Four Canadian lenders have confirmed their departure from an investor coalition aimed at tackling climate change, just days before Donald Trump assumed office for a second term.
The Bank of Montreal (BMO), National Bank of Canada, Toronto-Dominion Bank (TD), and the Canadian Imperial Bank of Commerce (CIBC) all announced on Friday that they were leaving the Net Zero Banking Alliance (NZBA), citing heightened concerns over legal threats against climate coalitions.
Their departures follow comments by BMO CEO Darryl White at an investor event earlier this month, where he hinted at the possibility of exiting the climate coalition. Despite this, all four banks reiterated their commitment to addressing climate change.
In the first week of January, some of the largest banks in the US, including Citi Bank, JP Morgan and Bank of America had announced their departure from the coalition.
The NZBA is part of the Glasgow Financial Alliance for Net Zero (GFANZ), an umbrella organisation of net-zero coalitions. Earlier this month, GFANZ announced a significant overhaul of its membership expectations, effectively removing the requirement for participating banks to commit to net-zero targets.
BMO, TD Bank, and CIBC are among the five largest Canadian banks. BMO, in particular, has a substantial presence in the US market, bolstered by its 2023 acquisition of BNP Paribas SA’s US banking division. The lender now operates more than 1,000 branches across the US.
Despite their involvement in the NZBA, RBC, TD Bank, Scotiabank, BMO, and CIBC have been identified as major financiers of the fossil fuel industry. Between 2020 and 2021, the five banks increased their lending to the oil and gas sector from $62 billion to $104 billion, according to research by campaign group Influence Map.
Commenting on the recent departures of banks from the coalition, Jeanne Martin, head of the Banking Programme at campaign group Share Action recognises that banks still pledge their commitment to climate action. In the latest Net Zero Investor podcast, she cautions: "To be taken seriously on climate by concerned investors, banks will need to match words with action. For example, by setting clear strategies to phase out their financing of dirty activities like fossil fuels and ramp up their financing of sustainable activities. If they fail to do that, the truth is climate change remains a financial risk and communities across the world are already facing the harmful impact of global heating. That is why, despite voluntary initiatives having a lot of benefits, we need regulators to step up with robust regulation that willl ensure banks are playing their part in building a sustainable future that we need."
