OTTAWA/TRADITIONAL, UNCEDED TERRITORY OF THE ALGONQUIN ANISHNAABEG PEOPLE — Environmental law charity, Ecojustice has expressed disappointment in the Office of the Superintendent of Financial Institution (OSFI)’s choice to delay reporting requirements for the Scope 3 greenhouse gas emissions of federally regulated financial institutions.
Today, in a letter to industry, OSFI announced changes to its Guideline B-15: Climate Risk Management. The Guideline, published in March 2023, outlines the minimum requirements that banks and insurance companies are expected to follow to manage and increase their resilience to the threats that climate change poses. One of these requirements was for banks and insurance companies to publicly disclose their Scope 3 emissions — the indirect emissions that occur as a consequence of their activities but that are not owned or controlled by the company. For example, the Scope 3 emissions of a bank or insurance company would include the emissions from fossil fuel companies and projects that they finance or insure. Scope 3 emissions are critical because they are the largest portion of banks’ and insurance companies’ carbon footprint, that on average are over 700 times larger than their direct emissions.
Based on OSFI’s Guideline, Canada’s largest banks and international insurance companies were under obligation to disclose their Scope 3 emissions for the 2025 financial year. Now OSFI has pushed that timeline back three years, to align with the Canadian Sustainability Standards Board (CSSB) standard. The CSSB standard should not weaken the approach that has been years in the making. Particularly as the CSSB standard sets a delayed timeframe for Scope 3 emissions disclosure, as compared to the parallel standard from the International Sustainability Standards Board.
Ecojustice’s lawyer and Sustainable Finance Project Lead, Karine Peloffy shared: “OSFI has demonstrated leadership in upholding climate risk management guidelines amidst the rampant backsliding taking place in the United States. Canada needs a stronger climate framework, now. Instead, we got more delays on critical Scope 3 emissions data — by far the largest and most concerning source of financial institutions’ emissions, particularly those tied to fossil fuels.”
Ecojustice points to the fact that Canada’s largest banks have net-zero commitments but continue to fund climate chaos through their fossil fuel investments, while neglecting to adequately finance clean energy alternatives and repeatedly undermining their own net-zero pledges.
Peloffy adds: “Canada’s financial institutions remain among the world’s worst financiers of fossil fuels. If Bay Street was a country, it would be the world’s fifth largest emitter and Bloomberg NEF’s latest report ranked a Canadian bank as the worst in the world in terms of the ratio of clean energy to fossil fuel funding among major global banks.
The current international and national disclosure rules, based on the outdated Greenhouse Gas Protocol (2004), allow major emitters like the fossil fuel sector to bypass accountability on emissions data and leave a critical gap that undermines trust in the accuracy of Scope 3 emissions data for financial institutions regulated by OSFI. Even when financial institutions begin disclosing their Scope 3 emissions under the Guideline, we anticipate significant gaps in its reliability, particularly as it relates to the financing of the fossil fuel sector.” (see background)
Let’s keep in mind that we are not even talking about importing rules about climate action; this is just disclosure. The federal government has a responsibility to legislate the financial institutions that are actively working against us by continuing to fuel the climate crisis. Ecojustice has been calling on the federal government to future-proof our economy years, and calls on all political parties to step forward and include climate-aligned finance in their upcoming election platforms.
Ecojustice finance lawyer, Tanya Jemec adds: “Nearly a decade after the Paris Agreement, which includes a commitment in Article 2.1(c) to make financial flows consistent with low carbon pathways, it’s unfathomable that we continue to see pushback and delays for basic information and disclosure requirements: the GHG emissions companies are responsible for.
In this tumultuous political moment, amidst a dual climate and affordability crisis, Canadians are counting on our government to future-proof our economy through a forward-looking, climate-aligned financial lens. OSFI has a responsibility to contribute to the public confidence in the Canadian financial system and ensure federally regulated financial institutions remain in sound financial condition. Weakening and delaying climate-related standards is not the way to do this.”
About
Ecojustice uses the power of the law to defend nature, combat climate change and fight for a healthy environment. Its strategic, public interest lawsuits and advocacy lead to precedent-setting court decisions, law and policy that deliver lasting solutions to Canada’s most urgent environmental problems. As Canada’s largest environmental law charity, Ecojustice operates offices in Vancouver, Calgary, Toronto, Ottawa and Halifax.
