Canada should be taking more ambitious steps to reduce fossil fuel emissions. The ruling Liberal party campaigned on climate action and their minority government is supported by two parties — the Greens and the NDP — who presented ambitious climate plans in their own platforms. Some Liberal MPs like Steven Guilbeault, Nate Erskine-Smith and others seem to actually understand the severity of the crisis. But more than that, climate action is popular with voters. To me, Canada’s failure to act on climate change is something of a mystery. I do, however, have a theory that fits the evidence.
Canadians want Climate Action
According to Abacus Data, 40% of Canadians think reducing emissions is important and 50% think it’s URGENT! With the right messaging, climate action is a political slam-dunk. And yet, year after year, the Liberals continue to drag their feet. Even during the pandemic, Canadians still see the need for climate action – with 32% saying it is even more important now.
So… Climate action is very popular. AND the ruling party campaigned on climate action and has several climate champions in its ranks. And yet nothing happens? What gives?
It must be Alberta, right?
Although Alberta is not a monolith, Albertans are more likely to support the expansion of the fossil fuel industry and less likely to believe that climate change is an emergency. However, despite bending over backwards to please the fossil fuel lobby, the Liberals still won zero seats in Alberta. Think about that for a second. Even by completely undermining their own pro-environment messaging by purchasing and building an ill-fated pipeline the Liberals managed to form the government with zero Alberta votes. Why would the Liberals be swayed by Alberta-based fossil fuel champions like the Canadian Association of Petroleum Producers if bending over backwards to please them doesn’t earn them a single seat? Honestly, it seems to me that the Liberals probably don’t give a shit about Alberta, even if they won’t say it out loud. There must be an even bigger thumb on the scales, tipping them inexorably towards inaction.
What’s bigger than oil and gas?
There is only one institution in Canada that can throw around more weight than the fossil fuel companies — and that’s the big 5 Canadian banks. BMO, TD, CIBC, RBC and Scotia. And the evidence suggests that they’re addicted to fossil fuels too. Between 2016 and 2019, RBC pumped $140B into the fossil fuel economy. TD: $103B. Scotiabank $97B. BMO $82B. CIBC: $57B. Keep in mind that the only banks above the Canadian banks on this chart are the largest American banks — and they have more total assets.
The Canadian banks are up to their eyeballs in fossil fuel debt.
A bank only makes a loan after evaluating the assets of the recipient. You can get a mortgage for a house because, if you fail to pay it back, the bank can sell the house. The same is true in the fossil fuel industry — except here most of the assets are ‘proven reserves.’ If the world stops burning coal and oil, those assets suddenly become liabilities. So, unlike other lending, where a bad loan is a pain in the ass that requires the bank to jump through a bunch of hoops to get its money back, if oil companies start defaulting the banks most likely get zilch! So you better believe the banks are leaning on the Liberals through every backroom Bay Street channel available to them telling Trudeau and Co. to keep the oil sands alive at all costs.
BankShift: Earth Day 2021
The Canadian banks need to stop making new loans to the oil and gas industry and start removing existing loans from their balance sheets as quickly as possible. This will both slow the expansion of Canada’s oil and gas industry AND make the banks less nervous about Ottawa taking meaningful climate action. In the short term, this will probably hurt their bottom line — but in the long-term it will make them more stable in the face of the inevitable collapse of fossil fuel demand. The oil sands are never coming back. Our job is to motivate the banks to clean up their balance sheets while there’s still time to also save the earth. You can help by calling or emailing your branch manager or financial adviser and asking them to align their loans with the Paris Accord. If they won’t, tell them you’ll be taking your money somewhere else next April. For now, that means a credit union, but the banks want to get these risky assets off their balance sheets, so we’re hoping that as demand for climate-friendly banking rises one of the big 5 will recognize that becoming the first climate-friendly bank in Canada will be a huge competitive advantage. And when they do, their gigantic marketing budgets will be set to work attracting new customers who are looking for a convenient banking option AND a biosphere that is safe for humans. Once one banks makes the shift, the others will have to follow. And if that happens, we’ll finally get meaningful climate action in Canada and you have to actually go through the hassle of moving your money! Win, win!
So whaddya say? Are you willing to make one call or email to save the world? If so, you can read more about the BankSwitch campaign here — we’ve even got email templates!