The Royal Bank of Canada is facing international criticism for its continuing investments in coal mining and power generation, enabled by an October, 2020 policy that contains “two giant loopholes” for investments that many other financial institutions are turning away from.
In a release this week, Paris-based Reclaim Finance says the RBC coal policy [pdf] is “one of the poorest among global banks,” allowing the institution to continue doing business with 319 of the 526 coal mining companies and 400 of the 604 coal power companies on the Global Coal Exit List (GCEL) maintained by Urgewald, a non-profit environmental and human rights organization based in Sassenberg, Germany.
“While fires rage across Canada, engulfing tens of millions of people in North America in filthy air, RBC can continue to finance the dirtiest fossil fuel, coal, due to its very weak coal policy,” Reclaim Finance states this week. “If RBC wants to be considered credible and really ‘at work to tackle climate change’ while Canada burns, it must immediately update its coal policy, exclude all coal developers, and foster the coal exit needed by 2030 in the OECD and 2040 globally,” as 18 other global financial institutions have already done.
Reclaim Finance points to two big gaps in the RBC’s current coal policy:
• It only excludes new clients, allowing the bank to continue investing in at least 30 companies that are already in its portfolio. That makes RBC the author of “the biggest loophole that can be found in a bank sector policy,” the release says.
• The exclusion only applies to mining companies that derive at least 60% of their revenue, or utilities that produce at least 60% of their power, from coal. “These thresholds are a long way from best practice as seen at Desjardins in Canada,” with restrictions of 0% for coal mining and 10% for coal power capacity.
Those provisions enable RBC to continue funding clients like coal mining giant Glencore, Reclaim Finance says. The bank also arranged US$5.4-billion in “sustainability-linked” financing for German utility RWE, which “razed a whole village in western Germany to the ground in January 2023 to expand one of its coal mines”.
In April, Global News said any connection between the bank and RWE would “symbolize the nuances of ethical investment,” where policies like RBC’s still allow them to invest in high-emitting projects and clients.
“You look at all of the policies that the Canadian banks have in regards to coal, and they have so many loopholes in them that you could drive a coal excavator through those loopholes,” Richard Brooks, climate finance director with Stand.earth, said at the time.
An RBC spokesperson did not respond to a request for comment on when the bank’s coal policy is due for an update, or what it would take to accelerate that timeline.