Senator Rosa Galvez is urging Canadian banks to adopt a requirement to prioritize climate change as their biggest issue.

The independent Quebec senator has proposed legislation that would compel banks and pension funds to divest from emission-heavy investments, such as the fossil fuel industry. 

The Climate-Aligned Finance Act, if passed, would “require certain financial and other federally regulated entities to mitigate and adapt to the impacts of climate change.”

The bill would offer expanded authority to the Office of the Superintendent of Financial Institutions, the regulatory body for the financial sector, to enhance its oversight of the climate strategies of financial institutions.

Any projects that produce emissions or relate to fossil fuel activity may see increased capital for loan approval and potentially result in higher interest rates upon securing a loan. 

Galvez stated she shifted her focus to banks and pension funds, which she views as vital for the transformation to renewable energy. 

“You come to the conclusion that the part that is missing is the finance sector, which actually should be the first sector in order to start obtaining results,” she said. 

Darren Hannah, senior vice president of the Canadian Bankers Association, voiced concern regarding the bill, saying this adjustment would be “fundamentally unfair to the thousands of Canadians who work in the energy sector.” 

He additionally stated that this would “increase costs for most Canadians that rely on their vehicle for day-to-day needs or many who rely on hydrocarbon fuels to heat their homes.”