RBC Takes Step Away From Tar Sands

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RBC: Fund the FutureIt took nearly two years, but today Royal Bank of Canada (RBC) finally adopted environmental and social standards on its financing in the tar sands. Great! So what does that mean?

Clearly, it means a significant about-face on tar sands for one of the world’s biggest banks. Before today, RBC trailed its peers on basic issues like Indigenous rights, water quality, and the environment. A review of the Bank’s 2009 annual report shows strong philanthropy and energy-saving initiatives across the bank, but relatively few screens for lending and other core financial services. Despite being one of the world’s biggest financiers of the tar sands, RBC’s business in the sector escaped any systematic environmental or social review. During a speech to shareholders in early 2009, CEO Gord Nixon claimed that concerns about tar sands concerns were “not a bank issue.”

What a difference a year makes. In a post to its website, RBC announced its first ever “Policy on Environmental & Social Risk Management for Capital Markets.” The policy guides the bank in assessing the environmental and social impact of its clients and deciding what to do about them. While the announcement doesn’t go into details, Rainforest Action Network (RAN) got a peek at the language in the new policy last month.

Support free, prior, and informed consentThe policy breaks significant new ground on Indigenous rights. For clients with operations within Indigenous territories, the bank will document the status of consultation with those groups. That’s not especially new. In fact many banks have incorporated the World Bank standards of “consultation, leading to broad community support” into their lending policies. Where RBC raises the bar is in documenting whether clients have “policies and processes consistent with the standard of “Free, Prior and Informed Consent.”

That “consent” clause—commonly referred to as FPIC (pronounced “eff pick”)—was taken from the UN Declaration on the Rights of Indigenous Peoples, which was endorsed by the US government just last week and by the Canadian government last month. No other bank has yet issued such an explicit expectation of its clients regarding Indigenous rights. RBC also extends this policy to its entire capital markets business — not just a handful of its biggest loans, as is the standard established by the Equator Principles.

Policies are one thing, but results for communities facing off against RBC’s clients are quite another. The first test of RBC’s new policy will happen in the heart of the Great Bear Rainforest in British Columbia, where Enbridge is proposing a 727 mile long pipeline to carry more than half a million barrels of tar sands oil per day to a tanker port in Kitimat. Along the way, 61 First Nations are (strongly) withholding consent for the project due to failed consultation over its substantial social and environmental impacts to traditional territories.

Enbridge will likely go to the bond market to finance the $5.5 billion project. If RBC steps in to underwrite that bond, the bank’s policy will have meant little to the communities which it purports to honor. If RBC opts out, it will be a new day in the banking world. Rumor has it that the World Bank will be adopting similar “consent” language in its revised IFC Performance Standards expected to be released next year. RBC’s handling of this new commitment will be a bellwether for the private banking sector’s willingness to implement this emerging international standard.

Is RBC up to the challenge?

Let us know what you think in the comments section below.

6 Comments For This Post I'd Love to Hear Yours!

  1. John Barber says:

    Glad to hear that RBC has made some positive steps towards respecting Indigenous rights. Agree that this new policy will only be relevant if it actually influences RBC’s decisions on who gets financing. The Enbridge pipeline proposal out to the west coast will definitely give a clear indication on this. Given the opposition to the pipeline from First Nations communities in the region, this is the perfect opportunity for RBC to show that they are serious about respecting Indigenous rights and incorporating social/enviro standards in a meaningful way. We’re watching RBC!

  2. Steve D says:

    I’m not posting this as some kind of representative of Climate Justice London (in London, ON, Canada), but I’m a member of it, and I just wanted to put out there that some groups campaigning against RBC’s ongoing role as leading financier of the Alberta Tar Sands have demands that are nowhere near being met.

    Here’s Climate Justice London’s demands, for its tar sands campaign, targeting RBC:

    I. RBC

    a. We demand that RBC withdraw financing for all projects associated with the tar sands.

    b. We demand that RBC pay reparations to all First Nations communities negatively impacted by tar sands projects.

