David McKay, president and CEO of Royal Bank, addresses the company’s annual meeting in Halifax in April 2019. Representatives from Canada’s five biggest banks faced questions from MPs this afternoon over their commitments to help reduce greenhouse gas emissions and spur the transition to renewable forms of energy. (Andrew Vaughan/The Canadian Press)
The CEOs of Canada’s five largest banks faced intense questioning from MPs on Thursday regarding their climate commitments and their substantial investments in the fossil fuel industry. Appearing via video conference before the standing committee on environment and sustainable development were executives from RBC, CIBC, TD Bank Group, BMO Financial Group, and Scotiabank.
NDP MP Matthew Green challenged RBC CEO David McKay for promoting his bank’s climate record while continuing to heavily finance fossil fuel projects. McKay defended RBC’s position, stating, “It’s a complex transition. We are not getting off fossil-based fuels immediately. To just stop is not an option for us. We have to commit to finding green sources of energy.”
Canadian banks have faced criticism for their slow transition away from fossil fuels. In 2023, Canada’s top banks invested a combined $103.85 billion USD in fossil fuel projects. Despite setting net-zero financed emissions targets for 2050, a report from InfluenceMap found that these banks have not aligned their short- and medium-term emissions reduction targets with their long-term commitments.
The executives did not commit to limiting investments in oil and gas to projects aimed at reducing emissions, emphasizing the sector’s economic importance. “Energy has been very important to the economy and will continue to be important,” McKay said.
Conservative MP Brandon Leslie highlighted that banks have invested in renewable energy without government mandates and questioned whether oil and gas projects should be held to different standards. Scotiabank CEO Scott Thomson responded, “I don’t think energy projects should be held to a different standard than that.” He suggested that Canada can lead the energy transition while still utilizing oil and gas in the coming years.
Climate finance specialist Julie Segal from Environmental Defence criticized the banks’ “fickle” voluntary climate commitments, calling for more regulations. “We need credible climate transition plans from these banks and financial institutions, and since they are not designing these on their own, we need rules to ensure they happen and are delivered.”
Senator Rosa Galvez’s proposed Climate-Aligned Finance Act aims to impose new regulations on financial institutions to align with Canada’s climate goals. The bill, introduced over two years ago, is still in the Senate committee stage and faces several hurdles before becoming law.
The Canadian Bankers Association opposes the legislation, arguing it would impose unnecessary regulations on the sector. As the debate continues, the scrutiny on Canada’s financial institutions and their role in addressing climate change intensifies.
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