FILE PHOTO: A Royal Bank of Canada logo is seen on Bay Street in the heart of the financial district in TorontoTORONTO - Some of Canada's biggest banks have admitted for the first time that their climate-related finance efforts may not necessarily curtail emissions growth, following years of pressure from climate activists for banks to be more transparent about their claims on climate goals.
"The question for regulators will be whether it's enough for the banks to insert these brief disclaimers deep in their ESG reporting or whether they need to do a better job telling their investors and the public that these huge financial numbers they promote as green aren't necessarily adding up to emissions reductions at all," said Matt Price, executive director of Investors for Paris Compliance.
Price said the latest revelations were still not enough to obviate the need for an investigation. He noted that TD, for example, is still leaning on its C$500 billion sustainable finance initiative, without the qualifiers it makes elsewhere, which he says is misleading.Canada is the world's fourth-biggest oil producer, and energy sector contributes about 5% to the country's GDP.
CIBC echoed a similar narrative, saying "sustainable financing may involve eligible green activities... but do not necessarily curtail the growth of their absolute emissions."Royal Bank of Canada, Canada's No. 1 bank, said the target of limiting global temperatures to 1.5 degrees Celsius above preindustrial levels would be a key challenge and just 2% of its clients have plans that are aligned with that goal.
In a recent report, think tank InfluenceMap said between 2020 and 2022 the big five banks steadily increased their fossil fuel financing exposure to an average of 18.4% in 2022 from 15.5% in 2020. That compares with an average of 6.1% for leading US banks and 8.7% for European banks across the same period.