To: Jan Hommen (CEO, ING Group) and
W. Galen Weston (Owner, Loblaw Companies) and
Gerald T. McCaughey, (CEO Canadian Imperial Bank of Commerce)
I am a customer of your banks and I think they provide the best options for Canadians right now, in the areas of saving and chequing respectively. At the same time, I donâ€™t think you have given sufficient consideration to the importance of climate change – both as an ethical and a business phenomenon.
Banks play a vital role in Canadian and global society: helping to match up those who have excess funds at any particular time with those who have productive investment opportunities. That allows the first group to accumulate wealth for future purposes, while allowing the latter group to undertake projects that increase human welfare.
Not all projects achieve that end, however, and there are cases where it is not immediately obvious that a project being undertaken is unethical or a bad investment. Right now, investments made in the production and use of coal and unconventional oil and gas are both unethical and bad investments. I encourage your financial institution to wind down any investments it maintains in these areas, as well as develop and implement a policy against making such investments in the future.
The threat from climate change
We now know to an extremely high degree of certainty that burning coal, oil, and gas causes greenhouse gases to accumulate in the Earthâ€™s atmosphere. This accumulation is dangerous for humanity, since our global society depends upon a stable climate for continued prosperity and even survival. The Holocene period in which human civilization emerged consisted of 10,000 years of unusual climate stability. During that time, we built all the infrastructure that is now relied upon by humanity. At the same time, humanity expanded in numbers and biophysical impact to the point where humans have become the dominant force on Earth. Indeed, there are those who argue that the Holocene has now been replaced by an ‘Anthropocene’ period, in which human choices will do more than anything else to determine what conditions are experienced by all the living things on Earth.
Right now, humanity continues to burn fossil fuels with abandon, disrupting the climate in ways that will ultimately be profoundly threatening. In order to produce climatic stability, humans need to abandon fossil fuels as sources of energy and replace them with zero-carbon, sustainable energy options like solar, wind, tidal, geothermal, and hydroelectric energy.
If we continue on our present course of emissions, it is estimated that global temperatures will increase by over 5Â°C by 2100 – far above the 2Â°C threshold that has been generally accepted as ‘dangerous’. With such temperature increase, it is likely that major sea level rise would be accompanied by large-scale changes in precipitation and other major climatic shifts. There is even a danger that warming could kick off a self-amplifying cycle: ‘runaway’ climate change that could leave the planet profoundly transformed.
The larger the proportion of fossil fuels burned, the more warming will take place and the greater the risk of a catastrophic or runaway outcome. As such, most of the world’s remaining coal, oil, and gas should be left unburned and underground. The global economy must be reformed so its energy needs are supplied in other ways.
The choices we make today as a global society will affect the lives of thousands of future generations of humans. If they could speak to us, it is reasonable to conclude that they would be shouting for us to move quickly away from fossil fuels – not to condemn them to climatic instability and infrastructure that is increasingly poorly matched to the world they inhabit.
But they cannot speak to us, or indeed affect us in any way. In relation to them, we are entirely invulnerable. At the same time, they are completely defenceless when it comes to the circumstances we can impose on them through the reckless burning of fossil fuels. As philosopher and ethicist Henry Shue argues, the moral question of climate change mitigation falls into the special moral category of intentional harm imposed upon the defenceless.
It is unethical for us to deprive all those generations of the opportunities our generation inherited, in the form of a stable climate. We cannot impose the risk of catastrophic or runaway climate change upon them, despite how convenient fossil fuels are for us, and how challenging it may be to move to renewable options. When your banks invest in the production and use of fossil fuels, you participate in the unethical imposition of that harm. For the sake of doing what is right, you should stop and refocus your efforts on funding renewable and zero-carbon forms of energy that can serve human needs forever.
A bad investment
Even if we ignore the ethics of the situation, a strong case can be made that investing in coal and unconventional oil and gas (like the oil sands) is bad business. As humanity continues to pump out greenhouse gases, the effect on the climate is going to become more and more unambiguous. Scientists have understood for decades how threatening climate change could be, but those with an interest in the status quo have been highly effective at confusing the public and political debates on the issue. Eventually, however, the threat posed by climate change will be clear and governments will take action.
When that happens, investments in things like coal-fired power plants, oil sands extraction and processing facilities, and shale gas pipelines will suddenly look like poor choices. If governments act soon, they can put a price on carbon that will encourage more rational long-term decision making. If they delay action (as seems likely), investments will be made in facilities that will need to be shut down long before the end of their natural lives. The people who made those investments will suffer financially as a result.
It is far more economically responsible to invest in technologies that can serve humanity forever than it is to invest in the fossil fuel industry: an industry that ultimately has no future, both due to climate change and the fundamentally finite nature of the resources being exploited.
Right now, many Canadians see investments in things like the oil sands as a path to prosperity. That perspective only seems valid when you ignore the long-term consequences of the unrestricted emission of greenhouse gases. If all the future generations that will be impacted by climate change could vote on our current policies, I think it is nearly certain that a moratorium on new investments would be immediately agreed and existing operations would be wound down. From the perspective of humanity in general, the oil sands are best left underground. The same is true for the lionâ€™s share of the Earthâ€™s remaining coal, oil, and gas.
As businesses, you are most concerned about the responsibility you bear to your customers and shareholders. When you invest in projects that donâ€™t make sense in the long-term, you expose those people to risk. Governments will eventually wake up to the danger of climate change and, when they do, they will reform policies in ways that make these investments unprofitable. It is better from a business perspective – as well as an ethical one – to simply not get involved in the first place.
Thank you for your attention,