Canada Banks Keep Climate Pledges as Rival RBC Drops Targets

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(Bloomberg) — Royal Bank of Canada’s decision to drop its sustainable finance commitment has sparked speculation that other major Canadian players could quietly walk away from their own goals on climate-related lending, underwriting and advisory work. 

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Canada’s biggest bank abandoned its pledge on that front in its latest sustainability report, pointing to changes to the country’s Competition Act that restrict the kinds of environmental claims firms can make. Royal Bank’s report, published last week, also cited “evolving” methodologies for measuring and reporting on sustainable finance.

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Asked if they planned to amend or drop their own climate-finance goals, Canada’s other large banks — Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada — all directed Bloomberg News to their most recent sustainability reports or other publications including the targets.  

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“Nothing to report on our end,” National Bank spokesperson Alexandre Guay said by email. “We are maintaining the targets announced in our sustainability reports.”  

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The amended rules on deceptive marketing, which were enacted last June, don’t prevent banks from making public claims backed up by diligent efforts and real metrics, said competition lawyer Julien Beaulieu. But he added that he wouldn’t be surprised to see others follow Royal Bank’s lead. 

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“It’s a very good excuse to stop making these commitments. They’re probably a bit afraid about what’s happening in the US. There’s this wave of anti-ESG lawsuits and all these anti-ESG policies in the US,” Beaulieu said. He argued that the US backlash has generated a “greenhushing” movement in which firms remain silent on climate-related initiatives. 

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Earlier this year, Canada’s big banks followed peers in the US in leaving the Net-Zero Banking Alliance, marking a major change in North America’s approach to climate finance. The development is part of a larger shift that coincided with Donald Trump’s return to the White House, with other banks including Wells Fargo & Co. and HSBC Holdings Plc walking back environmental commitments.

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“It’s a really bad time for leading financial institutions to say, ‘We’re going to quietly quit on climate,’” said Richard Brooks, climate finance director at Stand.earth. “It sends the wrong message to corporate Canada.”

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Still, Beaulieu said, it’s not necessarily a bad thing for banks to drop commitments that have attracted criticism for being overly broad and vague. Royal Bank itself has faced allegations of greenwashing over its sustainable-finance claims, and Canada’s Competition Bureau said in 2022 it was investigating a complaint about Royal Bank’s environmental marketing filed by Indigenous and climate activists. 

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Deleting Claims

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Canada’s so-called anti-greenwashing law, which amended rules around deceptive marketing practices to bar environmental claims that can’t be backed up by “internationally recognized methodology,” immediately stirred controversy when it was enacted last year. Major oil-sands industry groups deleted material from their websites and social-media feeds, arguing the changes created significant uncertainty about how Canadian companies should communicate their efforts to improve environmental performance. 

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Competition Bureau spokesperson Marianne Blondin said the agency, which is in charge of enforcing antitrust laws, has since consulted on proposed guidelines to help businesses assess whether their climate claims follow the new law. 

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“Companies are free to make environmental claims, as long as they are not false or misleading, and have been adequately and properly tested or substantiated as required,” Blondin said, noting that the bureau is now finalizing its guidelines.

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