The chief executives from Canada’s five biggest banks faced hard questions from MPs on Thursday over their climate commitments and plans to help spur transition to renewable energy.
Representatives from RBC, CIBC, TD Bank Group, BMO Financial Group and Scotiabank appeared Thursday before the standing committee on environment and sustainable development. All five attended by video conference, avoiding an in-person hearing.
NDP MP Matthew Green took aim at David McKay, the head of RBC, the country’s largest bank, for “touting” his climate record, while “continuing to be one of the largest financiers of fossil fuels in the world.”
“This is a transition,” McKay said in response.
“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 been criticized for how slow that transition has been, given that they remain among the largest financiers of oil, gas and coal globally.
A recent report calculated that Canada’s top banks pumped a combined $103.85 billion US into fossil fuel projects in 2023.
The five largest banks have made both short- and long-term emissions reduction targets, including net-zero financed emissions by 2050, but faced questions about whether those are on track.
Another recent report, from InfluenceMap, a global climate policy watchdog, found that Canada’s largest five banks have not aligned “their short- and medium-term emissions reduction targets with their long-term net zero commitments.”
Banks stress importance of oil and gas
None of the executives committed to limiting investments in the oil and gas sector to projects that would reduce emissions, and several stressed the importance of the sector.
“Energy has been very important to the economy and will continue to be important to the economy,” McKay said.
At one point, Brandon Leslie, a Conservative MP, focused on how banks have made investments in renewable energy without being forced by government.
He then asked Scott Thomson, the CEO of Scotiabank, if an oil and gas project should be held to a different standard — other than whether a loan can be paid back.
(A bill proposed by Quebec senator Rosa Galvez could make it harder for oil and gas projects to secure financing.)
“I don’t think energy projects should be held to a different standard than that,” Thomson said.
Thomson later added that Canada can be a “leader in the energy transition,” but suggested oil and gas can continue to play a role in the coming years.
“We should move away from emissions reductions at all costs to a comprehensive strategy that encompasses all sources of energy,” he said.
Banks accused of ‘fickle’ commitments
Thursday’s testimony comes a week after the same committee questioned the CEOs of Canada’s top oil and gas producers. The committee is exploring how Canada can meet its commitment to reduce emissions.
Julie Segal, a climate finance specialist with the advocacy group Environmental Defence, said Thursday the banks’ “voluntary climate commitments have proven fickle” and more regulations are sorely needed.
“We need credible climate transition 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.”
Scroll the latest headlines and it’s easy to feel climate defeated, but between the missed targets and dire warnings are signs of progress. CBC’s Nicole Mortillaro breaks down three ways the clean energy transition is starting to take shape.
Galvez’s proposed bill, known as the Climate-Aligned Finance Act, that would impose new rules on Canadian financial institutions to make sure they are aligned with the country’s climate goal.
The bill was tabled more than two years ago, but it remains at the committee stage in the Senate. It faces several more hurdles before it would be put to a vote in the Senate, and then make its way to the House of Commons.
The Canadian Bankers Association, which represents the country’s largest banks, is opposed to the legislation, saying it would add unnecessary regulations on the sector.
