Canada Banks Face ‘Greenwashing’ Claims as Oil & Gas Firms Obtain Sustainable Financing

Environmental News from Canada:

For banks in Canada, one of the world’s largest oil producers, it’s not easy being green.

In the past two years, Canadian banks have increased the amount of sustainability-linked financing (SLF) they extend to oil and gas clients. SLF refers to financing whose cost changes when certain environmental, social, and governance (ESG) requirements are met at the company level but does not require the funds themselves to be used for climate-friendly purposes.

This has led to accusations of “greenwashing,” with some environmental groups and investors claiming banks are using SLF merely to pretend to lower their carbon footprint rather than take meaningful steps in that direction.

If the use of financing instruments that do not require a reduction in overall carbon emissions keeps growing, it could delay banks’ readiness for Canada’s transition to a low-carbon economy, leading to higher risk and increased capital requirements to offset these.

The central bank and financial regulator have already warned that a lack of preparedness by the banks could expose them and investors to “sudden and large losses.”

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Source: Reuters

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