After months of mixed signals, HSBC, one of the largest banks in the world, informed Canada’s energy sector this month that it will officially stop providing financial services to a large portion of our industry in the fight against climate change.
It’s hard to ignore the selective targeting of Canada’s oil and natural gas industry with this new policy.
In outlining its new policy, HSBC did everything but mention Canada by name when it singled out its new policy against financing oilsands mining and also “in situ” operations that extract bitumen underground using heat. No other country in the world has an oilsands industry.
It would have been nobler — and more transparent — to mention the countries impacted and, even more importantly, those who are not.
HSBC is effectively joining forces with countries like Russia, an oil-producing jurisdiction with lower regulatory standards, more concerned with weathering economic sanctions than developing energy responsibly.
Attempts to stifle Canadian oil and natural gas production through duplicative and inefficient regulation, pipeline obstruction or — in this case — restrictions to financing can have only one effect: countries with much lower environmental standards will fill the void left by Canada, only too happy to meet global energy demand with their products.
Canadian bankers see that support for Canada’s oil and natural gas industry as win-win — the world gets cleaner energy and Canadian businesses thrive.
Activists, corporate and otherwise, view Canadian industry as a soft target in their geographically selective fight against climate change. Canada is responsible for just 1.5 per cent of global emissions, yet we are the sole focus of internationally funded professional activists who take advantage of our good intentions while undermining our economic and political institutions. Russia and Saudi Arabia are left to their own devices.
Yet, in good faith, Canada’s oil and natural gas industry continues to grow its strong record of environmental stewardship, adherence to stringent regulations and commitment to technological innovation. We have no apologies to make about our world-leading environmental credentials.
Thankfully, Canadian banks recognize this important work. They continue to display sound judgement about the role of a strong and competitive oil and natural gas sector in the Canadian economy.
In April, RBC CEO Dave McKay warned of the significant investment exodus underway due to competitiveness challenges in Canada’s energy industry. His comments reflect the important role oil and natural gas plays as an engine of the economy, creating jobs and generating of tax and royalty revenue.
Similarly, Scotiabank CEO Brian Porter lamented the lack of progress on the Trans Mountain pipeline expansion project earlier this year, citing the thousands of miles of pipeline built in the U.S. while nothing was done in Canada.
Canadian bankers see that support for Canada’s oil and natural gas industry as win-win — the world gets cleaner energy and Canadian businesses thrive. They deliver strong returns to shareholders and enjoy a reputation for consistency.
Even while engaged in this current campaign of virtue-signaling to activists and out-of-touch global elites, it [HSBC] continues to offer investment funds in Russian equities...with holdings in Gazprom, Lukoil and Rosneft — energy brands associated more with oligarchs than leaders in responsible energy development.
Consistent is not a word to describe the practices at HSBC. Even while engaged in this current campaign of virtue-signaling to activists and out-of-touch global elites, it continues to offer investment funds in Russian equities to Canadian clients. These funds are weighted more than 40 per cent to Russian energy, with holdings in Gazprom, Lukoil and Rosneft — energy brands associated more with oligarchs than leaders in responsible energy development.
With investment from financial institutions that are interested in solutions rather than symbolism, Canada can become the global hub for the development of new environmental technologies that can then be exported internationally, growing our presence as a high-tech environmental and economic world leader.
In the meantime, our industry will continue to debunk uninformed attacks on Canada’s energy sector, defend thousands of Canadian workers that come to work every day and continue to build a uniquely Canadian industry of which we can all continue to be proud.
This commentary originally published in the August 1 Financial Post.