Some of Canada’s top banks, including Royal Bank of Canada, Bank of Montreal, and Toronto-Dominion Bank, have announced plans to reach net-zero emissions by 2050. However, these plans have drawn doubts from many investors because they lacked details, including a definition of that target, interim emissions-cutting goals, and plans to distance themselves from the fossil fuel industry.
Reuters reported that as of January 31, Canadian banks’ outstanding loans to the oil and gas sector stood at CAD47.5 billion ($42.2 billion), steady from two years earlier, albeit down 9.7% from a year ago. A report by the Rainforest Action Network showed that Toronto-Dominion Bank is the world’s largest financial backer for oil sands, while RBC Canada is among the world’s top financiers of the fossil fuel industry. So far, no Canadian bank has joined the Net-Zero Banking Alliance.
Investors said the banks’ reluctance to step away from fossil fuel prompted calls to divest. However, this poses them with a dilemma because the banks are critical to helping meet many investment targets in the renewable and alternative energy sectors. Some investors also demand banks to step up their transparency, including by disclosing their milestones for achieving net-zero emissions and incentives to clients to cut emissions. Some of the investors even threatened to band and demand resolutions to remove directors.
