Canada’s largest financial institution said it expects to meet the environmental funding target by 2025 after it hit its initial goal of $100-billion last year. The money will be deployed in debt and equity capital markets, lending and financial advisory services.
The net-zero pledge, in which greenhouse gas emissions are simultaneously reduced and offset, puts RBC in league with a growing number of global corporations aligning with commitments their countries have made under the Paris Agreement.
RBC’s plans include measuring and reporting emissions for major sectors it finances in its 2022 Task Force on Climate-related Financial Disclosures (TCFD) report. TCFD, which was developed under the umbrella of the Financial Stability Board, is quickly becoming a global standard.
The bank will also set interim targets to reduce “financed emissions” and conduct climate-related stress testing. RBC said the interim targets are crucial to making sure it can track and meet its net-zero goal.
“When you look at the role of a financial institution in working with stakeholders to address the future of climate and the future of a green economy, really our role has to be in partnership with our clients,” said Lindsay Patrick, head of the sustainable finance group at RBC Capital Markets. “And we really think the biggest impact we can have is supporting our clients with their own sustainability strategy and their own sustainability initiatives.”
In addition to its activities with clients, the bank aims to get to net-zero in its own operations, including reducing greenhouse gases by 70 per cent and buying all its own power from renewable and non-emitting sources.
The moves build on RBC’s “climate blueprint,” a bank-wide approach to dealing with issues related to climate change, said Valerie Chort, vice-president of corporate citizenship.
RBC and other Canadian banks have been criticized by environmental groups that complain the banks are engaging in “greenwashing” by making net-zero commitments while remaining some of the world’s largest funders of fossil-fuel projects.
“Banks continuing to finance fossil fuels while committing to net-zero goals is like saying we need more cigarettes to cure cancer,” Richard Brooks, climate finance director for Stand.earth, said in a statement issued before RBC’s announcement. “Getting rid of fossil fuels is the transition we need to tackle climate change.”
Ms. Patrick said the bank believes all sectors should be given the wherewithal to improve their operations in the transition to a net-zero economy, and that high-carbon industries that provide products still necessary for society may require the most capital to make the shift.
“It’s really important to take a balanced approach to sustainable finance, as well as an inclusive approach,” she said.
She pointed out that, last year, RBC announced it would no longer provide financing for new thermal-coal mines, including those that require mountaintop removal, and coal-fired power plants. It also said it would not fund any oil and gas development in the Alaska National Wildlife Refuge.
On a conference call on Wednesday to discuss the bank’s quarterly results, RBC chief executive Dave McKay said the bank is playing a leading role in green initiatives, pointing out it was financial adviser to Italy’s Eni SpA and Greencoat UK Wind on purchases of offshore wind farms. He also touted being joint bookrunner on Enbridge Inc.’s recent $1-billion sustainability-linked credit facility, a first for the North American market.
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