SHARE asks Canada’s banks to do more to address climate change risks

Given this exposure, banks “have not sufficiently integrated climate change considerations into long-term business strategies and risk management processes,” the report says.

The report makes a number of recommendations for improving their approach to climate change risks, including developing statements that outline how the bank addresses climate change, the steps it is taking to reduce the impacts of its operations and financing activities, and how the bank is contributing to a transition to cleaner energy.

The report also calls on the banks to analyze their exposure to climate change and carbon regulation scenarios, including the carbon footprints of their lending and investment portfolios. In addition, it recommends that the banks themselves adopt carbon reduction targets and incentives. It also calls on the banks to enhance their disclosure to investors regarding climate issues.

“Canada’s banks are failing to demonstrate to their shareholders that they understand the implications of this fundamental risk to their core business,” says Shannon Rohan, SHARE’s director of responsible investment and the report’s co-author, in a statement

“It is critical for investors that are concerned about the long-term risks associated with climate change to push for improved performance by Canada’s banks in integrating climate change considerations in their business strategies and risk management processes,” she adds.

The report also calls on investors to utilize the report as part of their efforts to gauge the banks’ performance in addressing climate change, and to engage with the banks in their portfolios on climate-change issues.

“Active engagement by investors encourages Canada’s banks to recognize the potential business impacts of climate change and demonstrate that they are managing and adapting to climate change-related risks and opportunities accordingly,” the report says.