This week, some in the world of high finance showed their willingness to get on with solving the climate crisis.
Forty-three financial institutions, including Vancity credit union, are among more than 160 firms that joined the Glasgow Financial Alliance for Net Zero.
It's chaired by Mark Carney, the UN Special Envoy on Climate Action and Finance and the former governor of the Bank of Canada and Bank of England.
Collectively, the 43 financial institutions have assets of US$28.5 trillion.
Combined with the other members, that sum rises to more than US$70 trillion.
Vancity is the only Canadian financial institution that's part of the alliance.
It was convened by the United Nations Environment Programme Finance Initiative as part of the UN's Race to Zero Campaign.
“Financial institutions have an enormous economic and social footprint," Vancity president and CEO Christine Bergeron said in a statement. "We must rally that influence to take on the crisis facing our planet and support the shift to a low carbon economy that is clean and fair for everyone.
"Vancity is proud to be a founding signatory of the Net-Zero Banking Alliance, to support the global collective effort to limit warming to 1.5°C, to catalyze collaboration among the financial sector, and to foster systemic change internationally."
Fossil-fuel financiers join alliance
Vancity has an impressive track record on these issues. But the same can't be said for some of the other signatories.
Four of the world's 10 largest financiers of fossil fuels, according to a recent report, are also original members of the Glasgow Financial Alliance for Net Zero.
They are CITI (second), Bank of America (fourth), Barclays (seventh), and BNP Paradis (10th).
Several environmental organizations were behind the Banking on Climate Chaos: Fossil Fuel Finance Report 2021. It also listed Canada's five largest banks among the top 22 financiers of fossil fuel companies.
RBC came fifth; TD was ninth, Scotiabank ranked 11th; Bank of Montreal came 16th; and CIBC was 22nd.
"In the 5 years since the Paris Agreement, the world’s 60 biggest banks have financed fossil fuels to the tune of $3.8 trillion," the Rainforest Action Network states on its website. "Runaway funding for fossil fuel extraction and infrastructure fuels climate chaos and threatens the lives and livelihoods of millions."
So far, Canada's largest banks have not stepped forward to join the organization, which has strict entry requirements.
According to the UN Environment Programme website, they include:
- align operational and attributable emissions from their lending and investment portfolios with pathways to net-zero by 2050 or sooner;
- within 18 months of joining, set 2030 targets (or sooner) and a 2050 target, with intermediate targets to be set every five years from 2030 onwards. All targets will be regularly reviewed to ensure consistency with the latest science (as detailed in IPCC assessment reports);
- banks’ first 2030 targets will focus on priority sectors where the bank can have the most significant impact, i.e., the most GHG-intensive sectors within their portfolios;
- within 36 months of joining, banks will set a further round of sector-level targets for all or a significant majority of specified carbon-intensive sectors, including: agriculture; aluminum; cement; coal; commercial and residential real estate; iron & steel; oil & gas; power generation; transport;
- the commitment is designed to ensure that banks engage with their clients’ own transition and decarbonization, promoting real economy transition;
- annually publish absolute emissions and emissions intensity in line with best practice and within a year of setting targets, disclose progress against a board-level reviewed transition strategy setting out proposed actions and climate-related sectoral policies;
- and take a robust approach to the role of offsets in transition plans.
The math of fossil fuels
The challenges are enormous.
A paper published in Nature in 2019 estimated that historically existing fossil-fuel infrastructure, if allowed to continue through its life cycle, would cumulatively emit about 658 gigatonnes of carbon dioxide. (The actual rate would range between 226 to 1,479 gigatonnes, depending on the lifetime and utilization rates.)
Proposed power plants that have been planned, permitted, or under construction in 2018 would add an estimated 188 gigatonnes of carbon dioxide emissions.
This would reach 846 gigatonnes, vastly exceeding the entire carbon budget necessary to meet the 1.5 C target in the 2015 Paris Agreement.
The researchers noted that keeping emissions between 420 and 580 gigatonnes would have a 50 to 66 percent chance of limiting the average global temperature rise to 1.5 C from the start of the Industrial Revolution.
To keep warming below 2 C, emissions would have to remain below 1,170 to 1,500 gigatonnes, according to the paper.
"The remaining carbon budget estimates are varied and nuanced, and depend on the climate target and the availability of large-scale negative emissions," they noted. "Nevertheless, our estimates suggest that little or no new C02-emitting infrastructure can be commissioned, and that existing infrastructure may need to be retired early (or be retrofitted with carbon capture and storage technology) in order to meet the Paris Agreement climate goals."