TORONTO — Royal Bank of Canada plans to ramp up its renewable energy funding, even as it also reported little progress on reducing the emissions intensity of its oil and gas financing.
In its latest annual climate report Wednesday, the bank set a goal to triple renewable energy funding to $15 billion by 2030 and said it plans to direct $1 billion to climate solutions by the end of the decade.
RBC has also created its own "decarbonization finance" category to help direct funding, as progress on creating industry-wide green finance standards remains stuck at the federal government.
"The actions we are announcing today will help support our clients in their efforts to reduce emissions, contribute to bringing more renewable energy online and provide needed capital to innovative climate solutions," Jennifer Livingstone, RBC's vice-president of climate, said in a statement.
The bank also disclosed that the emissions intensity of its oil and gas funding was "relatively flat" last year compared with a 2019 baseline, while its goal is to reduce the measure by between 11 and 35 per cent by the end of the decade.
RBC has said it's better to work with oil and gas companies to reduce their emissions intensity, even as they ramp up production and total emissions, rather than cut off funding as pushed by some climate advocates.
The bank did not disclose in the report how its total amount of low-carbon energy funding compared to its fossil fuel financing, which is emerging as a key measure of bank climate progress.
Research firm BloombergNEF found RBC had directed about 37 cents to low carbon sources for every dollar to fossil fuels in 2022, or US$11.5 billion to low-carbon sources compared with US$31.2 billion to fossil fuels.
BloombergNEF figures banks need to hit a minimum of $4 toward green options for each $1 to oil and gas by the end of the decade to limit global warming to 1.5 degrees C.
RBC said in its climate report that it has a goal to grow its overall low-carbon energy lending to $35 billion by 2030, or about US$26 billion.
New York City pension funds have filed a shareholder resolution against RBC, pushing it to disclose the green to fossil fuel ratio itself. The pension system also filed a similar resolution at JPMorgan Chase, but has dropped that resolution after the bank agreed to do so.
The need for better climate disclosure was emphasized as a report from U.K.-based advocacy group InfluenceMap published Wednesday showed Canada's big banks in general were directing an increasing portion of their funding towards fossil fuels.
TD, Scotiabank, BMO, RBC and CIBC increased their fossil fuel financing exposure from 15.5 per cent in 2020 to 18.4 per cent in 2022, the report said.
The Canadian Bankers Association said in a statement on behalf of the named banks that they all understand the importance of the financial sector in the transition to a low-carbon future.
The CBA said the InfluenceMap report is based on 2022 data and doesn't capture recent climate progress, while upcoming bank disclosures will provide additional insights on climate efforts.
RBC did disclose in its report for the first time its absolute financed emissions from oil and gas. The figure stood at the equivalent of 71.4 million tonnes of carbon emission last year, about as much as emitted per year by all cars and light trucks in Canada.
This report by The Canadian Press was first published March 6, 2024.
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Ian Bickis, The Canadian Press
