Big Six must finance green for good

Earlier this year, Change Course, Stand.earth and Canada’s National Observer launched the first annual Climate Finance Scholarship Contest, an opportunity for young people across Canada to showcase and share visionary, solutions-oriented essays that reimagined the role of Canada's Big Six banks and other powerful financial institutions in our communities. Each of the two contest winners won $2,500 scholarships for written or multimedia submissions. Mimi O’Handley used her winning essay to challenge financial institutions to reinvest in solutions to help combat the climate crisis. Our second winner, Diana Yoon, proposed an innovative model that financial institutions could consider.

We will also feature three other top entries, beginning with Annabelle Liao, who argues institutions must work harder to make their investments more sustainable.

Canada is at a crossroads with a rapidly intensifying climate crisis, but the signals being sent by some world leaders and financial institutions are that the climate crisis is not a priority and that not everyone deserves a future free from climate crisis.

We need to see real support for those on the front lines of climate action and marginalized communities, who both face the impacts of climate change and have the unique solutions to mitigate it. Because we live in a world that speaks with money, it is now more important than ever to embed climate justice and prioritize climate science in financial drivers and investment decisions.

The First Nations of Canada have been stewards of the land since time immemorial, possessing traditional knowledge and sustainable practices that uphold thriving ecosystems. Although centuries of brutal colonization have resulted in the loss of Indigenous lands and sovereignty, there is a role for Canada's Big Six banks to play. For instance, financial institutions can invest in Indigenous-led conservation organizations such as the Indigenous Land Guardians program, which works to protect and restore Indigenous lands and watersheds across Canada.

Another strategy is providing financing for Indigenous-led community development projects that promote economic self-sufficiency and cultural revitalization, including funding renewable energy projects, sustainable agriculture initiatives and small business enterprises. For example, Goparity Canada features open projects fuelling Indigenous clean energy, and this working capital investment will position Barkley, a project management group specializing in energy and community infrastructure for First Nation communities, to further strengthen their project management capabilities, expand their service offerings and grow their dedicated work in driving positive change in Indigenous communities.

Access to affordable and efficient public transit is crucial for reducing greenhouse gas emissions and improving mobility, particularly in urban areas where transportation accounts for a significant portion of emissions. Financial institutions have an immense capacity to drive positive impact here. For instance, the fare-free transit campaign in Vancouver advocates eliminating transit fares, reducing barriers to transportation and promoting environmental sustainability and social equity. Banks can sponsor these campaigns and offset subsidy costs, just as they do with existing sponsorships for social or fundraising events such as RBC’s Race for the Kids, which supports the BC Children's Hospital.

This also ties into affordable and sustainable housing. Entire communities can prepare for the impacts of climate change — such as heavy wildfire smoke, heat domes and flooding — by making sure everyone has access to adequate housing.

Organizations such as Purpose Construction work on these challenges, partnering with provincial and municipal governments to build physically accessible, energy efficient and durable homes on vacant inner-city land. These homes are offered to low-income families at a discounted rate with no down payment through a shared-equity mortgage model. By providing impact-adjusted loans to organizations such as this one, banks can incentivize social and environmental improvement with lucrative interest rates.

In Canada, we could also adopt ideas from elsewhere, such as an innovative finance tool called the California GoGreen Home Energy Financing Program that enables homeowners in the U.S. state to access funding for green, renewable upgrades at a lower interest rate than if they were to explore financing options from a traditional lending resource.

Financial institutions can improve community resiliency by boosting social cohesion, with a focus on community support services such as childcare and elderly support. Care work is critical for community well-being and resilience, but often undervalued and underfunded. Financial institutions can support such initiatives by providing funding for accessible and affordable childcare facilities, elder care programs and community health services. For example, the Cooperative Community Care Network in Toronto offers cooperative childcare services, empowering parents to share caregiving responsibilities while fostering community resilience and social connection.

And finally, focus should shift to low-carbon markets and financing renewable energy projects, supporting the development of clean energy infrastructure and creating green jobs in communities across the country.

Financial institutions must divest from fossil fuel investments to truly commit to fostering climate-resilient communities. It is not enough to finance sustainable projects occasionally to offset other investments. Equity-driven climate action is an all-hands-on-deck fight.

Mechanisms such as impact investing and environmental, social, and governance (ESG) are a central part of the next step financial institutions in Canada must take. Although many banks occasionally showcase sustainable financing and tout those efforts as shining examples of their commitment, they are not enough.

Simultaneously, we need to continue systems transformation work, and I hope that I can continue playing a role in advocating for climate action from financial institutions that prioritize frontline communities.

I gratefully acknowledge that I learn, work and live on the unceded and ancestral territory of the xʷməθkʷəy̓əm (Musqueam) people.

Learn more about the traditional names throughout xʷməθkʷəy̓əm territory: Map

Having recently completed her BSc Global Resource Systems at UBC with a specialization in Sustainability & Social Impact, Annabelle’s experience includes designing and launching a university-wide capacity-building program for student groups to embed more sustainable best practices into their operations, managing sustainability projects for Canada’s largest student union, and attending COP28 as a youth delegate. She is currently working at the intersection of climate action and finance at Vancity while continuing to advocate for more youth-led climate education, and she is passionate about creating climate messaging that resonates with diverse audiences.