Across the globe, countries are developing new labelling systems to identify what can qualify as a “sustainable investment.” This is done through a system known as a taxonomy, whereby labels would make it easier for investors to know which investments are good for the climate
In 2021, the Government of Canada decided to start creating its own system, and it made an advisory council to help. However, the government filled the council with financial experts, with not a single climate expert- meaning the council made some suggestions that do not align with the progress we need to make on climate change.
This council suggested labeling fossil fuel activities like CCUS (carbon capture, utilization, and storage) as sustainable, as well as some types of oil and gas expansion. Labeling fossil fuel activities as sustainable is like including a harpooned whale under Ocean Wise, or describing a peanut butter and jelly sandwich as nut-free.
In the 2023 Fall Economic Statement, the government promised to move forward with its sustainable investment labelling scheme. However, there’s a risk that it will agree to label fossil fuel projects as sustainable. This would allow your bank or pension to claim they are fighting climate change while actually perpetuating it, through making investments and misleadingly labeling them as sustainable.
Case in point: in the last few years, banks have been making “sustainable” loans to fossil fuel companies. In early 2024, climate experts identified over $11 billion of these “sustainable” loans that had been used to expand fossil fuel production. Oil and gas companies greenwash their activities to access sustainable loans by promising to use the funds to reduce the emissions from their production activities. Meanwhile, these companies are actively increasing production, and therefore the quantity of burnable fossil fuels in the world. Oil and gas greenwashing allows the financial sector to fund the climate crisis while claiming to fix it.
The “sustainable investment” label should be reserved for real climate solutions like renewable energy such as wind and solar.
This summer, the federal government is expected to announce its next steps on the taxonomy. As we speak, it is making decisions that will impact this key piece of policy. We are therefore faced with an opportunity to contribute to the conversations shaping this policy. We need to tell the government: fossil fuels are not the new green investment.
Our government should be accountable to us, not the financial industry. Right now, only the financial sector has a seat at the table. We need to get our voices heard too. Fossil fuels are not a good investment, for either the planet or our economy. We want our financial institutions to fund climate solutions, not mislead us about harmful investments.
