Just think for a minute on what this image shows. Clearly massive profit is built in to the pricing of bottled water, but for decades gasoline has been priced lower than bottled water per litre. This represents the significant subsidy behind the exploration, extraction, refinement and shipping of a considerably more rare resource ~ oil ~ whereas water can simply be drawn from a well. The IMF estimates the Social Cost of Carbon (SCS) at $400/ton. This translates to $1.08 in damages for every litre of gasoline sold. The Carbon Tax in Canada is only 4 cents per litre. The Carbon Tax in Sweden is over 3x that, but it is still only 14 cents per litre equivalent.
Step One: Education
After listening to the ‘The Biggest Story in The World‘ – a Guardian series on the climate crisis that chronicles their own divestment from fossil-based investments as promoted by Bill McKibben, I set out to see if I could divest my own small practice. Better yet, what if I could encourage my colleagues, our regulator (the OAA), our insurance company ( ProDemnity ~ Spoiler: It turns out they already had before I got a chance to ask!) and my own bank to consider divesting along with me? I immediately discovered a number of architects across Canada are thinking the same way and so we have collaborated to create this website. I was then informed that our insurance company has recently completed a divestment exercise (we’ll write about this elsewhere), as have many senior staff and other OAA-licensed architects. It seems that since the education of an architect includes the study of physics, materials science and thermodynamics, our understanding of climate science and the related effects to the hydrological cycle and extreme weather have a direct relationship to both energy infrastructure and building resilience. This may explain why architects are some of the first professionals to call for direct action not only in how we design buildings and the type and quantity of energy they use, but also in how we run our businesses. In a way, architects bridge the worlds of science and business by influencing development patterns (Transportation, Land-Use Planning, Development Density), infrastructure (Energy & Water), material selections (Resource Economy & Technology) and policy (Zoning & Building Codes).
Now as I understand it, the first part of any action is education, both to solidify one’s stance with the facts, but also to become more comfortable in the knowledge of an issue in order to better explain it to others. The list of resources on this website was generated by my colleagues and I in the process of our collective self-education and as such they represent the bread-crumb trail we have left in our collective path of research. We’ve even numbered them in rank of importance.
Canada’s private banks influence the way we structure energy in Canada from head to tail, or well to tailpipe. But despite global commitments to avert the worst effects of the climate crisis, fossil fuel expansion continues to be subsidized, underwritten, financed and insured by Canada’s big 5 banks to the tune of $464 billion dollars in the past 3 years alone – or $464 thousand-million dollars – or $464,000,000,000.0002. This has a knock-on effect on the slow uptake of energy efficient architecture in Canada. Can you imagine the clean energy and green architecture revolution that could be funded with that kind of investment? And this is only in Canada!
The birth of solar and energy efficient architecture took place in the 1970’s, but after the oil shocks ended (1979), the solar panels that President Jimmy Carter installed on the roof of the White House were immediately removed by President Ronald Reagan. Big Oil redoubled their efforts to glut the market into a kind of amnesia. The burgeoning Green Architecture revolution in North America has been in a kind of purgatory ever since. Even though design tools and techniques have improved significantly from those early explorations, the sheer enthusiasm, scale, economics and interest in ecological design never returned, suppressed for decades by artificially cheap fossil energy. The solutions to the climate crisis have always been at hand, but have been forced into dormancy by energy pricing and policy. But the world is changing fast, and if Canada doesn’t soon wake up, our economy may be left behind, as is has been in Alberta.
In the 1970’s and early 80’s Canada was deeply involved in the early development of some of the world’s best standards for residential energy efficiency (R2000), which was subsequently exported to the EU in the 80’s and 90’s. This in turn advanced European state of the art design by adding airtightness, door-fan testing and HRVs to their strategies of thermally massive buildings with super-insulation. The EU standards improved to the point where, with no small irony, they are actually now exporting this know-how re-packaged as Passive House to the Canadian market.01
The market for green technology and design solutions has exploded abroad, driven by Fossil Divestment, the plummeting costs of WWS (Wind, Water & Solar Energy), and Carbon pricing. Citizens cheer for carbon pricing when the higher the Carbon Tax, the higher their matching dividend cheques, such as how carbon pricing is structured in Sweden, which now has the highest carbon tax in the world at $182/ton that has lowered per capita emissions from 7 to 4 tons since its introduction. The addition of significant new WWS capacity and the restructuring of finance and insurance industries has promoted a move to climate balance from assured climate chaos.
