Royal Bank of Canada RY-T has dropped its sustainable finance targets – including a $500-billion commitment to decarbonization efforts – blaming the country’s anti-greenwashing provisions and changing measurement practices.
Canada’s biggest bank said on Tuesday that amendments to the Competition Act, enacted by the federal government last year to guard against corporate greenwashing, contributed to its decision to suspend disclosures.
Those provisions within Bill C-59 call for climate reporting to be backed by internationally recognized measures, and put companies at risk of penalty for making false assertions.
RBC also reviewed its methods for measuring and reporting on funds directed at climate and other green initiatives and “concluded that it may not have appropriately measured certain of our sustainable finance activities as presented on a cumulative basis,“ the bank said in its 2024 sustainability report.
“In light of these developments, we will no longer be using this methodology going forward, and we are also retiring our sustainable finance commitment,” the bank said in the report. “Finally, we are considering potential changes to our overall approach to sustainable finance, including our Sustainable Finance Framework.”
The lender’s moves are the latest in a series of setbacks for climate-related finance in Canada. Early this year, RBC and the country’s other big banks withdrew from the Net-Zero Banking Alliance, a global organization aimed at marshalling private capital to emission-reduction goals.
The alliance was spearheaded by Prime Minister Mark Carney when he was UN Special Envoy on Climate Action and Finance.
Last week, the umbrella group for the country’s provincial securities commissions suspended work directed at making climate-related disclosure mandatory for public companies, blaming uncertain economic conditions and concerns about competitiveness.
The re-election of U.S. President Donald Trump, a staunch opponent of environmental, social and governance in the finance world, has played a role in influencing both those events.
RBC said it had not abandoned its goals to address climate change and to be “the bank of choice” for financing the energy transition. It said it was proud of its progress in 2024, boosting lending for renewable energy and developing a green buildings strategy.
However, the legislated anti-greenwashing provisions restrict its ability to report several metrics, partly because there are no established methods yet for measuring some of the them, it said.
RBC said this was evident in cases where the bank was among the first to produce some metrics, including those related to its low-carbon energy supply ratio and energy lending.
“We are disappointed not to share these metrics externally but will continue to monitor and report them internally to measure our progress,” Jennifer Livingstone, RBC’s vice-president of enterprise climate strategy, said in a statement.
In 2021, RBC made headlines when it committed to making $500-billion in financing available for achieving net-zero emissions by 2025.
Last year, the bank added more details to its low-carbon transition strategy by earmarking $15-billion for renewable energy by 2030, and boosting overall lending for low-carbon energy projects to $35-billion within the same time frame.
Those figures are no longer valid, it said.
The bank also warned that interim targets it had set in 2022 may no longer be achievable based on changing circumstances.
Those included the impact of some jurisdictions cancelling electric-vehicle incentives; geopolitical events prompting changes to energy forecasts; and technologies, including carbon capture, utilization and storage, falling short of projections.
Competition lawyer Julien Beaulieu said RBC appears to be acknowledging that its measurement methods were not robust. That is positive, and was the goal of the Bill C-59 provisions, he said.
“However, RBC also suggests that there is some sustainability information that they cannot disclose any more because of the amendments. I think there is a risk of a new dangerous trend – that companies start using the Competition Act as a (legitimate or not) reason to stop disclosing information,” Mr. Beaulieu said in an e-mail.
Richard Brooks, climate finance director for environmental group Stand.earth, said he is concerned that RBC’s moves will prompt the other big banks to follow suit, blaming Bill C-59.
This shows why the federal government – now led by a climate finance expert in Mr. Carney – should push for required disclosures to replace voluntary measures, he said.
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