Answering Mark Carney: What are the climate plans for Canada’s banks and pension funds?

On December 18, the Bank of England was widely reported  to have unveiled a new “stress test” for the financial risks of climate change. That stress test is a proposal contained in an official BoE Discussion Paper,  2021 biennial exploratory scenario (BES) on the financial risks from climate change , open for stakeholder comments until March 2020.  Mark Carney, outgoing Governor of the Bank of England, has led the BoE to a leadership position on this issue in the financial community and will continue  in his new role as United Nations special envoy on climate action and climate finance in 2020.  In a December BBC interview reviewing his legacy, he warned the world yet again about stranded assets and asked: “A question for every company, every financial institution, every asset manager, pension fund or insurer: what’s your plan?”

What are the climate plans for Canada’s pension funds ?

shift action pension report 2019In their June 2019 report, Canada’s Pension Funds and Climate Risk: A Baseline For Engagement  , ShiftAction concludes: “Canadian pension funds are already investing in climate solutions, but at levels that are far too low relative to the potential for profitable growth, consistent with levels required to solve this challenge.” The report provides an overview, and importantly, offers tips on how to engage with and influence pension fund managers.

Since then…..

The sustainability performance of  the  Canada Pension Plan Investment Board (CPPIB) continues to be unimpressive, as documented in  Fossil Futures: The Canada Pension Plan’s failure to respect the 1.5-degree Celsius limitreleased in November ccpaFossilfuture2019 by the Canadian Centre for Policy Analysis-B.C. (CCPA-BC).  According to the CPPIB Annual Report for 2019, (June 2019) the CPPIB is aiming for full adoption of the Task Force on Climate-related Financial Disclosures recommendations by the end of fiscal 2021 (page 28).

Canada’s second largest pension fund, the Caisse de dépôt et placement du Québec (CDPQ), announced in November that CEO Michael Sabia will retire in February 2020 and move to the University of Toronto Munk School of Global Affairs and Public Policy. The press release credits Sabia with leading the Caisse to a position of global leadership on climate change, beginning in 2017 with the launch of an investment strategy which aims to increase low-carbon assets and reduce the carbon intensity of investment holdings by 25%. In 2019, the Caisse announced that its portfolio would be carbon-neutral by 2050.   Ivanhoé Cambridge ,the real estate subsidiary of the Caisse de dépôt, has a stated goal to increase low-carbon investments by 50% by the year 2020 and to reduce greenhouse gas emissions by 25% by the year 2025. In December 2019, Ivanhoé Cambridge announced that it had issued a $300 million  unsecured green bond to finance green initiatives – the first real estate corporation in Canada to do so. Shawn McCarthy reviewed Sabia’s legacy in “Canada’s second largest pension fund gets deadly serious about climate crisis”, in Corporate Knights in December.

AIMCo, the Alberta Investment Management Corporation is a Crown Corporation of the Government of Alberta, with management responsibility for the public sector pensions funds in Alberta, along with other investments. In November 2019, the Alberta government passed Bill 22, which unilaterally transfers pension assets from provincial worker plans to the control of AIMCo (see a CBC summary here ). The Alberta Federation of Labour and the province’s large unions protested in a joint statement, “Union leaders tell UCP: ‘The money saved by Albertans for retirement belongs to them, not to you!’” (Nov. 20) . The unions state: “we’re worried that what you’re attempting to do is use other people’s money to create a huge slush fund to finance an agenda that has not yet been articulated to the public – and which most people would not feel comfortable using their life savings to support.” And in December 2019, those worries seem to come true as AIMCo announced  its participation in a consortium to buy a 65% equity interest in the controversial LNG Coastal GasLink Pipeline Project from TC Energy Corporation. Rabble.ca reported on the demonstrations at AIMCo’s Toronto offices regarding the Coastal Gas project in January .

On January 8, the Toronto Star published  “Toronto asks pension provider: How green are our investments?” – revealing that the city has asked for more details from the Ontario Municipal Employees Retirement fund (OMERS). OMERS, with assets of over $100 billion, manages the pension savings of a variety of Ontario public employees, including City of Toronto and Toronto Police, Fire, and Paramedics. On January 8, OMERS announced the latest consolidation of Toronto pension plans with its consolidation of the Metropolitan Toronto Pension. Its Sustainable Investment Policy statement is here .

