Over 85 investment firms, academic organizations, and environmental groups from across Canada and the globe, representing nearly 3-million members, have called on the government to step up and pass policies that align the financial sector with climate action. Canada’s financial sector needs to invest in climate solutions, but most of our banks, pension funds, and insurers continue to fund climate chaos.
Recent reports have highlighted that Canadian banks significantly invest in oil, gas, and coal despite the clear science that fossil fuels worsen climate change. Redirecting the financial sector is key for Canada to succeed on climate action. As a result, Environmental Defence in partnership with 88 other organizations called on the government to implement policies that reroute the financial sector to help limit global warming below 1.5-degrees, and keep the world liveable.
Our call to action supports independent Senator Rosa Galvez’s Bill S-243, the Climate-Aligned Finance Act. Senator Galvez tabled this ambitious piece of legislation on March 24th, 2022. If implemented, it would require the financial sector to reduce carbon emissions and build resilience in the real world. The bill’s policies would ensure that all financial institutions align with Canada’s commitments on climate action, including avoiding carbon lock-in and respecting the rights of Indigenous Peoples. This legislation would help Canada become a leader in delivering a climate-aligned, low carbon financial system. We need policymakers to take the lead and implement these policies into law.
Although financial institutions have independently taken baby steps to advance climate-aligned finance, voluntary initiatives alone are not spurring action at the level needed to keep the planet liveable. Other countries are recognizing this and implementing climate finance policies in response. For example, New Zealand requires companies to report on their emissions and climate business strategies, and the European Union introduced regulations that would require investors to report the adverse impacts their investments have on environment and social justice. But Canada’s climate finance regulations still lag behind international best practices.
The Climate-Aligned Finance Act moves beyond just disclosure, or reporting, to ensure the financial sector actually cuts carbon and builds resilience. Canadian policymakers should implement this to ensure finance becomes truly sustainable – not just in name.
This united call for action – signed from across the climate and finance spectrum – proves that Canadian policymakers have left a big policy gap on climate finance. We call on both Canada’s Senate and House members to implement the provisions of Bill S-243 into law. This bill would ensure Canada’s financial sector helps to mitigate climate change. It would move us towards a stable environment and a stable economy.