Canadian banks’ commitments to “net-zero financed emissions” by 2050 have drawn doubts from many investors. Their growing funding for green projects also presents a dilemma for shareholders who might want to divest.
Both the banks and their investors face the large Canadian quandary. Despite its being responsible for over a quarter of emissions, the lenders cannot withdraw from an industry that accounts for about a tenth of the economy. Royal Bank of Canada (RBC)(RY.TO), Toronto-Dominion Bank (TD.TO) and Bank of Montreal (BMO.TO), have announced plans to achieve net-zero emissions. But they lack details including a definition of that goal, interim reduction targets and plans to move away from traditional energy sources.
The six biggest banks account for nearly 90% of the industry’s revenues. Jamie Bonham, director of corporate engagement at NEI Investments, which holds shares of the five banks said that the challenge with the current push to divest banks because they’re involved in fossil fuels is that these are the very same banks critical to help meet many of our goals in alternative energy and sustainable financing.
Canadian banks’ outstanding loans to the oil and gas sector have stayed at the levels of two years ago. They remain some of the biggest financiers of fossil fuel producers globally. None of the big Canadian banks has joined the Net-Zero Banking Alliance, which commits to finding pathways to net-zero emissions by 2050. VanCity, the biggest credit union, which has never financed fossil fuel companies, is the only Canadian financial institution in the alliance.