What are the climate plans for Canada’s private Banks?  

The 10th annual edition of Banking on Climate Change: the Fossil Fuel Finance Report Card was released in October 2019 by Banktrac, Rainforest Alliance Network and others . It states that $1.9 trillion has been invested in fossil fuels by the world’s private banks since the Paris Agreement, led by JPMorgan Chase, Wells Fargo, Citi and Bank of America. Canadian banks also rank high in the world: RBC (5th), TD (8th), Scotiabank ( 9th), and Bank of Montreal (15th).  Also in October, the World Resources Institute green-targets2published Unpacking Green Targets: A Framework for Interpreting Private Sector Banks’ Sustainable Finance Commitments , which includes Canadian banks in its global analysis and provides guidance on how to understand banks’ public documents.  “How Are Banks Doing on Sustainable Finance Commitments? Not Good Enough”  is the WRI blog which summarizes the findings.

Since then….

On September 14, the Canadian Imperial Bank of Commerce announced the release of their first climate-related disclosure report aligned with the Task Force on Climate-Related Financial Disclosures. Building a Sustainable Future highlights the CIBC’s governance, strategy, and risk management approach to climate related issues. It provides specific metrics and targets, especially for its own operational footprint, but also a commitment: “to a $150 billion environmental and sustainable finance goal over 10 years (2018-2027).”

Scotiabank also announced climate-related changes in November, including “that it would “mobilize $100 billion by 2025 to support the transition to a lower-carbon and more resilient economy”; ensure robust climate-related governance and reporting; enhance integration of climate risk assessments in lending, financing and investing activities; deploy innovative solutions to decarbonize operations; and establish a Climate Change Centre of Excellence “to provide our employees with the tools and knowledge to empower them to act in support of our climate commitments. This includes training and education, promoting internal collaboration, and knowledge and information sharing.”  Their 4-page statement on climate commitment  is here. Their  2018 Sustainable Business Report (latest available) includes detailed metrics and description of the bank’s own operations, including that they use an Internal Carbon Price of CAD$15/tonne CO2, to be reviewed every two years.

RBC, ranked Canada’s worst fossil-fueling bank in the 2019 edition of Banking on Climate Change , released a 1-page statement of their Commitment to Sustainable Finance (April 2019)  and an undated Climate Blueprint  with a target of $100 billion in sustainable financing by 2025.  However, in their new research report,  Navigating the 2020’s: How Canada can thrive in a decade of change , the bank characterizes the coming decade as “Greener, Greyer, Smarter, Slower”, but offers little hope of a change in direction. For example, the report states “ Canada’s natural gas exports can also play a role in reducing emissions intensity abroad. LNG shipments to emerging economies in Asia, where energy demand is growing much faster than in Canada, can help replace coal in electricity production, just as natural gas is doing here in Canada. …As climate concerns mount, Canada’s challenge will be to better sell ourselves as a responsible, cleaner energy producer.”

Financial giants targeted by new U.S. divestment campaign; Youth challenge the Davos elites to stop investing in the fossil fuel economy immediately

stop the money pipeline targetsLaunched at Jane Fonda’s final #FireDrillFriday event in Washington D.C. on January 10, the Stop the Money Pipeline , according to a Sierra Club press release , will consolidate a number of existing divestment campaigns and target the worst climate offenders in each part of the financial sector. The first campaign round consists of three major targets: amongst banks:  JP Morgan Chase;  amongst  insurance companies: Liberty Mutual;  and amongst asset managers, BlackRock. Groups involved in Stop the Money Pipeline are: 350.org,  Rainforest Action Network (RAN), Sierra Club, Greenpeace USA, Sunrise Project, Future Coalition, Divest Ed, Divest-Invest, Native Movement, Giniw Collective, Transition U.S., Oil Change International, 350 Seattle, EarthRights International, Union of Concerned Scientists, Majority Action, The YEARS Project, and Amazon Watch.

