).
Earlier this year, Canada’s five largest banks withdrew from the Net Zero Banking Alliance, part of a broader effort led by former Bank of Canada governor Mark Carney to mobilize US$130 trillion over 30 years to finance the transition off carbon. The banks denied abandoning their climate goals, but some climate advocates framed the departure as proof they had only joined in an attempt to greenwash operations.
Now, a coalition of investor groups led by SHARE is calling on the banks to continue disclosing their energy finance ratio, which compares clean energy investments to fossil fuel funding. SHARE says the ratio is “a key indicator for investors to track how a bank is doing in reducing its exposure to fossil fuels and harnessing the opportunities of the energy transition.”
Analysis by Bloomberg NEF suggests an average ratio of 4:1 by the end of the decade will be needed to limit global warming to 1.5°C. Though direct reporting is not yet available from the banks, Bloomberg has been extrapolating data and placed the sector’s average at 1.11:1 in 2023. While that was an improvement from 2022, the banks were still not on track to reach 4:1 by 2030.
Meanwhile, finance directors are seeking climate data to inform their business decisions even as the Donald Trump administration in the United States does its best to suppress climate information and research. One report, commissioned by We Don’t Have Time and Kearney, suggests that recent announcements of financial institutions rolling back climate goals contrast with the behaviour of chief financial officers, who are increasingly focused on climate risk and sustainability for long-term profitability. Two-thirds of CFOs said they already measure sustainability inaction.
But financial models might be failing to capture the true value of sustainability investments, says Forbes. The report shows that 69% of CFOs expect strong financial returns from sustainability measures, yet 61% still see those measures as primarily about cost, not benefit. Among its recommendations to accelerate the transition, the report says to invest more in data and metrics and to “reframe sustainability as a strategic value driver.”
JPMorgan Chase, the largest bank in the U.S., recently released an analysis by its top climate advisor Sarah Kapnick, previously chief scientist at the U.S. National Oceanic and Atmospheric Administration. The analysis describes a “new climate era” where a company’s success depends on its ability to integrate climate considerations into daily decision-making.
“Those who adapt will lead, while others risk falling behind,” writes Kapnick.
