about me
Hi, I'm William and I head up the WEB Team (Web Engagement & Banking) at Vancity, Canada's largest credit union.

My opinions and views are just that, and don't reflect the views of my employer (or, perhaps, anyone else).

I can be found on LinkedIn, Twitter and Facebook

Climate Friendly Banking shows how your money can make an impact.

One of the advantages of getting Google Alerts for your company is that you find nuggets like this.

The Rainforest Action Network has investigated the contribution that Canada's big FIs make to climate change. Their site, Climate Friendly Banking, goes beyond the actual greenhouse gas emissions from the FIs' operations to quantifying the lending and financing they provide to the fossil fuel industry, which in Alberta is particularly polluting.

The enormous financial commitments made by Canada's five biggest banks - RBC, TD Bank, Scotiabank, CIBC and BMO - to fossil fuel production, namely oil and coal operations, inextricably links them to the fueling of global climate change. Banks are the lifeblood of the fossil fuel industry...

"Financing Global Warming: Canadian Banks and Fossil Fuels" is the first report to analyze and quantify the greenhouse gas emissions of seven leading Canadian banks - the aforementioned banks as well as Desjardins and Vancity - based on their financing of fossil fuels...

Canada's top banks provided more than $155 billion in total corporate financing for fossil fuel extraction in Canada and internationally in 2007.

It's a very intriguing way to look at this issue. I've said repeatedly that one of the main reasons I love working at Vancity is when you get to how financing affects the community, you get to the root cause of a lot of issues and can be an instrumental force for progress. Here's one conclusion they draw.

Moving $10,000 from Scotiabank, the highest-carbon footprint bank, to Vancity, the low-carbon bank leader, avoids an amount of financed CO2 (1,430 kg CO2) comparable to:
not driving a small car for five months;
replacing an average car with one that gets 33 percent better gas mileage;
eliminating seven two-hour airplane flights per year.

That's powerful stuff. They have a calculator to figure out how your deposits at a Canadian FI affect climate change. I truly believe that more and more consumers (though by no means most) will include factors like this into their consumer decision-making.

The site has several versions of the report, from a one pager to the full 294 page report. Well worth checking out.

I was particularly proud of this sentence:

...Vancity stands out as the only Canadian bank profiled in this study that provided no corporate loans or direct investments to fossil fuel producers.

Now that's a company I want to work for.

Thanks to Dan Dickinson for sending this my way.

Labels: banking, canada, climate change, environment, vancity

posted on Thursday, November 20, 2008

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10 comments
Thank you for this information. In France the carbon status will be mandatory for big companies in 2 years, and we can imagine that initiatives like this one will be common.
http://insiden.blogspot.com/2008/11/is-your-bank-carbon-bigfoot.html
comment from denis on November 22, 2008

Hi William - thanks for this post, very interesting.

I'm going to play contrarian for a minute - forgive me :)

First, I think the numbers this article throws around are a bit myopic.

For one, I don't think its valid to say that because I pull $10,000 from my Scotia Bank account, and put it in Vancity, that it will curb demand for fossil fuels by 1430kg in the greater economy [which I should mention is about the equivalence of a flight to Toronto - I can offset that for $8].

The reason is that the absence of that $10,000 from Scotia's books will only [and very very] marginally increase the cost of getting capital for the fossil fuel companies doing business with Scotia. This tiny price increase will, if we're lucky, get passed onto consumers, who may or may not change their behavior [reduce fuel usage] because of it.

More than likely, it will merely be absorbed out of the fossil fuel industry's enormous profits, and no behavior change will occur. The fact is, the best way to change demand side behavior around carbon emissions is to price emissions in a progressive and increasing fashion through policy - taxes, and cap and trade. Relying on individual voluntary behavior change is too unpredictable and nearly impossible to attribute to hard reductions.