The Stop the Money Pipeline website  has archived some of the arguments for their campaign – including Bill McKibben’s September Commentary in the New YorkerMoney Is the Oxygen on Which the Fire of Global Warming Burns”, and “Why Big Banks Are Accused Of Funding The Climate Crisis” in  HuffPost  in October 2019.  The campaign launch has been described in “Climate Movement Takes Aim at Wall Street, Because ‘Money Is Only Language Fossil Fuel Industry Speaks‘” in Common Dreams (Jan. 9);   , and  in  “Want to do something about climate change? Follow the money” in the New York Times  on Jan. 11. In that Opinion piece, Bill McKibben and Lennox Yearwood Jr.  describe their arrest at a sit- in at the Chase Bank which was part of the campaign launch. Democracy Now also covered the events in  “Stop the Money Pipeline”: 150 Arrested at Protests Exposing Wall Street’s Link to Climate Crisis  on January 13 .

Are campaigns having any effect?

Perhaps it is just coincidence, but on January 9,  BlackRock announced it is signing on to  Climate Action 100+, a global investor network formed in 2015 and which includes California Public Employees’ Retirement System (CalPERS), HSBC Global Asset Management, and Manulife Asset Management.   BlackRock also announced a new investment strategy, summarized in  “BlackRock Will Put Climate Change at Center of Investment Strategy”   in the New York Times (Jan. 14) . The NYT article emphasizes the company’s influence as the world’s largest investment fund with over $7 trillion under management, and states that “this move … could reshape how corporate America does business and put pressure on other large money managers to follow suit.”  The new strategy is outlined in two Annual Letters from BlackRock’s CEO Larry Fink:  Sustainability as BlackRock’s New Standard for Investing , the letter to corporate clients states, “Our investment conviction is that sustainability-integrated portfolios can provide better risk-adjusted returns to investors”.  The second letter, titled A Fundamental Reshaping of Finance, acknowledges that  protests have had an impact on their position: Climate change has become a defining factor in companies’ long-term prospects. Last September, when millions of people took to the streets to demand action on climate change, many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect.”   He continues: “…. awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.… climate change is almost invariably the top issue that clients around the world raise with BlackRock. ….   In the near future – and sooner than most anticipate – there will be a significant reallocation of capital.”  However, this urgency seems somewhat at odds with another statement in the Letter to CEO’s: “…. While the low-carbon transition is well underway, the technological and economic realities mean that the transition will take decades. Global economic development, particularly in emerging markets, will continue to rely on hydrocarbons for a number of years. As a result, the portfolios we manage will continue to hold exposures to the hydrocarbon economy as the transition advances.”

Other divestment developments:

Urgency is a key theme in a new public call by Greta Thunberg and other youth leaders.  “At Davos we will tell world leaders to abandon the fossil fuel economy” – an Opinion piece carried by The Guardian on January 10,  directed to the world’s economic elite scheduled to gather at the World Economic Forum in Davos at the end of January. The core message is urgent:  “We call upon the world’s leaders to stop investing in the fossil fuel economy that is at the very heart of this planetary crisis. Instead, they should invest their money in existing sustainable technologies, research and in restoring nature.. …Anything less than immediately ceasing these investments in the fossil fuel industry would be a betrayal of life itself. Today’s business as usual is turning into a crime against humanity. We demand that leaders play their part in putting an end to this madness. Our future is at stake, let that be their investment. An article in Common Dreams on January 10 highlights the youth campaign and notes that it aligns with Stop the Money Pipeline .

C40 Cities released a new toolkit on January 7:  Divesting from Fossil Fuels, Investing in Our Future: A Toolkit for Cities.   The toolkit is directed at city officials, outlining steps required to divest their pension funds from fossil fuels. It includes eight successful case studies –  from Auckland, Berlin, Copenhagen, London, MelbourneNew York City, Oslo, and Stockholm – all of whom have divestment experience and none of whose city pension funds were negatively impacted by divestment.  C40 Cities is a network of 94 municipalities with a population of over 700 million people, active in promoting climate change action at the municipal level.

The Australian bushfire disaster: what does it mean for firefighters and workers?

