Canadian banking giants ‘lack net zero urgency’

Canada’s biggest banks are not doing enough to get to net zero as most do not have any mature policies to decarbonise their portfolios, new research claims.

The shareholder activist group Investors for Paris Compliance (I4PC) said that “Canada’s banks lack net zero urgency.” 

Also, in a new report the group raised questions about the green finance pledges of the country’s biggest banks.

I4PC rated the six largest banking players between a B – good – to D – insufficient - when it comes to net zero and climate change progress.

The report was particularly critical about the banks’ oil and gas commitments, with four out of six banks not setting any new or additional targets in more than a year.

“It is worth noting that when including underwriting activity and the entire fossil fuel value chain, from 2021 to 2022 fossil fuel financing increased substantially at TD by 34 per cent, followed by RBC, at four per cent,” the report found.

Moreover, most of the banks examined lack any proper checks and balances against greenwashing, I4PC warned.

“Beyond listing eligible activities, no bank provides a measurable standard of what is ‘sustainable’ and what is not, particularly with regards to emissions,” the authors wrote.

Since the banks do not clearly define with finance operations are ‘sustainable’ or 'green', the group concluded, it has become impossible to distinguish those activities from any regular banking operations.

If banks do not increase their transparency and start publishing more specific data, more regulation is needed, argued Kyra Bell-Pasht, director of research and policy at I4PC.

“Canada is literally on fire but our banks are showing no urgency shifting their financing from activities that are making things worse,” she said. 

Responses

Responding to the I4PC report, Scotiabank said in an email that it is committed to transparency in climate governance and climate-related public reporting, and stressed it is working on a sustainable finance framework “which is expected to be published in 2024.”

“Expectations for reporting and disclosure rapidly evolve and the quality of emissions data presents ongoing challenges for the sector in assessing emissions exposure,” the bank said. 

“Scotiabank continues to update its targets, methods and action plans as data accuracy and quality improves.”

Meanwhile, RBC shared it remains "committed" to achieving net zero in its lending by 2050 and has established interim emissions reduction targets to do so.

“These targets are informed by science and reflect a measured and deliberate approach to climate action,” a spokesperson reportedly said.

CIBC, meanwhile, stressed open and regular communication about its climate change commitments is important, and the bank said it will continue to “advance our reporting and measurement of our progress.”

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