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This is the year of climate and finance, and Canada is now getting a glimpse into one of the trickiest parts of that combo.

Vancouver City Savings Credit Union has released a report showing annual greenhouse gases emitted by its business and consumer borrowers total 105,314 tonnes, or 36 times those of its own operations. It is one of the first Canadian financial institution to release such a report, but it won’t be the last.

These are what are known as financed emissions, a topic now getting a lot of air time. The credit union’s emissions are a tiny fraction of the global total, but how it determined the number is a good guide to the complex science of tallying greenhouse gases – and what Canada’s big banks face as they prepare their own reports.

It’s no easy task. Think about it: Banks and other financial institutions lend, often in syndicates, to myriad businesses so they can expand operations or buy new equipment. Sometimes these activities are carbon intensive. In addition, they finance millions of consumer purchases such as houses and vehicles – each with its own emissions profile. Also included are calculations related to investments, such as mutual funds.

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Vancouver City Savings, or Vancity, calculated its financed emissions using methods developed by a six-year-old international body called the Partnership for Carbon Accounting Financials, or PCAF. All of Canada’s major banks and a few other institutions, such as Alberta Investment Management Corp., have committed to the program.

Fourteen Dutch institutions started PCAF with the goal of harmonizing the approach of figuring out the finance world’s impact on climate change as countries try to meet their Paris Agreement commitments. It now includes more than 135 global lenders and fund managers representing US$40.4-trillion of assets.

As a credit union, Vancity’s lending is limited to residential and commercial mortgages, small and medium-size business loans, and auto and other consumer loans. It does not finance fossil fuel companies, as the major banks do.

Commercial real estate loans accounted for the most at 52,528 tonnes of CO2 equivalent in 2020, followed by residential mortgages at 31,162. In terms of tonnes of CO2 emitted per dollar lent, the vehicle loans are the highest at 179, followed by general purpose business loans at 80, commercial mortgages at 9.6 and residential mortgages at 2.4. Among investments including mutual funds and asset management activities, emissions are 36.8 tonnes of CO2 per dollar invested.

Vancity has a total of $19.9-billion in loans outstanding, and its calculation of emissions covers 93 per cent of that total in this initial report. The PCAF methods assign scores for data quality, as some of the information is estimated based on accepted multipliers. Vancity’s numbers are at the low end of the quality scale; it admits it can’t track precise emissions from every home and building on which it holds a mortgage. But that is expected to improve as it assembles more data in coming years.

The numbers have some practical business uses. The credit union can use some of the results to make suggestions to clients on such things as improving building efficiency with, say, better insulation or switching from natural gas furnaces. They also provide a road map for the institution’s own net-zero emissions goal of 2040.

The financial world’s contribution to global emissions is set to take up a big part of the agenda for UN talks in Glasgow, Scotland, in November. Financed emissions are a big deal in the discussion – they account for 700 times that of the greenhouse gases emitted by banks and insurers themselves, according to CDP, formerly the Carbon Disclosure Project.

Banks around the world, under pressure from regulators, governments and their own investors, have had to face their role in funding industrial and consumer activities that emit CO2. Job One is tallying it all up so that they can pinpoint where they can influence making reductions.

The big Canadian banks are busy compiling their own data for initial PCAF reports. Among them, Toronto-Dominion Bank expects to issue a report for this year’s financed emissions in 2022, Royal Bank of Canada aims to report on 2022 emissions in 2023, National Bank of Canada will set a date for publishing details next year, and Canadian Imperial Bank of Commerce plans to provide its data some time in the three years after it joined the program, which was February, 2021. Bank of Nova Scotia said it is formulating its plan, and will report on its progress publicly.

They have far larger and more varied lending and investment portfolios than Vancity does, so the math is more daunting, given the mountains of data required. The big banks have made carbon-neutrality pledges, but have resisted calls from environmental groups to decarbonize by dumping their finance activities in the energy sector. The banks say they are better off supporting Canadian businesses while using their resources to help reduce clients’ carbon emissions.

Once they file their reports on financed emissions, however, Canadians will have a much clearer picture of just how big and expensive a problem that will be to solve as the country seeks to achieve its net-zero emissions target.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at

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