There are many themes amid the story of the horrifying Australian bushfires of 2019/20:  destruction of habitat and homes, the reality of climate change, and the resilience and self-sacrifice of Australians, exemplified in their unique tradition of community volunteer firefighters, or “firies”.   The International Trade Union Confederation (ITUC) recognized their contribution in a statement which includes: “Workers in the emergency services and volunteers in their own communities are on the front lines of defending people, their homes and community infrastructure. We thank them profusely for their efforts and their courage. They are working heroes.”

australia firefightersAustralia’s Volunteer Firefighters Find It Hard to Pause, Even for Christmas in the New York Times (Dec. 24 2019) describes the self-sacrifice displayed by these volunteers, but it also questions how sustainable such a system can be in such a long-running and widespread disaster. Exhaustion is one constraint; financial necessity to earn money is another.  Only under public pressure did the government finally announce compensation for the volunteers  in December.  The Sydney Morning Herald offers a detailed “Explainer: How the Bushfire Compensation Scheme works”  (Jan. 12), which notes that some union leaders “have called for amendments to the Fair Work Act to ensure workers have the right to paid emergency services leave as part of the National Employment Standards.”  This idea is taken up in “Unions and employers join forces to demand increased bushfire relief for workers and firies”, also in the Sydney Morning Herald (Jan. 12), which highlights the “fine print” limitations for firefighters’ :

“The federal government and some state governments have said they will provide eligible volunteer firefighters with up to $300 per day capped at a total of $6000 as compensation for time off work to fight bushfires, but firies can only claim from day 11 and the hours spent on patrol must align with their normal working hours…This means if a volunteer firefighter normally works from 9am to 5pm, but is out fighting blazes from midday to midnight, they can only claim five hours’ pay.”

Occupational health and safety concerns:

The Australian Council of Trade Unions issued a December call for change in “Laws must adapt to keep workers safe in changing climate” , focussed on the occupational health and safety issues of extreme heat and smoke for all workers.  Their call for change was accompanied by two Fact Sheets:  Smoke Haze – Bushfires and Air Quality  and Working in Heat . Another important occupational health issue, the emotional and psychological toll of such disasters, is described in “Black Saturday firefighters want you to listen to them, not call them ‘heroes‘” from the Australian Broadcasting Corporation  (Jan. 3).

On January 7, the Australian Council of Trade Unions (ACTU) released  this statement and call for government action :

  “No workers should ever be required to work in dangerous environments. Smoke levels are well beyond the hazardous range in huge areas of the country. Any workers, especially those who work outside, who have concerns about their safety should contact their union.

Workers should be aware that the NES provides for unpaid leave for the full period of time that workers are engaged in volunteer firefighting or other emergency service work. Union negotiated Enterprise Bargaining Agreements will also often provide additional paid leave provisions.

In some circumstances, workers will also be able to access personal leave if they are unable to return to work due to being evacuated or having nowhere to live, for instance if they or a family member have suffered mental or physical injury as a result of the fires.

Under no circumstances can a worker or their employer already dealing with this devastating crisis face the added insult of being left without an income or a bill they cannot pay for a service they have not used or received.

To make sure this happens, the Federal Government’s response needs to make it clear that everyone impacted by this crisis is entitled to support and assistance and should not be left worse off.  This should include ensuring that there is comprehensive relief from debt repayments, mortgages and utility bills while families get back on their feet.

Any worker who faces issues with their bank, other lending institutions or who is fired from their job due to the fallout from these fires should immediately contact their union.”

