Canadian banks play outsized role financing fossil fuels: report

Canadian banks continue to play an outsized role among global financiers of the fossil fuel industry, according to a report released Monday by a coalition of environmental groups.

The world’s 60 biggest banks sank roughly US$700 billion into companies doing business in fossil fuels last year, according to the latest edition of the annual Banking on Climate Chaos report.

Last year was also the hottest year on record, another grim milestone in the climate crisis.

Against this ominous backdrop, three Canadian banks — namely the Royal Bank of Canada, Scotiabank, and Toronto-Dominion Bank — made the 2023 “Dirty Dozen” list representing the biggest financiers of fossil fuel projects worldwide.

RBC ranked seventh in the world with US$28 billion in fossil fuel financing, while Scotiabank was tenth with US$24 billion, followed by TD, which ranked eleventh with more than US$20 billion.

Other major homegrown climate culprits included BMO and CIBC, which contributed US$15.75 billion and US$15.5 billion, according to the report.

The study is published annually by a coalition that includes the Rainforest Action Network, the Sierra Club, and the Indigenous Environmental Network, among others.

Altogether, Canada’s “big five” banks contributed more than US$104 billion to fossil fuel developments last year, according to the 61-page report.

Financing by the Bay Street giants has contributed more than US$900 billion to fossil fuels development since 2016, when the Paris Agreement on climate change came into effect.

The report notes that, on a global scale, medium and smaller banks “are disproportionately financing fossil fuels,” including Scotiabank, CIBC, BMO, and RBC. That means that fossil fuel financing accounts for a relatively large share of their total assets.

None of the banks immediately responded to requests for comment on Monday, except CIBC, which referred questions to the Canadian Bankers Association. The association declined an interview request and provided a brief emailed statement.  

It stated, in part, that Canadian banks “understand the important role that the financial sector can play in facilitating an orderly transition to a low-carbon future.”

It said their plans include “working with clients across industries to help them decarbonize and pursue energy transition opportunities, and financing new and existing green projects that will help Canada meet its net-zero ambitions.”

RBC ranked worst in Canada 

Those assurances are unlikely to satisfy climate activists. Climate justice activists in Moncton took part in nationwide protests last month demanding that RBC divest from fossil fuels and “all projects using force against Indigenous people.”

RBC Financial Group, the largest bank in Canada as measured by assets, was the world’s top financier of fossil fuels developments in 2022, according to the previous edition of the Banking on Climate Chaos report.

Its improved ranking this year is due, at least in part, to changes in how the rankings are calculated.

Those changes are meant to account for all banks that make financial contributions to a deal, instead of only those playing the role of “book runner” or primary underwriter, according to the authors.

Since RBC tends to play leading roles in fossil fuel deals, this methodological change caused its ranking to decline.

Critics have accused RBC of greenwashing its reputation, prompting an ongoing investigation by the Competition Bureau of Canada. RBC has denied the allegations.

This article was updated on May 16, 2024 at approximately 1:40 p.m. to include a response from the Canadian Bankers Association. 

David Gordon Koch is a journalist with the NB Media Co-op. This reporting has been made possible in part by the Government of Canada, administered by the Canadian Association of Community Television Stations and Users (CACTUS).