A new report from U of T researchers finds that Toronto’s top financial institutions invested over $1.4 trillion in fossil fuel companies in 2022, resulting in at least 1.4 billion tonnes of carbon emissions — twice the total emissions of Canada, and 100 times that of Toronto.
“If Bay Street were a country, it would be among the top five polluters in the world,” says co-author Robert Soden, an assistant professor in the Department of Computer Science and the School of the Environment. He leads the Toronto Climate Observatory (TCO), the U of T research group that published the report. The TCO is using technology, data and climate science to better understand the city’s relationship to climate change.
“We know that Toronto is a leading financial hub in Canada and the world. It is also disproportionately involved in fossil fuels and natural resource extraction, funding energy companies across the globe,” says Soden.
“For this report, we decided to take a closer look at what we call ‘financed emissions’ for the complete picture of the financial sector’s global carbon footprint.”
While Toronto’s net-zero strategy accounts for financial institutions’ emissions related to buildings, transportation and waste, it does not consider emissions resulting from their investing and lending activities — which account for the majority.
To fill this gap, the researchers tracked the top loans, bonds and investments of Toronto’s 18 largest financial institutions, including banks, asset managers and pension funds. Using a global standard carbon accounting methodology, they found that the emissions facilitated by financing in 2022 were behind only the United States, the EU, India, China and Russia.
Most financial institutions have made a public commitment to a green energy transition and transparency around the oil and gas projects they fund. However, researchers found widespread discrepancies between the emissions these institutions have reported and the actual emissions their financing enables — some may be underreporting by as much two thousand per cent.
The report highlights the need for stronger regulation to ensure consistent reporting that meets international standards and the federal enforcement of credible climate transition plans for financial institutions.
It also outlines opportunities for the City of Toronto to enhance its role in climate action.
“TransformTO, the city’s climate change mitigation plan that aims to achieve a net-zero Toronto by 2040, uniquely positions Toronto to be a global climate leader,” says Soden. “Our data shows the overwhelming global impact that the investing and lending activities of locally based financial institutions are having on the climate. We hope these results will prompt the city to see these financed emissions as our responsibility.”