The ACTU has established a Bushfire Relief Fund here , where donations can be made to support union members who may need more than the government support, and another campaign, here, for Australians to volunteer their skills and time in the rebuilding effort.   The National Construction Division of the CFMEU also announced their own $100,000 donation to the bushfire recovery effort in a press release .

australia nasa smokeA few other recommended articles about the Australian Bushfires :  from The Guardian, “We are seeing the very worst of our scientific predictions come to pass in these bushfires” (Jan. 3); “Australia’s fires have pumped out more emissions than 100 nations combined” (MIT Technology Review, Jan. 10) ; “Terror, hope, anger, kindness: the complexity of life as we face the new normal”  (Jan. 11, The Guardian);    “In Australia, the air poses a threat; people are rushing to hospitals in cities choked by smoke (Washington Post, Jan. 12); “Australia’s bushfires offer heated view into longstanding misinformation on climate change” (National Observer, Jan. 7); “Bushfire emergency leads thousands to protest against PM and climate change policies “( Australian Broadcasting Corp.,Jan. 10) , and the latest political development: “Scott Morrison to take proposal for bushfire royal commission to Cabinetreported on January 12 by the Australian Broadcasting Corporation, also reported as  “Australia’s Leader Calls for Inquiry Into Government Response to Fires” in the New York Times (Jan. 12).  

Unifor’s campaign to defend Northern Pulp mill jobs in Nova Scotia

northern pulp view

A January 8 general news release, “Nova Scotian forestry workers already struggling as Northern Pulp prepares to close ” summarizes the union’s position in a quote from Atlantic Region Director Linda MacNeil: ““We all agreed Boat Harbour had to close. That closure did not have to come at the cost of thousands of rural jobs ­­– there was a solution for the mill to coexist, but there was no political will from McNeil to make it happen …. Our members and other forestry workers are not the ones responsible for any wrong-doing here. … They deserve better than to be blamed and sacrificed due to the government’s lack of leadership, consultation or clear regulatory expectations.”

The context:

The “years of controversy” over the Northern Pulp mill is summarized in a Backgrounder  in the Halifax Chronicle Herald on December 10 2019, published just before the government of Nova Scotia announced that it would enforce a 2015 law which would require the mill to stop pumping effluent in Boat Harbour.  Paper Excellence Canada , the owner of the Northern Pulp mill,  stated almost immediately  that it would close the mill, but apparently the years of controversy are not over yet.  As reported on January 9 in “NS effluent dumping mill to move ahead with environmental process” in the National Observer , Paper Excellence has issued a new statement: “Our team is currently focused on supporting our employees, developing plans for a safe and environmentally responsible hibernation, and working with the government of Nova Scotia and stakeholders to determine next steps.”

Unifor’s role in the controversy: 

Unifor represents approximately 230 workers at the  mill and has been actively engaged in advocating to protect its members’ jobs by allowing the mill owners, Excellence Paper, to improve the environmental performance of the mill by building a new effluent treatment plant. Unifor’s Save Northern Pulp Jobs campaign  includes “Why Mill Jobs Matter” as a summary;  in early 2019, the union commissioned  a detailed economic impact study by consultants Gardner Pinfold which makes the case for the “keystone” importance of the mill in the region, profiling major businesses from the supply chain of  1,379 companies associated with the mill operation,  and estimating that the mill accounts for approximately 2,679 full-time equivalent jobs, earning approximately $128 million annually.  (Note that Gardner Pinfold completed an earlier economic impact study  for the industry group, Forest Nova Scotia, in 2016).

An ongoing series of Updates chronicle how Unifor has participated in the provincial environmental assessment process and in direct advocacy for their membership.  The January 3 update  reports to members on interactions with government, stating: “the best course of action for a viable and continued forest industry in the province is with Northern Pulp continuing to operate. We reiterated that the $50 million should be used to assist all workers in the industry through a temporary shutdown of the mill to facilitate the construction of Northern Pulp’s new effluent treatment facility (ETF)…. We also suggested the idea of a third-party expert who could serve as intermediary between government regulators and the company to establish a firm and fair process and timelines for the necessary approvals to take place for construction of the ETF.”

The update also states:  “Premier McNeil announced a $50 million transition fund for forestry workers that was of particular interest during the meeting, especially since the fund was never mentioned to the union, or anyone else, prior to his December 20 decision.”

Work and Climate Change Report has summarized the $50 million  Forestry Transition Fund here.

Further documentation: The March 2019 submission of Unifor Atlantic Region to the provincial Environmental Assessment process is here , included in a compilation of all submissions ; comments by Unifor’s National Office to the environmental assessment process in October 2019 appears here (around page 14).