Architects in Canada however cannot sit at their desks and expect the phone to ring with clients demanding off-grid, passive house or zero-carbon homes because the market is so tilted in favour of carbon-intensive, ‘cheap fuels’ and buildings that can simply leak cheap energy with impunity. Subsidies both direct and indirect maintain the artificially low cost of fossil energy. What is needed is a removal of subsidies from all forms of energy, and with a reckoning of the externalities and costs of pollution, the true economic solutions will be the clean solutions that will include a mix of conservation (DSM) and new WWS production capacity, resulting in high-performance, energy-efficient and clean energy infrastructure and architecture.
Our Canadian marketplace has been for too long driven by an obsession with low price and large size, without considering longer term economics that result in higher quality, more durable, more comfortable, and frankly more resilient and valuable buildings. Much like the preference for monstrous SUVs, the North American housing market has a super-sized appetite for plywood castles, meeting only the bare minimum standards of the building codes. These McMansions are energy hogs, entirely dependent on an endless supply of inexpensive natural gas and electricity. So how do we start a conversation about right-sized buildings? About walkable communities? Sustainable transportation, clean air and food and water? How do we change the channel so that instead of talking only about the short term value and build quality of a permanent asset, we start a discussion about durability, resilience and high performance in a buildings and not just in cars and cameras?
In this context, our company has started numerous upstream initiatives to increase the awareness of better architectural and planning options, to help educate the public about the benefits of a transition to a stable, green economy and to promote social, ecosystem and climate justice. These initiatives have included launching a local film series called ‘BRAVE | Social Cinema‘, but also active, sustained engagement in municipal, provincial and federal politics, as well as advocacy work with our own governing body, the Ontario Association of Architects. Political ideas like the Green New Deal include a raft of solutions and new green jobs to literally transform the dirty energy economy to a clean one, and buildings represent a significant percentage of the solution. Architects need to get behind these ideas for a number of reasons, not the least of which being that we contribute up to 40% of GHGe’s as a sector of the economy, and so we have a moral responsibility to reverse this trend.
Having studied energy-efficient and zero-carbon design at the University of Stuttgart in the mid-1990’s, I have watched the German economy boom in the area of green architecture and infrastructure development, which has increased that country’s resilience, job numbers and lowered overall operating costs of a wide range of building types. At the same time Germany’s debt to GDP level has held steady at 64%. On the other hand, here in Canada we have witnessed an increase in debt to GDP levels of 67% to 90% (from 2007 to 2017) with only marginal improvements to our building or energy infrastructure, all the while investing ever more in fossil resource development with decreasing tax receipts from the industry02.
This is symptomatic of government and fiscal policy that has not invested in innovation or the future, and as such our built environment lags far behind the EU in terms of efficiency and resiliency. My own knowledge of this sector is not merely observational or theoretical. I’ve driven a 100% electric car since 2012, and have built a zero carbon housing not just for myself, but for many of my clients. The most startling discovery of this lifestyle has been that it is half as expensive to live this way. Our old gas car and the natural gas bills from our old house are in fact more than double the cost of our new electric alternatives, even with much higher energy rates. This is the magic of efficient buildings through better design, that simply waste less energy to begin with. In fact we have developed building prototypes that are zero-operational carbon at half the cost of conventional construction. The solutions are at hand, but Canada will not advance to develop resilient solutions to meet the goals of climate mitigation or adaptation so long as the major banks in this country continue to suppress the green economic revolution with their financing the literal destruction of our climate system. And the longer banks wait to take action and properly evaluate their exposure to market shifts and stranded assets through more comprehensive disclosure research, the more their own business and shareholders will be subject to the losses. Divestment action in this light is like a lighthouse signalling the presence of a rocky shore, the idea is to sound the alarm and to avoid doing harm.
