According to a recent report published by Banking on Climate Chaos, in 2022 RBC became the single largest financier of the fossil fuel industry on the planet. The bank invested $54.4 billion into fossil fuels, including $10.8 billion into expanding production capacities. Since 2020, they’ve increased their investments by more than 100 per cent, beating out other banking giants like Wells Fargo, Citibank, JP Morgan, and Bank of America.
Meanwhile, in their public statements, they have tried to cultivate the image of a responsible institution doing its part to address the climate crisis. The reports published on their website often make reference to the “pathway to net-zero emissions”, “green investment”, and even a “Green Revolution”. At the same time, since the signing of the Paris Agreement in 2016, RBC has invested more than $338 billion into fossil fuels, making it one of the largest financial pillars of climate disaster on earth. For all their green-speak, in practice they have never left the close embrace of their oil baron friends and business partners.
The consequence of this continued investment in fossil fuels is nothing short of global disaster, and RBC has been rightly criticized by environmental groups and activists for their part in perpetuating global warming. These same groups, however, have very little to offer when it comes to proposing concrete and realizable solutions to the climate crisis. It is extremely rare for them to properly recognize global warming as a crisis intrinsically linked to the capitalist system, and that the only real solution to climate disaster is the socialist reorganization of society.
If we listen to RBC, they tell us that they are already on the road to building a greener future. The bank has publically pledged to reach net-zero emissions by 2050 and in the meantime to reduce the greenhouse gas emissions from their operations by 70 per cent by 2025. They’ve touted these figures as proof of their commitment to combating climate change, but what do the figures actually mean?
Their pledges to reach “net-zero” are conveniently blind to the vast majority of RBC’s ecological footprint. The net-zero plans look at the practices of RBC as an independent and isolated enterprise only. They take into account everything related to the regular functioning of the bank itself—their branches, offices, call centres—and leave out the one central feature of any bank in capitalist society: its investments.
This is not a bureaucratic oversight. Canadian finance capital is deeply interwoven with natural resource industries at home and all over the world, and interwoven with the fossil fuel industry in particular. Were RBC to divest from fossil fuels entirely, or, for that matter, all their other environmentally destructive holdings, it would deeply affect their profit margins and impact their ability to compete on a global scale. It is not in their interest to police their own investments, and it is not in the interests of the rest of Canadian capitalism to police them either.
In keeping with their net-zero plan, RBC could spend a few hundreds-of-millions of dollars making their offices and local branches eco-friendly, while at the same time continuing to pump hundreds-of-billions of dollars into the fossil fuel sector, while still meeting their so-called climate goals. The whole net-zero model is in this case a shamefully shortsighted metric for determining which business practices are actually sustainable.
And even at that, they are more than ready to fall behind their own insignificant targets!
In their 2022 Climate Report they do their best to give an unreadable explanation:
“By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct, and that our objectives, vision, commitments, goals, targets, and strategies to mitigate and adapt to climate-related risks and opportunities will not be achieved… We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements. (our emphasis)”
One can only marvel at the author’s ability to say so little with so many words! What took them a very lengthy paragraph to avoid saying could be summed up more easily in just one line: “don’t expect us to actually follow through!”
The climate pledges and talk of “green investment” that RBC has made in recent years are nothing more than nice-sounding, aspirational goals which they toss aside the first moment they infringe on the bank’s ability to make a profit. We have seen this already, and not just with RBC. In 2021, the Guardian wrote that “[d]espite the record number of corporate climate pledges, an analysis of 9,300 listed companies… found that they are still on course to exceed their ‘carbon budgets’”.
Far from being the exception, RBC is an indication of the rule!
Leading the pack
The hypocrisy is difficult to stomach, but in the context of Canadian banking it is nothing out of the ordinary. RBC is not alone in their generous patronage of the oil bosses, they’re simply the ones leading the pack. The rest of Canada’s “Big Five” banks have also increased their investments in fossil fuels over the last two years, with all of them among the top 20 financiers of the fossil fuel industry globally.
Between 2020 and 2022 Scotiabank increased their investments from approximately $23 billion to $40 billion, TD from $24 billion to $39 billion, Bank of Montreal from $21 billion to $26 billion, and CIBC from $14 billion to $24 billion. All together, the “Big Five” invested nearly $190 billion in fossil fuels last year alone.