    II. The Tar Sands

    a. We call for the immediate shut down of all tar sands-related projects.

    b. We call for reparations payments to all affected First Nations communities–in compensation for lost income, as well as ecological, cultural, or health impacts–paid for primarily by the energy and financial corporations which have profited from tar sands projects.

    c. We call on the Federal Government to guarantee that any workers displaced by the shut-down of the tar sands will be re-hired, with union representation, to restore ecosystems damaged by tar sands projects and to work on building clean, renewable energy infrastructure.

    For more, check out ClimateJustice[dot]tk

  3. Brant Olson says:

    @Steve D – First, a huge thank you to the group out there in London. You all, along with dozens of other community groups and First Nations across Canada (not to mention in Europe), helped to apply the direct pressure that brought about this policy.

    Also, thanks for taking the time to comment. Our aim is to make this blog a forum for this kind of feedback.

    As for groups continuing to campaign on RBC, I have a couple Questions:

    What do you think about the new RBC policy? If you think it’s a step in the right direction, why not lay off for a while? Our strategy was to lay out a clear demand for the bank and scale back campaigning only if it met the demand. Our demand was to recognize Free, Prior Informed Consent for Indigenous communities. RBC’s new policy meets that basic threshold by clearly guiding the bank to assess whether its clients have “policies and processes consistent with the standard of Free, Prior Informed Consent.” By scaling back protests, we show the bank that it gets rewarded when it makes good decisions.

    None of this is to say RBC is now squeaky clean. I’ll be the first to acknowledge that RBC’s commitment is far, far from the monumental ecological shift that needs to happen within the global banking sector to avert climate catastrophe—much less the fossil fuel sector. RBC still engages in plenty of bad practices, including financing all kinds of nasty operators in the tar sands. Also, the new policy is a strictly voluntary commitment its lawyers have made sure will have zero legal ramifications.

    If you think the policy is pure greenwash, I can understand why you’d want to keep up the pressure. Moving forward, If RBC finances a major deal clearly opposed by First Nations, I’ll be the first to cry greenwash. Until then, I’m doing everything I can to prevent that from happening.

    Finally, if campaigning at RBC is based on it’s status as the “top financier” of tar sands, that may be changing. According to our preliminary research, another bank took that title from RBC in 2009. Stay tuned. As soon as we’re done fact checking, we expect to release the research very soon.

    Meantime, I’d love to hear what you think about how to shape the campaign moving forward.

  4. dan kellar says:

    i think the headline is a little misleading… the RBC is still engaged in the tar sands, they have not stepped away at all, and even if they are no longer the top financier, they are still in there for billions, and they have made no efforts to fix the problems they have caused in the past.

    all that they did was but some jargon in a policy. i think laying off is in order after they actually do something for real… not just on paper. how many promises have they broken in the past, how much greenwashing did they take part in?

    if they were coming out with billions to repair damaged ecosystems and pull out of the tar sands completely that would be something. if they would re-work all their current financing to meet fpic, that would be something. neither is likely to happen…

    im with steve D on his points, and would like to add that “cutting deals” with corporations is not going to give our grandchildren a future.

    we need to target all banks and all corporations that are destroying the planet, and shut them all down (not ask them nicely to stop).

    system change (as in the industrial capital colonial patriarchal system that needs to change), not climate change! its not just a slogan, it is a means to our future.

  5. Megan K says:

    So, great. The bank has decided to implement ILO 169- a document that’s been signed by such progressive countries as Guatemala and Canada- governments well known for their protections of indigenous rights. What does “consent” even mean when the governments of native groups are systematically destroyed and replaced with western puppets, as is the case with official band councils in Canada? How much democracy is involved in getting this ‘consent’? Also, ILO 169 has loopholes, and the nation state retains the rights to resources of national interest. And who is going to hold the bank accountable?

    Why continue to target RBC? Why not give them ” a break”. Because it is true that banks continue to make huge profits from the exploitation of native lands, the global commons,and the labour of all working people. Because the financial sector rakes in billions why people suffer in substandard housing and starve without jobs after being forced on inadequate welfare. Because environmentalism must be anti-capitalist if it is anything at all- because this system of profits is destroying everything.

  6. dan says:

    what’s up now? one year later…

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