Banking on climate change
Canada's second largest bank, Toronto-Dominion Bank (TD Bank), released a report on April 14 warning financiers and policy makers to begin planning for a global spike in severe weather. This move is part of a growing trend among the world's major banks to minimize the financial risks associated with climate change.
Floods in Toronto and southern Alberta last year cost several billion dollars, making them the costliest natural disasters in Canada. Storms that used to occur once every 40 years now arrive every 6 years in some regions of Canada, according to TD Bank. The report estimates that the financial impact of natural catastrophes will annually cost Canadians $5 billion by 2020 and $43 billion by 2050.
“However, with over $6 trillion in assets, banks could finance our way out of climate change by substantially scaling-up investments in [environmentally] ‘clean’ technology”, says Veena Ramani, director of the corporate program at Ceres (Boston, MA), a non-profit sustainability advocate. Responding to pressure from funders, the financial services sector is beginning to take aim at GHG emissions, according to new research from Ceres. “Most large financial companies have cut emissions from their operations”, Ramani points out. TD Bank's offices and retail outlets, for instance, are now carbon neutral.
But Ramani says the most important step is to finance clean technologies and stop supporting fossil fuels. The International Energy Agency is calling for annual investments in clean technology to rise from US$281 billion to US$1 trillion by 2030 in order to keep global temperature rise below 2°C. Since 2007, Bank of America has funneled US$20 billion into green technology and last year announced a new 10-year, US$50 billion clean technology initiative. “[Such] commitments need to be put on steroids”, continues Ramani.
Meanwhile, some companies are breaking away from fossil fuels; TD Bank, for example, will no longer fund coal-mining operations that involve mountaintop removal. Nevertheless, the bank continues to support Canadian oil and gas companies. “More financial service companies are integrating climate-change risk into their processes, but overall there has been a slow change in investments”, Ramani concludes.