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Bruce Campbell

Once again, Canada will almost certainly fail to meet its target to  in accordance with the most recent  recommendations.

This is despite the  spin on the release of its latest . Jerry DeMarco, ,  as a litany of broken promises:

“We have been repeatedly ringing the alarm bells. Now, these bells are almost deafening.”

Canada is the only G7 nation with 2022 , and its 

And its financial institutions — banks, pension funds and private equity firms — fund the industry and are therefore helping fuel the climate crisis.

As a result, financial institutions’ assets are at risk. So too are the economy, people’s lives and ultimately the survival of the planet due to catastrophic fires, floods and droughts.

The federal government has so far been unable to effectively regulate financial institutions’ investments in the fossil fuels industry in accordance with its climate commitments.

Regulatory agency

DeMarco recently examined reports by the federal bank regulator, the  that oversees climate risks and sets risk guidance priorities for financial institutions.

The environment commissioner noted that while OSFI has belatedly designated climate change as a top priority, full implementation is years away. OSFI’s plan to improve banks’ resilience to climate change also fails to specifically encourage their transition to net-zero carbon emissions.

Sen. Rosa Galvez  that OSFI should ensure financial institutions have  to protect against the eventuality of 

Financial institutions need to adopt the standard of putting aside , they’ll have enough money to compensate depositors, workers and shareholders and avoid declaring bankruptcy.

In April 2023, the Bank of Canada released its  to provide guidance on the climate change risks facing the Canadian economy and financial system.

Like OSFI, the Bank of Canada report is a start but has a long way to go to make up for lost ground. And ironically, any positive effects could be offset by the bank’s high interest rate monetary policy. Critics of these central bank policies credibly argue that they hinder the transition away from fossil fuels.

Economic experts argue that .

Current reality

The latest fossil fuels report by the non-governmental organization  found that the world’s 60 largest banks invested more than US$5.5 trillion into the fossil fuel industry since the .

The Big Five Canadian banks all made the list of Top 20 funders globally after investing more than $1 trillion in fossil fuel companies since 2016.

The Royal Bank of Canada ranked as the world’s largest financier of fossil fuels in 2022, providing fossil fuel companies with US$42.1 billion with a total investment of US$253 billion since 2016 — the fourth highest on the globe.

An article in the journal  estimated that global stranded investor assets — namely, the present value of future lost profits in exploration, production and related services in the fossil fuel sector — exceeds US$1 trillion. The Canadian loss risk is more than US$100 billion, disproportionately in employee savings locked up in Canadian pension funds.

Canada’s largest banks have committed to voluntarily align their investments and lending with the United Nations target of net zero emissions by 2050 as part of the . They have also committed to cut emissions financing in half by 2030.

However, these banks haven’t made any commitments to jettison their fossil fuel clients. That makes their net-zero pledges highly suspect, bordering .

Conflicts of interest

None of their publicly available plans measure up, according to Matt Price, co-founder of , a shareholder advocacy organization.

Although the International Energy Agency has stated that there’s no need for additional fossil fuel infrastructure, Canadian banks continue to fund expansion activities. Multiple proposals put forward by  to give them a say on climate plans have been rejected.

A study by the organization  has concluded that Canadian pension funds have generally failed to align their investment strategies with the Paris Agreement goals and neglected to develop a credible pathway to transition out of fossil fuels.

Pension funds are also rife with conflicts of interest. The report found that seven of Canada’s 10 largest public pension funds have at least one director who also sits on the board of a fossil fuel company.

Overall, 80 different directors, trustees, executives and senior staff currently hold or previously held 124 different roles with 76 different fossil fuel companies.

 which manage funds beneath the radar for wealthy individuals and institutional investors, have invested an estimated US$1 trillion in the energy sector since 2010 — the vast majority in fossil fuels.

Where to go from here

Introduced more than a year ago, Galvez’s  — which seeks to hold financial institutions accountable for investments that increase climate risk — has passed second reading but is still waiting to go to committee and hear from witnesses.

Calling it the gold standard in legislation, 58 academics, myself included, have written a letter urging senators to move the bill forward by referring it to committee for testimony.

The close ties between the federal government and corporations largely explain Ottawa’s failure to effectively regulate banks and pension fund investments.

The corporate government power relationship — known as  — largely explains the government’s failure to effectively regulate banks and pension fund investments.

Regulations benefit the industry at the expense of the public interest. In this case, the fossil fuel industry and financial institution enablers are able to shape the regulations governing their operations, block or delay new regulations and remove or dilute existing regulations deemed a threat to their interests.

Countervailing measures must be urgently implemented to  and ensure the public interest takes precedence over profit.

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is EUC Adjunct Professor and Senior Fellow at Toronto Metropolitan University's Centre for Free Expression. He was awarded the 2015 Law Foundation of Ontario, Community Leadership in Justice Fellowship. He spent 2016 as a Visiting Fellow, University of Ottawa, Law Faculty. He was Executive Director, Canadian Centre for Policy Alternatives 1994-2015. Bruce has authored or edited seven books and numerous articles and reports on public policy issues. His commentaries have appeared in major newspapers and online news sites across Canada. He has appeared before parliamentary committees, and been interviewed by media in Canada and abroad. His most recent books are: "” Lorimer, 2018; and ",” [Edited volume], James Lorimer, April 2022. This article is originally published in The Conversation.