Canada’s five largest banks may be undermining their own net zero goals, according to new analysis released today by independent think tank InfluenceMap. Analysis of the climate performance of the Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD Bank), Scotiabank, Bank of Montreal (BMO), and Canadian Imperial Bank of Commerce (CIBC) – all of which are signatories of the Net Zero Banking Alliance – finds that all five appear misaligned with climate science across all three assessment areas: climate governance, financing portfolios, and climate policy engagement.
This research, undertaken by InfluenceMap’s FinanceMap program, shows that the financing and fossil fuel exclusion policies of the Big Five Canadian banks appear highly misaligned with the IEA’s and IPCC’s science-based net zero pathways. It reveals that the proportion of total financing going to the fossil fuel value chain from these banks has increased year-on-year, from 15.5% in 2020 to 18.4% in 2022. This compares with an average of 6.1% for leading US banks and 8.7% for leading European banks across the same period.
FinanceMap’s assessment of the policy engagement by the banks finds that all five are members of industry associations that have engaged obstructively with financial and real-economy climate policies in Canada. The Canadian Bankers Association, for example, stated in November 2023 that Canada does not require climate-related banking regulations, while the Business Council of Canada has advocated for the expansion of Canadian fossil gas as recently as March 2023.
FinanceMap’s overall assessment of the banks’ climate governance, strategy, and policies against TCFD guidelines and IPCC and IEA technological positions show that there are no leaders in the Canadian banking sector, with an average regional score of D+.
“The Big Five banks hold significant economic and political influence in Canada, yet they are delaying action that is essential to respond to the climate crisis, while retaining strong financing links to the country’s fossil fuel sector,” said FinanceMap Program Manager Daan Van Acker.
All banks assessed in this research were offered the opportunity to review the analysis and provide feedback prior to release.
Additional findings from the report include:
In response to the report, Catherine McKenna, CEO of Climate and Nature Solutions, Chair of UN Secretary-General’s High-level Expert Group on Net-Zero Commitments, and former Canadian Minister of Environment and Climate Change, said:
"This report shows that despite their position of power, the Big Five Canadian banks are failing to support ambitious climate policy in Canada in line with their net zero commitments. These banks hold the keys to unlocking the green transition if they commit to using their climate influence and redirecting financial flows from fossil fuels towards clean energy and solutions. This would not only help tackle climate change but also create good jobs and increase Canada's global competitiveness."
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FinanceMap's assessment of the Big Five banks is divided into three key research areas:
Further details on the methodology can be found in FinanceMap’s Banking Methodology here.