Canadian banks have a serious fossil fuel addiction. But it is not just a Canadian problem.
The latest study of corporate data from 60 of the world’s largest banks shows that rather than cutting back on the funding of fossil fuel projects since the 2016 global agreement to limit greenhouse gases, they have increased that funding to $3.8 trillion US in the past five years.
The report outlining the data, titled Banking on Climate Chaos 2021, is the 12th annual tally of fossil fuel financing by a group of seven climate advocacy organizations, including Rainforest Action Network and the Sierra Club, both based in the United States.
The good news for those concerned about climate change is that a crash in the fossil fuel business during the COVID-19 pandemic led to a sharp drop in investment growth in 2020, but the report’s authors fear that a growing recovery this year will lead to a “snap back to business as usual.”
Although U.S. banks, including JPMorgan Chase, have committed to establishing emissions targets for their financing portfolios in line with the Paris climate accord, the report declares that North America’s biggest bank has also been “the world’s worst fossil bank” over the past five years, lending $317 billion to the industry.
RBC punches above its weight
And while U.S. banks lead the pack, Canada’s RBC has the dubious honour of punching above its weight. Four Canadian banks are in the top 20, including RBC, TD, Scotiabank and Bank of Montreal.
“Citi follows as the second-worst fossil bank, followed by Wells Fargo, Bank of America, RBC and MUFG [Mitsubishi],” the fossil fuel finance report says. “Barclays is the worst in Europe and Bank of China is the worst in China.”
Despite repeated calls by people like former central banker Mark Carney and business leaders such as Larry Fink, CEO of investment giant BlackRock, for companies to decarbonize to avoid risks to the entire economic system, people close to Canada’s banking industry say banks like RBC are having trouble changing direction.
“There’s a lot in the Canadian psyche and history that is wrapped up in the fossil fuel economy, and we’re feeling some of that inertia right now,” said Laura Zizzo, co-founder and CEO of Manifest Climate, a Toronto company that advises financial institutions across North America on strategies to help them navigate climate change.
Working closely with Canada’s big banks — though she wouldn’t say whether RBC was one of her clients — Zizzo said she is convinced that people at the highest corporate levels really are committed to change. It’s just happening more slowly than many who fear the impact of climate change would like to see.
Responding to my question asking why Canada’s biggest bank continued to lend such large amounts — $160 billion over the past five years — to the fossil fuel industry and its projects, RBC reaffirmed its commitment to net zero emissions, including a promise of $500 billion in sustainable finance by 2025. It said it was also the first bank to commit not to lend to resource projects in Alaska’s Arctic National Wildlife Refuge.
But in a country where there is so much political and economic pressure for oil and gas development, RBC said that to be successful, its move to net zero must be gradual.
“This transition is vitally important and it must be done in an inclusive manner that brings all sectors and communities along or we won’t achieve the support we need to meet these goals,” RBC said in an email.
Bad for banks, as well as the climate
As Carney — who was governor of both the Bank of Canada and Bank of England before becoming head of impact investing at Brookfield Asset Management — has warned in the past, when financial institutions take a stake in long-term fossil fuel projects, it is not just bad for the climate.
In order to hold temperatures at levels scientists say are necessary to keep temperature rise to 2 C, experts say the value of fossil fuel investments must fall to zero in about 30 years. Carney and others say a rush to get out of those investments as the crisis worsens could create a financial risk for the entire economy and for institutions such as banks, pension funds and insurance companies.
It also creates a risk for ordinary Canadians who depend on those institutions for their banking, pensions and insurance, as well as for investors and employees.
That is what Zizzo, who trained as a lawyer, sees as her company’s job: to help banks transition to a point where climate risk will not hurt them or their stakeholders. And she says part of the difficulty for banks is that their normal investment horizons are two years, or maybe a little longer.
“But generally they are all still too short to think about the longer-term issues of climate,” she said. Financial institutions are currently struggling to adapt to new global requirements, expected soon, where investors will have to be informed of a bank’s long-term climate liability, she said.
“It’s taking time before it actually percolates into the risk-management functions of these financial institutions,” Zizzo said.
She also says that so far, banks have been better at expanding their investments in greener projects than they have been in paring back on fossil fuels.
That failure to reduce investments in fossil fuel expansion is the problem identified in Wednesday’s bank report. Adam Scott, director of Shift, a Toronto-based group that monitors pensions for climate risk, says it demonstrates what he calls a lack of “climate literacy.”