My second point is that I challenge why Credit Unions would not do business with the fossil fuel industry. Like it or not, we are stuck with fossil fuels for at least another 75 - 100 years. From everything I've read, it seems near to impossible [without some radical breakthrough in fusion or some other speculative technology] to extricate ourselves from the fact that we will need fossil fuels for some time come. I don't prescribe to peak oil theory, and with good reason, but that's another conversation.

The argument I am increasingly prescribing to is that in the short to medium term [now to 2100] we have no choice but to reform our fossil fuel usage, clean it up. Renewables are really problematic right now and can only provide a fraction [<3% I believe] of global energy demand. Without a major contraction in our economies, which would cause human suffering at an unfathomable scale, especially in the developing world, we are married to fossil fuels for awhile yet.

So, while I don't necessarily think it makes sense for Community Banks to move large scale into funding fossil fuel extraction and processing, I think an outright refusal to do business with 'the mother of all economies' , denies opportunities to engage on one of the most meaningful dialogues of this century - the transition to a cleaner energy economy. I think Credit Unions have a lot to offer to that dialogue.

Thoughts?

Jeremy
comment from

Jeremy Osborn on November 22, 2008

@ Denis - Thanks for the comment.
comment from

wazaroff on November 23, 2008

Hi Jeremy. I am so glad you left this comment. I understand this stuff up to a certain point and rely on experts like you to take the logic a little farther. I am so glad you took the time to read and comment.

Here's my take: As a progressively minded company, we need to start framing the issues a little differently. It can't just be a discussion of location, rate, service, etc... Obviously we have to get those things right. They're table stakes. But a broader discussion of what your money is doing (or isn't doing) on your behalf is something we need to get used to. And that's where this report is very useful to me. It starts to help us reframe the issue, so we're not stuck into a simple rates discussion. For some of our members it can be a discussion of those externalities - what their money is funding.

If climate change is vital to a member, this kind of thinking broadens their understanding of why banking at Vancity is important. If they wouldn't directly invest in fossil fuel exploration, are they aware that they may be doing that inadvertently if their money is held by other FIs.

I wouldn't take the logic in this report too far, but I think it opens the door to conversations that are important.

Curious as to your response.
comment from

wazaroff on November 23, 2008

Actually, I want to take this discussion one place higher. It's one thing to have a conversation about what a customer's deposits may or may not be inadvertently funding. That becomes a slippery slope. But because Vancity actually does so much granting and education around sustainability and climate change, because we leverage our tools as a FI to create positive social change and invest in solutions, we can come out of this debate in a very good place. Our actual products can make the environment healthier (or at least less damaged) and the more profitable we are the more good things we can make happen.

So the discussion with members and prospects should be: all things being equal (which means we have to be a competitive option for consumers) bank with us and you fund all kinds of good things. Reports like this help us sharpen that message, whether we refer to it explicitly or not.

That was the entire point of the Change The Way You Bank campaign that spawned ChangeEverything.ca.

So when it comes to public communication it shouldn't be about the specifics of what deposits at another FI might be funding. It should be about how we leverage our resources for good, and that like-minded people should get on that bandwagon.
comment from

wazaroff on November 23, 2008

Yes, great point. I think what this conversation highlights is how hard it is for consumers (members) to get information that tells them the true life cycle consequences of how their dollars are spent. I don't think organizations are very good at knowing this, or communicating it.

I think where Credit Unions have an advantage in this arena is through their engagement with members. The naturally more democratic ownership model of cooperatives lends itself better to inclusion, discussion, information sharing, and the democratization of commerce.

What this conversation also highlights to me is the need for more sophisticated tools for determining the impact of dollars spent [to be used by organizations], and more sophisticated channels of communicating these findings to customers and members.

On the topic of how dollars are spent. Check out this tool. It will tell you for every dollar of input into one sector of the economy, the volume of greenhouse gases generated in other sectors of the economy as a result. It's an environmental version of a popular economics tool from the 70s.