The reason for this is clear. As the global economy teeters on the precipice of recession and as multinational corporations lay-off tens-of-thousands of workers in preparation for the tough times ahead, Big Oil has been having a field day. The largest western-owned oil companies (BP, Chevron, Equinor, Exxon Mobil, Shell, and TotalEnergies) collectively made $219 billion in profits last year. Globally, the fossil fuel industry is estimated to have made $5.4 trillion in revenue. For any nervous banker, staring down the barrel of a global slump, the opportunity to make an easy buck is irresistible. The fossil fuel industry is a low hanging fruit, even if it is a poisoned one.
The role of the Canadian state
In spite of all of the signs of impending climate disaster, the banks who hold the strings of the Canadian economy are indifferent to the damage they are wreaking on the planet. If the ruling class insists on hurtling head first into environmental destruction, how are we to stop them?
The authors of the Banking on Climate Catastrophe report provide a wish list of all the features that they think a “just transition” should include: “increasing energy access for everyone”, “creating new jobs by investing in less destructive forms of energy”, “retraining transition-affected workers”, “implementing zero tolerance for violence against climate, forest, and rights defenders”, etc. Their list addresses many important issues related to reorganizing the economy on a sustainable basis, but it has one key weakness: under the present economic system it is absolutely utopian.
Who will be the ones to coax these profit-sniffing bankers into paying for this just transition, which prioritizes the rights of working class people and local communities? These are the same investors who are adding more fuel onto the wildfires which are, as I write these words, ripping across the country. Another force is required to bring about any form of transition, let alone a ‘just’ one, and–on this question–environmental groups and activists fall into the same error that has haunted the environmental movement for decades.
A senior energy strategist with Green Peace Canada argues:
“Right now the banks – by continuing to put 99% of their energy finance into fossil fuels – are a part of the problem. If they won’t do it on their own, then we should demand that our elected officials make them be part of the solution.”
It is conveniently forgotten that “our elected officials” are also the ones sanctioning and, in some cases, financing the criminal behaviour of the Canadian ruling class. Let’s not forget that it was “our elected officials” who bailed out the Big Five Canadian banks to the tune of hundreds of billions of dollars to save them from the economic slumps in 2008 and in 2020 while working class Canadians faced layoffs, pay cuts, and other similar measures. We can only speculate how many billions of dollars in handouts went straight from the purse of the federal government into the hands of the oil bosses in the form of fossil fuel investments.
The Canadian state is not, as many academics and well-meaning activists might imagine, a neutral judge sitting above the rest of Canadian society, setting the rules and arbitrating between the capitalist class and the workers. It is the devoted servant of the Canadian capitalists. In Ontario Doug Ford has elected to destroy portions of the Greenbelt to satiate the greed of his housing developer patrons. In Alberta, Danielle Smith has gone to war with the federal government’s carbon tax in defence of the ‘poor, defenceless’ oil barons. These cases are not exceptions—a few bad apples in an otherwise functioning government; they are evidence of the class nature of the state.
The Canadian state will not save us from this disaster, they will instead defend the rights of the Canadian capitalists to exacerbate it. It is up to us, the workers and youth, to take up this issue into our own hands.
Mitigating climate catastrophe
The climate crisis is getting worse with every passing year. There have been extreme heat waves and wildfires in North America and in Europe; a surge of flooding devastated Pakistan, displacing hundreds-of-thousands of Pakistani workers and youth; and at this moment a drought in the Horn of Africa is driving millions of people to the brink of starvation. The worst is yet to come, and, at every turn, those who suffer the price of the planet’s destruction are not the ones who are actually responsible for destroying it.
This whole debacle has demonstrated once again the shortsightedness of the capitalist class in Canada, and around the world. They see short-term profits dangling in front of their noses, but no further. For these profits they are willing to jeopardize the future of the entire human species. All of us, the billions of workers and youth all over the world who will suffer for their profiteering, are powerless to stop them so long as those industries responsible for creating the present crisis remain in the private hands of the oil bosses, the bankers, and the other profiteers who have driven us to the brink of catastrophe.
To genuinely address the climate crisis we need to break with the profit motive as the driving force behind the investments and the production which take place in society. We need to place the banks, the fossil fuel industries, and all other major levers of the economy in the hands of working people so that we can democratically determine our own future and chart our own course in our transition to a sustainable future. We, the working class, are the only ones with the power to deal with the climate catastrophe.