As the global economic crisis has made all too clear, there is one choke point for almost any business: its source of financing.
Rainforest Action Network activists were thinking about that this morning as they hung a banner outside the Toronto offices of RBC, Canada’s largest bank and the nation’s biggest financier of efforts to extract oil from the Alberta tar sands.
The banner had its own unusual pressure point: It called on Janet Nixon, wife of CEO Gordon Nixon and a known environmental supporter, to persuade her husband to stop RBC’s financial support of the energy-intensive tar sands.
In a personal video plea to Janet Nixon at the Web site PleaseHelpUsMrsNixon, RAN Executive Director Mike Brune says:
“Your husband can make history. RBC can lead Canada towards a clean energy future, and you’re our best hope, Janet.”
Tar sands extraction and production are a significant source of greenhouse gas emissions, producing two to three times the greenhouse gases of conventional oil, polluting water supplies, and making it difficult for Canada to meet its climate commitments.
RAN sees a better way to power North America, but to get the Shells and Suncors of the world to move on to clean energy, it needs to turn off the funding taps for the tar sands.
That’s easier said than done, as Brune later explained:
“We have found that there is a debate happening within banks. Many executives [want] to simultaneously resurrect their public image while also developing a dominant position in the market for clean energy — they can out-flank their competitors by cornering the market. At the same time, though, there’s an opposing view that they feel under siege and that this is not the time to walk away from fossil fuel clients who have provided a great source of revenue for decades."
“Right now, there’s not any bank that has a strong environmental policy — old-school, knuckle-dragging fossil fuels-embracing execs are winning the day. But I think there’s room for hope.”
RAN’s argument hits two key points: financial risk and political risk. Essentially, sinking money into the tar sands is a financial risk because regulations are coming (the United States is the No. 1 customer of tar sands oil) and the price of carbon is only going to go up. Politically, as more people pay attention to climate change, the danger of a company appearing to be on the wrong side of history will only intensify.
Brune and his colleagues have been working on RBC with those arguments for months, meeting with executives and attending shareholder meetings. So far, Brune says, they aren’t getting very far.
RBC spokesman Matthew Gierasimczuk acknowledged the past meetings and "ongoing dialogue" with RAN.
"RBC is committed to being a good corporate citizen, and despite many years of third party recognition for our corporate environmental sustainability, we are not complacent," he said. "We conduct comprehensive social and environment reviews of the impact of any project finance, energy or otherwise, and these reviews are a condition of financing."
Asked if RAN’s argument would have any effect on the corporate strategy, Gierasimczuk stressed the company’s environmental record, pointing to the RBC Blue Water Project in particular.
The Blue Water program promotes the sustainable use of Canada’s water resources through education and grant-funded projects, a contrast to the tar sands, where production uses three barrels of water per barrel of oil produced and leaves most of that water too toxic for reuse.
Customers, Shareholders and Employees
RAN might not have gotten far with the executives yet, but it’s just getting started, Brune said. Over the next six months, the group will be amplifying its message and taking it directly to RBC’s top customers, shareholders and employees.
Those tactics have succeeded before. A few years ago, RAN launched the campaign “Not With My Money” to get CitiGroup to stop lending money for projects that would degrade endangered forests.
Thousands of Citi customers cut up their credit cards and sent them to the company in protest. And eventually, Citi adopted a more enlightened policy. One bank taking that step encouraged Goldman Sachs and Bank of America to agree to similar policies and lending standards.
RAN recently launched a similar campaign encouraging customers of JPMorgan Chase to pressure the bank to stop funding mountaintop removal coal mining operations that have been devastating Appalachia’s mountains, valleys and streams.
Your Money’s Carbon Footprint
Once customers understand how their money is used, Brune believes they will think twice about their choice of banks.
For Canadians, RAN created a calculator to add up their money’s carbon footprint based on the bank they use.
At RBC, for example, for every $10,000 a customer has in an account, that person is effectively financing 1,120 kg of CO2 from tar sands operations per year, the equivalent global warming emissions of using a small car for about 17 weeks.
None of the top five Canadian banks has a small carbon footprint when it comes to fossil fuels investments. Together, RBC, TD, Scotiabank, CIBC and BMO provided more than $55 billion in direct corporate loans and investments in coal, gas and oil in 2007, more than three times the nation’s entire defense budget, and even more when managed assets and investment banking are factored in.
The banks’ investments calculate out to 625 million tons of CO2 per year – more than the entire nation’s emissions from power plants, industry, manufacturing, transportation, homes and offices, according to a study by Profundo Economic Research.
RBC leads the pack, with about $15.9 billion in direct fossil fuels funding, compared to $1.7 billion for renewable energy.
There is one bank that is setting a higher standard, granted it’s a cooperative based an ocean away. Britain’s Co-operative Financial Services recently set up a charitable trust starting with £53,000 to support Canada’s Beaver Lake Cree Nation as it fights to protect the water, wildlife and land it lives on from destruction by tar sands developers.
Co-operative’s ethics policy is closer to the ideal. It includes this statement:
"We will not finance any business whose core activity contributes to global climate change, via the extraction or production of fossil fuels (oil, coal and gas), with an extension to the distribution of those fuels that have a higher global warming impact (eg tar sands and certain biofuels)."
Brune, meanwhile, isn’t expecting a call from Janet Nixon, but he is hopeful that RBC will see the value of moving beyond the tar sands and finding a better solution.
“It’s clear that there is a great opportunity for Canada’s largest bank to turn a profit and meet its obligation by embracing expanded development of the clean energy sector, compared to the great financial risk it’s taking with the tar sands,” Brune said.
“I don’t think any bank wants to be seen as making climate change worse. In fact, most banks are beginning to try to compete on their environmental values.”
