Canada’s Big Five banks have joined the UN-backed Net Zero Banking Alliance, committing to reduce their carbon footprint and divest from oil and gas companies. The move has raised concerns about the impact on Canada’s economy, energy security, and shareholder returns.
The Global Financial Alliance (GFANZ) and Net Zero Banking Alliance (NZBA) were launched in 2021 with the goal of accelerating the transition to decarbonization and a net-zero global economy. The NZBA commits its members to align their lending and investment portfolios with net-zero carbon emissions, use decarbonization scenarios, and focus on higher-emitting sectors.
However, critics argue that this approach would have devastating effects on Canada’s oil and gas industry, which is a significant contributor to the country’s economy. The industry provides crucial energy security for both Canada and the global community.
By joining the NZBA, Canadian banks are divesting from oil and gas projects and companies, threatening shareholder returns and energy security. The move also ignores the fact that demand for oil and gas keeps growing and that coal, oil, and gas still make up about 80 per cent of the global energy mix.
The executive director of InvestNow, Gina Pappano, argues that Canadian banks should not pursue social or ideological goals at the expense of fiduciary ones. She believes that modern banks must be held to a standard of strict political neutrality and that the best interests of Canada and Canadians should guide banking policy, not the whims of unelected individuals.
The move by Canadian banks has sparked debate about their role in promoting decarbonization and energy security. As Gina Pappano notes, it is essential for institutions like banks to prioritize fiduciary duties over ideological goals.
Source: https://financialpost.com/opinion/big-banks-get-out-un-net-zero-banking-alliance