I think that these kind of tools need to be adapted to the organizational level to determine true life cycle impacts of commercial operations in regards to all three bottom lines of a business.

From there, communicating 'the good stuff' to members, customers, etc becomes more refined, I think, and good intentions become verifiable impacts in our communities.

Oh yeah, the tool!

http://www.eiolca.net/
comment from

Jeremy Osborn on November 23, 2008

Wow, that tool is so simple and easy to use.

Okay, it's not. Not at all.

This is actually one of the root problems I face. The best information and guidance is very academic. As far along the spectrum as I feel I am, I still don't understand a lot of this stuff. So how can we simply communicate it to our members?

Do you believe it's essential to understand this kind of complex, rich information in order to create a simple message that consumers can relate to?

Is anyone getting this balance right?
comment from

wazaroff on November 23, 2008

Floating around at the crossroads of academia and the 'real world', this is something I think about a lot. But I don't have an easy answer.

A good example of this is buying local. Last year I did a bit of research into buying local, and it turns out there is some compelling evidence for buying certain products as imports. It turns out that for some food products it is substantially less energy and pollution intensive to grow them across the world, and ship them here for consumption.

I started telling people about this, and I received very strong emotional responses. People did not want to hear this. After years of the buy local mantra, this type of complexity destroyed individual's ability to make easy decisions on sustainable food sourcing. I understand the frustration. Who has the time, energy, or wherewithal to learn about lifecycle impacts of every item in their fridge. Not me.

People need their heuristics - the simple, boiled down indicators that tell them which is the good thing to buy - and understandably so. For most people, life is super busy, time constrained, and incredibly information dense at every turn.

This becomes a philosophical question for organizations seeking to do good things - it's the classic knowing and being divide.

How does an organization know that what you are doing is actually having impact?

I think for organizations that are not explicitly and strategically managing this type of knowledge, its a huge question mark.

I think of the sustainability group at Vancity, and I think they have the right idea by keeping a running dialogue with a community of experts.

But I wonder if, as the knowledge economy deepens, and as environmental and social awareness deepens with it, there shouldn't be an explicit knowledge management function embedded deeply within progressive organizations who are seeking differentiation on their social and environmental impact.

Is this something that organizations can afford to do? Afford not to do?
comment from

Jeremy on November 23, 2008

Hey Jeremy. That's a great example, buying local but finding exceptions to the rule. The more I get to know about the world of sustainability the more complicated it becomes. There are no easy answers.

Most consumers just want to know the high level, make it simple and keep it short and sweet. But we also need to satisfy those more interested in the finer details and make sure we satisfy them, because only by satisfying them can we avoid greenwashing.

So we need to develop dual messaging, where those who want to know more can dig as deep as they want, and those who want to understand it at a surface level can get what they're looking for and move along with their lives.

I don't think that these two consumers are along a pathway. In other words, I don't think the consumers who want to know the high level info will migrate along a knowledge pathway and become more sophisticated like the consumers who want to know all the details. They might become slightly more sophisticated, but not by a lot.

So, all this being said, all I know is that it's tougher being a business like Vancity and finding ways to get across a hook so the majority get what we're about, while still having the data to back up our claims to those who are more serious. I'm not complaining at all, it's just tougher.
comment from

wazaroff on November 24, 2008

True, true, it is tougher.

Not to beat a dead horse, but I think organizations are good at messaging. It is the learning, and knowing that the message reflects a sophisticated and complicated reality that I think organizations, and individuals for that matter, struggle with.

I still wonder how organizations can get better at knowing the non-financial impacts of their operations?

Is this ever the domain of consultants, or worst, is some level of green washing inevitable; the cost of doing green business?

Or can organizations become the experts of their own domain from more than a financial perspective? That's what I'm really trying to get at.
comment from

Jeremy Osborn on November 26, 2008

Climate Friendly Banking shows how your money can make an impact.

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