'Canada needs a stronger climate framework,' says Karine Peloffy, Ecojustice lawyer
Ecojustice, an environmental law charity, has expressed disappointment in the Office of the Superintendent of Financial Institution (OSFI)’s choice to delay reporting or disclosure requirements for the Scope 3 greenhouse gas emissions of federally regulated financial institutions.
In a letter to industry dated Feb. 20, the OSFI announced that it has pushed back the timeline for changes to its climate risk management guideline by three years to align with the Canadian Sustainability Standards Board (CSSB) standard.
Ecojustice criticized the announced adjustment since the CSSB standard provides a delayed timeframe for Scope 3 emissions disclosure compared with the standard of the International Sustainability Standards Board.
“Canada needs a stronger climate framework, now,” said Karine Peloffy, Ecojustice’s lawyer and sustainable finance project lead, in the news release. “Instead, we got more delays on critical Scope 3 emissions data — by far the largest and most concerning source of financial institutions’ emissions, particularly those tied to fossil fuels.”
The biggest banks in Canada have net-zero commitments yet continue to finance “climate chaos” through their fossil fuel investments, their neglect in funding clean energy alternatives, and their repeated undermining of their net-zero pledges, Ecojustice’s news release lamented.
“Canada’s financial institutions remain among the world’s worst financiers of fossil fuels,” Peloffy said in the news release. “If Bay Street was a country, it would be the world’s fifth largest emitter and Bloomberg NEF’s latest report ranked a Canadian bank as the worst in the world in terms of the ratio of clean energy to fossil fuel funding among major global banks.”
In its news release, Ecojustice stressed that the federal government was responsible for legislating the financial institutions continuing to worsen the climate crisis and that political parties should take steps to include climate-aligned finance in their future election platforms.
“Nearly a decade after the Paris Agreement, which includes a commitment in Article 2.1(c) to make financial flows consistent with low carbon pathways, it’s unfathomable that we continue to see pushback and delays for basic information and disclosure requirements: the GHG emissions companies are responsible for,” said Tanya Jemec, Ecojustice finance lawyer, in the news release.
“In this tumultuous political moment, amidst a dual climate and affordability crisis, Canadians are counting on our government to future-proof our economy through a forward-looking, climate-aligned financial lens,” Jemec added in the news release.
Guideline B-15: Climate Risk Management, published in March 2023, provides the minimum requirements that banks and insurance companies are expected to follow to manage and to increase their resilience in the face of threats relating to climate change.
The 2023 guideline states that Canada’s largest banks and international insurance companies should publicly disclose their Scope 3 emissions for the 2025 financial year. Scope 3 emissions are those occurring indirectly as a consequence of the activities of these institutions.
These may include emissions from fossil fuel companies and projects financed or insured by banks or insurance companies, said Ecojustice in its news release. Such indirect emissions make up the largest part of these financial institutions’ carbon footprint, which on average are more than 700 times larger than their direct emissions, said Ecojustice’s news release.