 

northern pulp view

Phase-out, not expansion of fossil fuels – some recommendations for Canada

Oil, Gas and the Climate: An Analysis of Oil and Gas Industry Plans for Expansion and Compatibility with Global Emission Limits was published by the Global Gas and OilGas-ReportCoverOil Network (GGON) in December 2019.  The report analyzes the expansion plans of the oil and gas industry in relation to the global Paris climate goal of a 1.5C warming limit, and concludes that “if the world uses all the oil and gas from the fields and mines already in production, it will push us beyond 1.5°C of warming. This is true even if global coal use were phased out overnight, and if cement emissions were drastically reduced.” This report is the latest to sound this alarm: for example, Oil Change International, part of the GGON , began to publish such warnings in 2016 with The Sky’s Limit: Why the Paris Climate Goals Require a Managed Decline of Fossil Fuel Production , followed by Drilling towards Disaster in 2019.

Oil, Gas and the Climate states that from now until 2024, oil and gas companies are set to invest a further $1.4 trillion U.S.  in new oil and gas extraction projects – with 85% of that expansion in North America, and with the impact of the U.S. alone putting a 2 degree warming target out of reach.  Further, it states that over 90% of U.S. expansion would be shale production dependent on fracking.  It highlights that the Permian Basin (west Texas and southeastern New Mexico) would account for 39% of new U.S. oil and gas production by 2050. “It holds the greatest risk for new oil and gas development in the United States and in the world.”

Projected Canadian investment is a distant second to that of the U.S., but even so, the report states that “new oil and gas development in Canada between now and 2050 could unlock an additional 25 GtCO2 , more than doubling cumulative emissions from the sector.” The report highlights the approved Exxon Aspen Oil Sands project and the pending Teck Frontier Mine, but warns  “…Shale gas extraction, particularly the Montney Shale Basin in British Columbia, is a major focus of the industry…From 2020 to 2050, new gas projects could be responsible for as much CO2 as new oil projects.” (For a recent overview of the extent of Canada’s LNG infrastructure, see The New Gas Boom, published by Global Energy Monitor in June 2019).

“A better future is possible”, and here’s how to get there:

Despite the grim projections, Oil, Gas and the Climate  argues that “a better future is possible” and calls for “the launch of a well-planned phase-out of oil and gas production that addresses the needs of workers and communities impacted by fossil fuel developments. ” The report recognizes the impact of recent civil society actions such as Fridays for Future and Extinction Rebellion, and calls on governments and investors to catch up with such leadership.

Based on the findings of the report, Environmental Defence makes the following recommendations to support Canada’s phase-out:

Clear new federal rules under our environmental assessment law that review possible expansions of oil and gas projects against our commitment to climate goals. If we cannot credibly demonstrate how investing in a fossil fuel project is consistent with a 1.5C warmed world then the project should not be permitted to go ahead.

Institutional investors should apply a similar screen that will guide their decisions regarding whether to provide financing for new projects.

The federal government must invest in research and development of new energy technologies like geothermal electricity that have huge employment and energy production opportunities in places like Alberta and northern British Columbia. At a minimum, the government should make available an amount equivalent to the billions in subsidies that have been given to the fossil fuel industry through tax breaks or direct investment in pipeline infrastructure (e.g. Trans-Mountain) – subsidies that should be phased out rapidly. Success will create skills-linked jobs and massive supply of electrical energy for export to a North America that must replace the energy of fossil fuels.

Domestic demand for fossil fuels must be rapidly driven down through improved efficiency (e.g. buildings, appliances, manufacturing), electrifying transportation and home heating and increased renewables generation and storage.

The Oil, Gas and the Climate report is a project of the Global Gas and Oil Network , supported by Oil Change International; 350.org; Center for Biological Diversity; Center for International Environmental Law; CAN-Rac Canada; Earthworks; Environmental Defence Canada; Fundacin Ambiente y Recursos Naturales:FARN; Global Witness; Greenpeace; Friends of the Earth Netherlands (Milieudefensie); Naturvernforbundet; Observatorio Petrolero Sur; Overseas Development Institute; Platform; Sierra Club; Stand.Earth.