Despite the recent vote by federal Conservatives in Canada rejecting the idea that climate change is real, Scott said that is not a view shared by most bankers he meets. The problem is that they fail to recognize that the problem “requires the phaseout of fossil fuels entirely over a very short period of time.”
“I think the thing that’s missed here is that when you build new fossil fuel projects, you’re locking in emissions for decades to come. So an investment today in new fossil fuel makes it harder to address the climate crisis,” Scott said.
“It’s going to make a very difficult thing more difficult,” he said. “The banks are pouring money into making this problem harder, and that just has to stop.”
Follow Don Pittis on Twitter: @don_pittis
After Air Canada lifeline, small carriers seek aid as virus looms ahead of summer travel
By Allison Lampert and Steve Scherer
MONTREAL (Reuters) –Canada is facing industry calls to extend financial aid to smaller airlines, after offering a C$5.9 billion ($4.71 billion)life-line to Air Canada, as new COVID-19 variants loom ahead of the vital summer travel season.
The timing of Monday’s deal, which saw the Canadian government take a 6% equity stake in Air Canada, was partly designed to secure “access to air travel when it returns,” as the country’s vaccine rollout ramps up this summer, a source familiar with the discussions said.
But with the spread of new variants threatening to overtake the pace of vaccination, early hopes for a relaxation of Canada‘s strict travel requirements ahead of summer are fading.
Fears of a delayed recovery, along with the Air Canada deal, has upset the “level playing field” for air service, with smaller carriers asking for financial support.
“We want everyone to have access to the same programs,” said John McKenna, chief executive of the Air Transport Association of Canada (ATAC), which represents smaller carriers.
On Wednesday, Air Canada joined rival WestJet Airlines in extending a three-month suspension of sun-destination flights to the Caribbean and Mexico originally slated to end on April 30, reflecting the government’s current warnings against international travel. [L1N2M71SG]
The planned April reopening of a bubble in Atlantic Canada, which would allow travel among the region’s four provinces without the need to self-isolate, was postponed this week until at least May 3 over COVID-19 concerns.
WestJet said its previously-planned schedule for Atlantic Canada remains unchanged.
Canada‘s vaccine roll out has been slow, but it is ramping up now. By the end of June, some 44 million doses are expected, and everyone who wants to be fully inoculated will be by the end of September, Prime Minister Justin Trudeau has promised.
Trudeau said in a radio interview this week that he supports Canadian provinces which choose to close their borders to help curb the spread of COVID-19.
Canada‘s Liberal government, which will deliver its first budget in two years next week, has said talks with carriers like Onex Corp-owned WestJet are ongoing.
“We hope that the other agreements come as soon as possible,” the source familiar with the talks said, adding that “different airlines have different needs”.
WestJet spokeswoman Morgan Bell said the airline is optimistic that a successful vaccine roll-out will support summer travel and expects “government policy will transition” with mounting jabs.
Canada, with some of the world’s toughest travel rules, has a mandate that its citizens and residents arriving from abroad self-isolate for 14 days.
Health Canada advised Canadians in a statement to avoid traveling outside the country “for the foreseeable future.”
Calgary-based WestJet has asked the government to end an order requiring international arrivals to quarantine for up to three days in a hotel in favor of COVID-19 testing.
The government must decide whether to renew the controversial hotel order, which expires on April 21.
McKenna also urged the government to relax restrictions on travel with neighboring United States.
“The government can come up with all the financial help they want,” ATAC’s McKenna said. “But until those things are relaxed we can’t do anything.”
($1 = 1.2515 Canadian dollars)
(Reporting By Allison Lampert in Montreal and Steve Scherer in Ottawa. Additional reporting by David Ljunggren in Ottawa; editing by Diane Craft)
U.S. seeks to polish tarnished reputation with new climate change pledges
By Valerie Volcovici and Kate Abnett
WASHINGTON/BRUSSELS (Reuters) -The United States hopes to restore its shattered credibility when it hosts a climate change summit next week by pledging to cut its greenhouse emissions by at least half and securing agreements from allies for faster reductions, according to two sources familiar with the matter.
A 50% reduction from 2005 levels by 2030 is a minimum level urged by environmental groups, hundreds of corporations and European Union lawmakers. It would be the first upgrade of the U.S. climate target since 2015, when former President Barack Obama pledged a 26%-28% reduction by 2025.
Washington was also close to clinching deals with the governments of Japan, South Korea and Canada to accelerate their targets to decarbonize, the two sources said. It was not immediately clear if those nations would make announcements at the event, and representatives of those countries have not commented on the discussions.
