HSBC Canada acquisition could undermine climate goals: Senator Galvez
Tags
In a world increasingly dominated by corporate greed, people, future generations and the health of our planet are all too often collateral damage. Take the proposed acquisition of HSBC Bank Canada by the Royal Bank of Canada (RBC) — a move that, if approved by the government, will reduce consumer choice for sustainable banking in Canada and undermine progress towards achieving our climate goals.
HSBC, a global bank with international exposure, has demonstrated commendable progress in aligning its financial practices with sustainable objectives. While we should not idealize HSBC as a paragon of green banking, we must highlight the strategic decisions the bank has made. These include its focus on green customers and issuing Canada’s first-ever green bond.
The bank also took a significant step forward in 2022 by halting direct project financing for new oil and gas projects. This move marked HSBC as a trendsetter in the banking industry and it was followed by a wave of similar policy enactments by mainstream European banks. The world needs more of this type of leadership in banking, not less.
Unfortunately, this commitment did not extend to HSBC’s Canadian subsidiary because of its purported sale to RBC. This could have been a rare opportunity for international developments to positively influence Canada’s banking sector, which is lagging behind on the climate file. Canada’s “Big Five” banks have instead filled the void left by international banks’ divestment of oilsands holdings; they provided nearly 90% of the $28 billion in funding that oilsands companies received from banks last year.
RBC has a worrisome practice of financing projects that fuel the climate crisis and disrespect Indigenous rights. Since the Paris Climate Agreement was signed in 2015, RBC has financed more than $340 billion in fossil fuels, even claiming the unenviable title of the world’s number one financier of fossil fuels in 2022. This behaviour magnifies Canada’s climate risk and hinders our nation’s efforts to achieve the Paris Agreement goals.
To paint a clearer picture: In 2022, while HSBC was dramatically reducing its financing of fossil fuels by 44%, RBC was significantly ramping up its support. RBC’s actions not only seem inconsistent with their public commitment to net zero lending by 2050 but also stand in stark contrast to HSBC’s journey towards sustainability.
Given RBC’s poor environmental record, its intent to acquire HSBC’s Canadian business is cause for concern. Not only does this move threaten to further concentrate Canada’s oligopolistic banking sector, but if we allow the acquisition to proceed unchallenged, we effectively condone the increased financing of our highest-emitting sector and the diminishment of sustainability-focused financial options for consumers.
We also risk our nation’s reputation as a responsible actor on the global stage and we further expose our economy to heightened climate-related financial risks — which are materializing at an accelerated rate, as evidenced by the unprecedented wildfires raging across the country this summer.
A potential approval by federal finance minister Chrystia Freeland of this proposed acquisition — without conditions to align RBC’s business with Canada’s climate goals — further underscores the urgent need for a legal framework to manage the real-world effects that financial institutions have on our climate.
We must prevent out-of-control corporations from endangering our planet and our future. It’s time to take a stand against the relentless pursuit of short-term profit for some at the expense of the long-term collective best interest.
We are at a critical juncture and must choose between continuing with outdated, harmful practices or pressing ahead with forward-thinking and bold sustainable policies. Let us forge a path where banks are part of the solution, not the problem.
Otherwise, to borrow the words of the European Central Bank’s president, “we will be toasted, roasted and grilled.”
Senator Rosa Galvez represents the Bedford division of Quebec. She is chair of the Senate Committee on Energy, Environment and Natural Resources.
A version of this article was published in iPolitics on July 19, 2023.
In a world increasingly dominated by corporate greed, people, future generations and the health of our planet are all too often collateral damage. Take the proposed acquisition of HSBC Bank Canada by the Royal Bank of Canada (RBC) — a move that, if approved by the government, will reduce consumer choice for sustainable banking in Canada and undermine progress towards achieving our climate goals.
HSBC, a global bank with international exposure, has demonstrated commendable progress in aligning its financial practices with sustainable objectives. While we should not idealize HSBC as a paragon of green banking, we must highlight the strategic decisions the bank has made. These include its focus on green customers and issuing Canada’s first-ever green bond.
The bank also took a significant step forward in 2022 by halting direct project financing for new oil and gas projects. This move marked HSBC as a trendsetter in the banking industry and it was followed by a wave of similar policy enactments by mainstream European banks. The world needs more of this type of leadership in banking, not less.
Unfortunately, this commitment did not extend to HSBC’s Canadian subsidiary because of its purported sale to RBC. This could have been a rare opportunity for international developments to positively influence Canada’s banking sector, which is lagging behind on the climate file. Canada’s “Big Five” banks have instead filled the void left by international banks’ divestment of oilsands holdings; they provided nearly 90% of the $28 billion in funding that oilsands companies received from banks last year.
RBC has a worrisome practice of financing projects that fuel the climate crisis and disrespect Indigenous rights. Since the Paris Climate Agreement was signed in 2015, RBC has financed more than $340 billion in fossil fuels, even claiming the unenviable title of the world’s number one financier of fossil fuels in 2022. This behaviour magnifies Canada’s climate risk and hinders our nation’s efforts to achieve the Paris Agreement goals.
To paint a clearer picture: In 2022, while HSBC was dramatically reducing its financing of fossil fuels by 44%, RBC was significantly ramping up its support. RBC’s actions not only seem inconsistent with their public commitment to net zero lending by 2050 but also stand in stark contrast to HSBC’s journey towards sustainability.
Given RBC’s poor environmental record, its intent to acquire HSBC’s Canadian business is cause for concern. Not only does this move threaten to further concentrate Canada’s oligopolistic banking sector, but if we allow the acquisition to proceed unchallenged, we effectively condone the increased financing of our highest-emitting sector and the diminishment of sustainability-focused financial options for consumers.
We also risk our nation’s reputation as a responsible actor on the global stage and we further expose our economy to heightened climate-related financial risks — which are materializing at an accelerated rate, as evidenced by the unprecedented wildfires raging across the country this summer.
A potential approval by federal finance minister Chrystia Freeland of this proposed acquisition — without conditions to align RBC’s business with Canada’s climate goals — further underscores the urgent need for a legal framework to manage the real-world effects that financial institutions have on our climate.
We must prevent out-of-control corporations from endangering our planet and our future. It’s time to take a stand against the relentless pursuit of short-term profit for some at the expense of the long-term collective best interest.
We are at a critical juncture and must choose between continuing with outdated, harmful practices or pressing ahead with forward-thinking and bold sustainable policies. Let us forge a path where banks are part of the solution, not the problem.
Otherwise, to borrow the words of the European Central Bank’s president, “we will be toasted, roasted and grilled.”
Senator Rosa Galvez represents the Bedford division of Quebec. She is chair of the Senate Committee on Energy, Environment and Natural Resources.
A version of this article was published in iPolitics on July 19, 2023.