The Royal Bank of Canada is out with a long-awaited net-zero strategy that sets a far softer target than the emerging international standard for financial institutions, while touting its ability to engage with clients in the fossil sector and beyond to drive emission reductions.
In a release yesterday, RBC called the plan a “key milestone in its commitment to achieving net-zero in its lending portfolio by 2050,” and a “key element” of its commitment to the Glasgow Financial Alliance for Net-Zero (GFANZ), a financial sector decarbonization effort led by former Bank of England governor Mark Carney.
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“We know the greatest impact RBC can have to drive emissions reductions in the economy is through partnerships with our clients,” RBC President and CEO Dave McKay said in the release.
RBC Net-Zero Report [pdf] sets 2030 emission reduction targets for the three sectors where the bank thinks its customers can have the greatest impact—fossil fuels, electricity generation, and automotive. But all of its intensity-based targets are based on grams of carbon per unit of whatever a company produces. So if oil and gas emissions fall by 30%, for example, but extraction increases by 35%, the bank takes credit for an emission reduction while the amount of CO2 entering the atmosphere continues to rise.
The RBC report sets intensity-based targets of 47% for the auto industry and 54% for power utilities. But oil and gas, the only major Canadian sector whose emissions have continued to increase, gets a big break, with an intensity-based target of just 35% by 2030. Late last year, the latest published projection from the Canada Energy Regulator showed Canadian fossil fuel production continuing to rise through 2032, peaking at 5.8 million barrels of oil or equivalent per day.
Climate finance campaigners were quick to jump on the RBC report.
The RBC Revealed campaign compared the RBC targets to fossil fuel criteria set by the United Nations Race to Zero campaign, which sets the standard for GFANZ. It calls for a “50% reduction in absolute GHGs from financed, facilitated and insured activities by 2030” across the entire chain of fossil fuel production and consumption, from extraction to end use.
RBC joined the Carney initiative last year because “membership in the now 500+-strong GFANZ was a condition to access COP 26 negotiations in Glasgow, Scotland,” RBC Revealed writes. “Now, ahead of COP 27, RBC and Canadian banks risk getting booted from the global network as they push back against the global financial sector setting standards for climate risk.”
The release points to RBC as a lead investor in an intensely controversial fracked gas pipeline through traditional Indigenous territory in northeastern British Columbia. The bank “has been instrumental in the destruction of our lands by financing the Coastal Gaslink Pipeline, which is illegally now drilling into our pristine lands and threatening our waterways,” Wet’suwet’en Hereditary Chief Woos said in the release.
“There’s a dictionary-official definition for RBC’s climate targets: it’s called greenwashing,” added Richard Brooks, climate finance program director at Stand.earth. “With RBC continuing to bankroll polluters, these pledges are just more smoke and mirrors. While people across Canada bear the brunt of fires, floods, and deadly heat, Canada’s #1 fossil fuel-financing bank continues to pour gas on the flames, bankrolling gas, tar sands, oil, and coal. Instead of financing Indigenous rights-violating fracked gas pipelines, RBC has the opportunity to reinvest in climate-safe solutions and truly live into its climate rhetoric.”
The release cites the Bank of Montreal as the only large financial institution in Canada to base its climate plan on absolute rather than intensity-based targets, and identifies three institutions in Europe– Deutsche Bank, French bank SocGen, and Lloyds—that have recently done the same.
“If they can do it, why can’t RBC?” Brooks asked in an email.
RBC Senior Director, Climate Communications Andrew Block had not answered detailed questions on the net-zero report by the time The Energy Mix went to virtual press last night.
“We are looking to focus our attention where we will have the biggest impact—helping our clients reduce their emissions and supporting initiatives that bring green solutions to market,” he said in an emailed statement. “We are committed to achieving net-zero in our lending by 2050, and establishing interim goals will help us drive action and measure progress. We have set ambitious targets that are informed by science and input from our front-line business teams. Our targets reflect a thoughtful and practical approach on climate action. While our ultimate goal will require absolute-emissions-reductions targets, however, at this time we feel that physical-emissions-intensity targets are the right choice.”