The stakes for the meeting are high. Leaders from roughly 40 countries including China, India, Brazil and Russia have been invited, with hopes they will double down on past pledges to reduce climate warming emissions. So far, international pledges to decarbonize would shave only 1% off global emissions by 2030 compared with 2010 levels, a fraction of what scientists say is needed to avert the worst impacts of climate change.
The virtual summit on April 22-23, kicking off on Earth Day, will be an opportunity for Democratic President Joe Biden to reclaim U.S. leadership in global climate efforts, after four years during which his predecessor, Republican Donald Trump, downplayed the issue to support the oil and coal industries.
Biden’s climate envoy, John Kerry, has spent the last few months on countless Zoom appearances and on a globe-hopping tour, concluding this week in China and South Korea, to persuade countries to use next week’s summit to hike their commitments to protect the planet.
The Biden administration has been laying the groundwork for its new target, unveiling a $2 trillion infrastructure package to expand clean energy and transport.
The European Union last year agreed to reduce its net emissions at least 55% by 2030 from 1990 levels – currently the most ambitious among big emitters.
“All eyes are on the Biden summit next week as a key moment for John Kerry’s diplomatic skills to be put to work in aligning all countries with a halving of emissions in this decade, as science demands,” said Christiana Figueres, former executive secretary of the United Nations Framework Convention on Climate Change.
PATIENCE WEARING THIN
Next week’s U.S. summit is the first in a string of meetings of world leaders – including the G7 and G20 – ahead of the United Nations climate summit in November, known as COP26. That serves as the deadline for nearly 200 countries to update their climate pledges under the Paris Agreement, an international accord set in 2015 to combat global warming.
But as global powers tussle over percentage points, in countries already facing the impacts of a warming world, patience is wearing thin.
Developing countries – many of which are vulnerable to rising seas, heatwaves and rainfall made more severe by climate change – are expected to offer their own goals at the summit, said Pablo Vieira, director of the NDC Partnership, which has been helping developing nations craft their climate targets.
They will also repeat their demand that rich nations offer more money to help them cut emissions and adapt to the impacts it is already unleashing in countries like Bangladesh, South Sudan and the Marshall Islands.
YOU’RE ALL INVITED
U.S. talks with Japan, South Korea and Canada have focused on trying to get each country to commit to cut emissions at least 50% by 2030, according to the two sources familiar with the U.S. negotiations.
Japan and South Korea both rely on coal for power generation and winding that dependence down and their finance of coal plants abroad could yield significant emissions cuts in the next 10 years, the sources said.
Canada may have a tougher challenge.
“We don’t have quite that luxury here because coal is a much smaller part of our grid,” Canada‘s Environment Minister Jonathan Wilkinson said. But he added: “We are working to stretch as far as we can.”
Canada, which has a large oil industry, currently has a target to cut emissions 30% below 2005 levels by 2030.
Other major emitters appear less keen to take the plunge, including India, China, Brazil and Russia.
India, the third-largest emitting country behind China and the United States, is resisting because it expects more developed nations to take on the bulk of global reductions.
“What we are suffering today is caused a 100 years ago,” said Prakash Javadekar, India’s Minister of Environment, Forest & Climate Change, pointing to emissions from the United States and Europe. “Historical responsibility is a very important aspect. We cannot just forget it.”
China’s special climate envoy, Xie Zhenhua, was meeting with Kerry in Shanghai this week to discuss climate change, the foreign ministry said. China promised last year that its greenhouse gas output would peak by 2030, a target environmental groups say is insufficient.
U.S. and Brazilian officials, meanwhile, have been working since February on a billion-dollar deal to fund Brazil’s protection of the Amazon rainforest, but diplomatic sources said a deal is unlikely by April 22.
Russia, another big emitter, has not yet confirmed if President Vladimir Putin will participate in the summit. With Moscow’s ties with the West at a post-Cold War low, the U.S. summit has generated little buzz in Russia.
(Reporting by Valerie Volcovici in Washington and Kate Abnett in Brussells; Additional reporting by Neha Arora and Sanjeev Miglani in New Delhi, Thomas Balmforth in Moscow, Tony Munroe in Beijing, Jake Spring in Brasilia and David Ljunggren in OttawaEditing by Richard Valdmanis, Katy Daigle and Lisa Shumaker)
U.S. labor movement looks for path forward after Amazon defeat
By Timothy Aeppel
(Reuters) – Regina McDowell was not surprised that workers overwhelmingly rejected a union at an Amazon.com Inc warehouse in Alabama last week.