Of the ‘Big 5’ Canadian banks, the bank I have been dealing with the Royal Bank of Canada since I was only 8 years old. RBC is the Canadian bank most heavily invested in the fossil fuel industry03. The international movement to divest away from fossil-based resources now numbers in the tens of trillions of dollars. So it started to become clear that without a significant restructuring of the finance, insurance and tax systems in Canada, we would not see the kind of structured solutions to the climate crisis emerge as they have in the EU.
Step Two: Letter Writing
So, on assessing the resources noted on the home page of this website, and as I am currently with RBC and Scotiabank (via Tangerine), my next step was to author my thoughts and feelings on the subject, which form the basis of our standardized Template Letter for Banks that you can download here. The response from the regional VP of RBC is posted right next to it.
While I am happy to see that RBC has been a leader in the Green Bond market, their public facing statements show that this is for the EU market only. Now here is what I could find online about RBC’s approach to ‘managing risk’:
“The Risk Committee of our Board of Directors provides oversight to ensure that management has established policies, processes and procedures to manage all risks, including environmental and social (E and S) risks such as climate change. E and S risks are described in our enterprise risk management and reputation risk management frameworks, which are reviewed and approved annually by the Risk Committee of the Board. RBC’s Corporate Governance Framework provides an overview of our corporate governance structures, principles, policies and practices.”
Does that kind of ‘risk management’ sound to you like a concern for reputational risk? Does it sound like a concern for an existential risk as an institution – or even as a species? The way I read it, it says, we will only deal with this stuff it when it is a threat to our way of doing business. But token green initiatives are just as Rainforest Action Network has stated here:
While we recognize the huge importance of ramping up finance for clean technologies and appreciate that many banks have set targets for funding these sectors, the climate crisis demands not just that banks seize the many opportunities for profit in the clean energy revolution, but also that they be prepared to fundamentally redraw their business models away from financing dirty energy. These banks’ clean financing is in any case swamped by the volumes they funnel into fossil fuels.8
RBC also has these (rather dated) public facing documents:
But what is most telling is this statement from the latter resource on Carbon Disclosure:
(C2.3) Have you identified any inherent climate-related risks with the potential to have a substantive financial or strategic impact on your business? RBC: No
Wait – what? Just – “No.”?
Step Three: Exploring Alternative Solutions
So I have started investigating Meridian Credit Union here in Barrie. I also looked at HSBC but as they were in the South-end of town, and while they are at least active in divesting internationally, they still have oily feet. Meridian is around the corner from me, and have a long history of investing in our community. Fees for multiple accounts are bundled, so fees for personal accounts are waived by virtue of me having business accounts with them. I stated my reasons for switching banks, and their staff was courteous enough to do some research for me:
Meridian has only recently started doing business out of province over the past 12 months. Typically we go into deals as part of a syndicate in either land & construction (condo development) or hospitality/hotel financing deals. So far, Alberta has not been a market of significant opportunity for us. We have not provided any financing to O&G companies or oilfield services in Alberta to date. I am told that as an Ontario based credit union, we take deposits and re-invest those within Ontario as a majority.
I have requested a forward-looking statement clarifying Meridian’s policy specifically on Climate Change, they have answered that this has been passed upstairs and they will let me know as soon as they have a formal statement. While I am awaiting an answer, even in light of RBC committing to substantial green projects, these are still swamped by volume of their investment in fossil energy, at a ratio of about 10 to 1, or $105+ billion dollars in fossil fuels to $13 billion dollars in renewables and green bonds. Because of this ratio, I can only conclude that this is representative of a kind of imbalance, which is not something I can continue to support. I feel I have little moral choice but to close my accounts with them.
Transitioning banks, or internet providers or phone companies is always a pain. It took at least three days of phone calls, paperwork, meetings, signatures, and transfers, over the course of a month. But one needs to look beyond personal inconvenience when taking a merely principled stance. I have divested in a very public, and documented way, with the intent of educating even if just a little, every single person I have dealt with along the way. I have been very clear with every representative I have spoken with, from the telephone call centre employee that closed my credit card accounts, to the banker at my new bank the reasons for my divestment. Our exchanges have always been polite, respectful and constructive conversations, even if some folks think I’m a bit of an odd duck. It turns out I was the first customer they have heard these concerns from. I trust I will not be the last.
- Canada’s major banks have financed $464 billion worth of fossil fuel projects since 20162