Canada’s big banks have been incorporating climate considerations into the core of their operations but are starting to get nervous about the legal and reputational risks stemming from commitments made to global climate-related coalitions they voluntarily joined. Much of the issue centres on financing high-emitting sectors, with global alliances taking a much harsher stance than the domestic regulator.
The Globe and Mail reported on Sept. 29 that Canada’s big banks are concerned they could face legal action resulting from antitrust concerns if mandated by global coalitions to cut ties with some high-emitting sectors like oil and gas. The banks also have concerns about how these global coalitions are governed.
The Glasgow Financial Alliance for Net Zero (GFANZ), the self-described “world’s largest coalition of financial institutions committed to transitioning the global economy to net-zero greenhouse gas (GHG) emissions,” is led by a trio that includes former Bank of Canada governor Mark Carney, who took up the post of U.N. Special Envoy for Climate Action and Finance in 2020.
The banking component of GFANZ is the Net-Zero Banking Alliance (NZBA), of which eight Canadian financial institutions are members, including the six largest banks.
The Basel Committee on Banking Supervision is the world’s primary standard-setter for regulating banks, but Fitch Ratings said in June that its principles for managing and supervising climate-related financial risks “will lead to increased reputational and conduct risks for banks as regulators step up their scrutiny of banks’ climate risk and sustainability pledges.”
No Surprise
“It doesn’t surprise me if banks are starting to get worried,” Ross McKitrick, an economics professor at the University of Guelph specializing in environment, energy, and climate policy, told The Epoch Times.
“The fact that they are only now realizing the problems of this agenda just confirms how little competence banks have on issues of climate change and climate policy. They overstate the risks of the former and ignore the risks of the latter.”
Carney has said that the bulk of the cost of transitioning to green energy has to come from the private sector.
