The House of Commons passed a motion in June declaring that Canada is in a state of climate emergency. This important decision came after Environment and Climate Change Canada released a report demonstrating how, driven by human influence, temperatures are rising across all regions of our country, particularly in the North. In fact, the report found the average annual temperature in Northern Canada has increased by an alarming 2.3° C since 1948.
Climate change affects all of us. It reaches into our daily lives – as just one example, look at the recent increase in wildfires in Western Canada, and the intensity of the smoke that blankets our provinces each summer.
The situation in which we find ourselves – one we have collectively created – demands an urgent response. Tackling climate change requires leadership, focus and concerted action, from individuals, governments and businesses. The financial sector, including banks and credit unions, have a big role to play in meeting these new expectations and creating positive outcomes.
That was made clear in a document published this month by the federal finance department. The final report of the Expert Panel on Sustainable Finance does an excellent job explaining how our financial systems and markets must transition in order to identify, measure and minimize climate change risk, even as we expand our economies and encourage population growth.
As CEO of Canada’s largest community credit union – an organization driven by a triple bottom line approach of “people-planet-profit” – I have seen how the transition to sustainable finance works to the benefit of our members and to communities in which they work and live.
Who gets a loan and who doesn’t is a fundamental factor in determining the kind of future we want to create.
When people talk about what’s required to address climate change, my experience is the discussion seldom goes to the question of banking. But the allocation of capital is one of the most powerful tools we have in this work. Who gets a loan and who doesn’t is a fundamental factor in determining the kind of future we want to create.
At Vancity, we have long worked to reduce our own environmental footprint. In 2008, we were the first North American-based financial institution to become carbon neutral. But our biggest impact by far has been how we partner with, loan to and invest in organizations and businesses that participate in the clean and green economy.
Through this work, we finance green buildings and energy-saving retrofits, in both residential and commercial markets. We not only produce buildings with a small carbon footprint, we also reduce their operating costs. This business produces solid returns for the members of our credit union – last year, Vancity generated almost eight per cent profit based on the equity our members hold. To me, this proves the point made in last week’s report, that environmental goals need not come at the expense of economic ones.
When it comes to our own lending portfolio, we monitor both our retail and business mortgage loans against high-risk flood plain zones to understand what climate-related risks lie ahead. This complex work is still emerging; we’re fortunate to have partners from the Global Alliance for Banking on Values (GABV) – a global network of more than 50 banks committed to advancing positive change in the banking sector – to help push it forward.
In February, Vancity hosted a GABV summit in Vancouver. Much came from that summit, including a commitment by Vancity and 27 other GABV members to track and monitor the carbon impact of our loans and investment portfolios. This will be a major step forward in our work, one I believe will help contribute to efforts of financial institutions everywhere in understanding the full impact of the projects and priorities we support through capital allocation.
Our members want to know where their money is going.
I’ve often said that from a banking perspective, taking action on climate isn’t just good practice, it’s good business. Our members want to know where their money is going, how it’s being used and the impact it’s having. As climate change continues to manifest, Canadians from coast to coast to coast will increasingly expect their own financial institutions to play a role in helping Canada drive the green economy, and to be among the leaders in sustainable growth. Those efforts must start now.
This op-ed originally appeared in The Star on June 30, 2019.