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Greenwashing pots and kettles, Part II: the bankers’ side of the story

Defenders of the environment, like the Land Rover Defender

In the last post we looked at the Canadian federal Competition Bureau complaint against Royal Bank of Canada (RBC) alleging RBC is guilty of false advertising in its corporate communications. The complaint was brought by Ecojustice, the Canadian spinoff of a one-time Sierra Club chapter. Ecojustice’s complaint centres on RBC’s claim that it practices responsible environmental sustainability. Ecojustice points out that RBC makes this claim while continuing to underwrite Alberta oilsands operations. It is indeed true that RBC does this.

However, we pointed out that the Sierra Club for many years was funded by the natural gas industry, and that Ecojustice’s advocacy allegedly on behalf of the environment is virtually identical to Sierra’s. So Ecojustice complaining to the Competition Bureau was a case of the greenwashing pot calling the (allegedly) greenwashing kettle a greenwasher. Ecojustice defends the environment like the Land Rover Defender, with city fuel consumption running to 14 litres per 100 km (16.8 miles per gallon), defends the environment. With friends like Ecojustice, the environment doesn’t need enemies.

The Land Rover Defender burns 14 litres of gasoline every 100 city kilometres. Like most ENGOs who tacitly promote gas-fired power generation, not exactly a defender of the environment.

Of course, from RBC’s point of view in defending this complaint, it is immaterial whether Ecojustice is itself guilty of exactly what it accuses RBC of, or even that Ecojustice, having successfully (and we suspect dishonestly) portrayed itself as above pecuniary interest, is more harmful than RBC. Most people factor pecuniary interest into an on-the-spot assessment of a sales pitch. When a bank says something in an advertisement, most people know it’s an advertisement. But organizations that portray themselves as above all that do so in the hope they will be seen as altruistic, and hence their policy prescriptions will be seen as pure and therefore carry more gravitas. In the energy and environment game, that is often not the case. It is definitely not the case in this case.

Which matters not to RBC in this case. If the Competition Bureau rules unfavourably to RBC, the bank will face embarrassment that may or may not affect its bottom line but will affect how it communicates its sustainability practices. In the management proxy circular for the April 2023 common shareholder meeting, the RBC board recommended shareholders vote against a proposal to allow them to voice disaffection with RBC’s loans to oil and gas companies. Could a negative Competition Bureau ruling change the board’s position on that?

Catching the real greenwashers

In our view, the Competition Bureau’s mandate should cover false advertising even when the advertiser is a not-for-profit. False advertising is false advertising. Power markets, in today’s fraught climate change opinion environment, are at the frontline of an intense business competition, between nuclear and natural gas. Whatever harm RBC does in its corporate reporting (assuming Ecojustice’s complaint is successful), Ecojustice, by supporting fossil fuels while pretending to oppose them, is, by virtue of its false and misleading claims about renewable energy, worse than RBC.

Moreover, there is no entity in the world, other than public opinion, that could bring Ecojustice to heel on this issue. The public would have to be very well informed, which may be a tall order. Until the public recognizes the subterfuge for what it is, Ecojustice are quite literally free to continue their mis/disinformation campaign till the cows come home, with complete impunity.

The good news is, nobody is required or mandated to heed Ecojustice’s irresponsible and misinformed policy prescriptions. The bad news is, many still do.

And, ironically, those who do heed ENGO advice include RBC itself. Perhaps anticipating Ecojustice’s complaint to the Competition Bureau, RBC in March 2022 agreed to buy energy from a to-be-built wind farm in Alberta; more about that later. Ecojustice could not disagree with such a move. It would not be surprising if it turns out that RBC took this decision with exactly that in mind.

Nonetheless, the Competition Bureau is investigating RBC, not Ecojustice. So an adverse ruling could be problematic for the bank.

What RBC should, and shouldn’t, do

Our prediction is, however the Competition Bureau finds in this case, Ecojustice will issue a statement congratulating RBC on its Alberta wind farms, while sternly wagging its figure at the bank’s continued underwriting of oil sands projects, which run on natural gas. Which Ecojustice pretends to oppose but actually supports.

The time series figure above shows ten days of Alberta electrical grid net demand (demand minus wind and solar output) and the sources/sinks that contributed to it. The ten days are easy to make out: they are shown by the black and green curves moving in near unison. The wind farm output is the beige curve. Can you make out individual days from that beige curve? Note the wind farm’s zero output on Nov 30 (a Thursday) and Dec 8 (a Friday). Could Alberta have powered its whole grid with wind turbines on those days?

In the next post, we’ll look at what RBC should, and shouldn’t, do, regardless of how the Competition Bureau rules in this case. The bank has gotten into the wind power business, something one of its own oilsands clients got into years before, and abandoned recently. We believe that’s a mistake. The figure above shows why. We’ll explain more in the next post. Stay tuned.

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