Toronto-Dominion Bank TD-T has launched a carbon advisory business and is investing $10-million in a major Ontario forest conservation project, making it the latest Canadian financial institution to pursue strategic moves in the carbon-offset and credit markets.
TD said its new unit will offer clients such services as offset advice for project acquisitions, access to carbon markets and capital raising for project developers and financial players. The advisory service will be part of the bank’s ESG Solutions Group, and is being headed up by Calgary-based managing director Andrew Hall.
The conservation project, meanwhile, will protect 1,500 square kilometres of boreal forest in Northern Ontario, making it the largest such protection and carbon-offset effort in Canada. The Boreal Wildlands Carbon Project in Hearst, Ont., is being developed by the Nature Conservancy of Canada.
As part of the agreement, TD will gain access to some of the carbon offsets generated from the project. Companies will be able to purchase those credits to offset carbon emissions they are unable to abate as Canada proceeds with trying to reach greenhouse gas reduction targets to meet its international commitments.
“Carbon advisory and the use of carbon credits as part of the path to net zero is not only important today, but I think will continue to grow in importance in the coming years,” Amy West, global head of ESG for TD Securities, said in an interview. “For TD, building out a carbon advisory business is crucial to helping our clients as well as our bank group get to net zero in a credible way and in a measured way in the near future.”
Like its major Canadian competitors, TD is a member of the UN-convened Net Zero Banking Alliance, which represents 40 per cent of global banking assets. The group, brought together last year by former Bank of Canada and Bank of England governor Mark Carney, has committed to aligning investment and lending portfolios with the Paris Agreement goal of net zero carbon emissions by 2050.
Other Canadian members have recently announced significant moves into carbon markets as they seek to assist clients in dealing with greenhouse gases and make good on pledges to reduce their own financed emissions – those that stem from lending activities.
Canadian Imperial Bank of Commerce has joined several global institutions, including National Bank of Australia, UBS and Standard Chartered, in launching a blockchain-based system to record and track carbon trades. The venture, called Carbonplace, will act as a transaction network for voluntary carbon markets. The initiative has been compared to the SWIFT payment system in international finance.
In July, Bank of Montreal bought Radicle Group, a Calgary-based carbon offset developer with 130 employees and 4,000 clients. Radicle also helps companies measure their emissions so they can target ways to reduce them and document their progress. BMO did not disclose the value of the deal, which is slated to close by year-end.
Mr. Hall, who was previously director of sustainable finance at TMX Group, did not rule out similar acquisitions for TD’s carbon business, pointing out that private equity players in the United States have also bought carbon project developers. But the bank’s current plan is to expand on its own.
Increasing numbers of the bank’s commercial clients in various industries are looking to reduce carbon emissions on the road to net zero, and offsets are often an early way to set strategies with carbon prices, he said.
The Ontario forest land, known as a nature-based carbon storage project, has been owned by a logging company, and was expected to be sold to another one before it became a conservation effort. Besides preserving the boreal forest as a carbon sink in the fight against climate change, the project will also protect biodiversity in the region, TD said.
Jeffrey Jones