She spent 42 years working in a unionized electrical equipment factory in Indiana and was active in organizing drives — including traveling to the South to track down workers at their homes to make the pitch for her union, the International Association of Machinists and Aerospace Workers.
“They’d sometimes shoo you off their property with a gun,” she said, adding that union dues were a sticking point for many.
“I think that gets them,” said the 63-year-old grandmother, “that it’s less money they’ll have.”
The landslide failure of the Amazon vote at the warehouse in Bessemer has sparked soul-searching in the labor movement over what went wrong and what unions need to do differently in the future to regain ground.
“Organizing in America is no longer a fair fight. Our labor laws are no longer an effective way to capture the will of American workers to form unions,” said Tim Schlittner, communications director for the AFL-CIO, the largest U.S. labor federation.
“The sentiment this reinforces is that there’s an overdue and dramatic need for labor law reform in the United States.”
WORTH THE RISK?
Still, for many workers, labor experts reckon the decision whether to support a union campaign often boils down to a risk assessment.
“Once they know how strongly Amazon opposes them, and how much resources Amazon is willing to spend to defeat a union, then their fear sets in,” said Tom Kochan, a professor of industrial relations at the Massachusetts Institute of Technology’s Sloan School of Management.
Kochan has conducted surveys that show high, and even growing, support for unions among Americans. But when it comes to individual campaigns in a workplace, “the reality sets in –
when the employer campaigns so hard that you think you’re putting your job at risk.”
Changes in the economy have exacerbated the problem. Big companies like Amazon have operations dotting the country, making it easier for them to shift work. Compared to a steel mill or a car assembly plant, an e-commerce warehouse has fewer fixed investments in equipment, which also makes it easier to shift jobs.
“Why should I as an individual worker, earning $15 an hour, risk three years of a battle with my employer to get something done,” said Kochan, “and at the same time, risk losing my job?
The traditional view, shared by Kochan and many other labor experts, is that company measures to fight unionization, including tactics that would be illegal in other advanced countries such as requiring workers to attend meetings to hear anti-union arguments, need to be reined in.
The Democratic-led U.S. House of Representatives narrowly passed legislation last month that would expand protections for labor organizing and collective bargaining.
But the measure faces a difficult path in the Senate, where the two parties are evenly split and most legislation needs at least 60 backers to pass. A block of Republican senators from anti-union, “right-to-work” states is set to oppose the measure.
There was optimism among activists in the final months of the Amazon campaign, as it drew high-profile endorsements and national and international media attention, including a speech by President Joe Biden criticizing Amazon for hindering union drives at its warehouses.
Biden, a Democrat, is widely viewed as the most pro-union president in modern times.
But none of that was enough to counteract the view of some workers at the facility that pay and conditions were relatively good on top of the everyday barriers that have combined over recent years to drive union membership in the United States to historic lows.
Only 6.3% of private-sector workers belong to unions, according to the U.S. Labor Department. The comparable rate is 15.8% in neighboring Canada.
One response in recent years has been new types of organizing, which sidestep many legal restrictions on formal union campaigns to gain collective bargaining agreements with employers.
The Southern Workers Assembly, for instance, is a group that organizes protests and conducts education campaigns aimed at promoting labor and other social causes. The group helped organize events in February across the country in support of the Amazon workers.
Michael Hicks, an economist at Ball State University in Indiana, said unions need to refurbish their image. Many workplace advances such as the 40-hour week were enacted decades ago. Recent years have seen waves of factory shutdowns where companies have blamed unions for making the operation uncompetitive.
“Here in the Midwest, every time a factory closed, it had a huge spillover to the rest of the community,” he added. “It caused restaurants and bars to close, so the loss of other jobs.”
Younger generations have little contact with unions, simply because the share of workers covered by contracts has diminished so greatly.
McDowell, the former electrical worker, has seen these forces play out in her hometown of Peru, Indiana. Her plant, owned by France’s Schneider Electric SE, closed last April after a battle by the local union to retain it. The company said it was a difficult decision to close but necessary to remain competitive. Part of the work moved to Mexico.
Many workers viewed the move as an effort to get out of a unionized operation, a charge the company has denied.
But it also has eroded the stature of the union in the eyes of some, said McDowell, who remains strongly pro-union. “There were people who felt the union should have done more” to save the factory, she said.
“But once the company said they were going to close it, what can we do? It’s their company.”
(Reporting by Timothy Aeppel; Editing by Peter Cooney)
After Air Canada lifeline, small carriers seek aid as virus looms ahead of summer travel
U.S. seeks to polish tarnished reputation with new climate change pledges
Canadian home sales, prices surge to new record in March
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