Canadian banks, featured prominently in global energy financing, fall short on directing funds to low-carbon sources, according to a BloombergNEF report. TD Bank and Bank of Montreal signs seen in Toronto's financial district on Sept. 8, 2023.
According to a recent report by BloombergNEF, Canada's top five banks who are the major global energy financiers, rank poorly among the top 100 when it comes to directing funding toward low-carbon sources. The report indicates that in 2022, global banks directed an estimated 73 cents toward low-carbon energy for every dollar supporting fossil fuel supply, reflecting a 0.73-to-one ratio. However, this falls short of the four-to-one ratio needed to limit global warming to 1.5°C by the end of this decade.
The largest Canadian banks displayed varying ratios in their commitment to low-carbon funding. BMO had a ratio of 0.45:1 for its $18.9 billion in energy funding, placing it 88th in the ranking. With a 0.32:1 ratio for its $35.9 billion in funding, Scotiabank fell below the top 100. CIBC had a 0.41:1 ratio for its $17.9 billion, RBC had a 0.37:1 ratio for its $42.7 billion, and TD Bank had a 0.35:1 ratio for its $30.2 billion, positioning it at the bottom of the list.
Notably, the National Bank stood out with a ratio of $1.10 in low-carbon funding for every dollar allocated to fossil fuels in its $14.9 billion in financing, ranking 52nd globally. The report also revealed that BMO, TD, and Scotiabank saw their ratios worsen from 2021, while CIBC and National Bank showed improvement. RBC's ratio remained the same as in the 2021 report, but a downward revision to last year's low-carbon ratio contributed to an improvement.
RBC's spokesperson, Andrew Block, emphasized the importance of increasing low-carbon energy supply to meet global net-zero goals. He mentioned that RBC expects to enhance its ratio further, highlighting the bank's strengthened capacity to scale up financing for low-carbon energy.
Climate finance director at environmental organization Stand.earth, Richard Brooks, expressed disappointment at the lack of progress by banks in driving climate solutions. He emphasized that no bank is doing its fair share of the work required to transition global energy systems, and they continue to exacerbate the problem.
The report underscores the ongoing challenge for financial institutions to align their funding practices with climate goals and address the urgent need for a transition to sustainable energy sources.
