TORONTO (Reuters) – Royal Bank of Canada plans to triple loans for renewable energy to C$15 billion ($11 billion) by 2030 as part of its efforts to achieve net zero emissions in its lending practices by 2050, Canada’s largest bank said on Wednesday.
RBC has come under attack by climate activists for being one of the biggest fossil fuel financiers.
“Looking to 2024, we’re accelerating our strategy to finance the energy sources needed to build a net-zero economy by stepping up our focus on low-carbon energy development,” CEO Dave McKay said in its climate report.
The Toronto-based bank said it also plans to increase its low-carbon energy lending to C$35 billion and allocate C$1 billion by 2030 to funds and companies that are helping clients achieve their climate goals.
RBC’s outstanding loans to the oil and gas sector stood at about C$5.58 billion at the end of January, down about 8% from a year ago. A report by nonprofit group InfluenceMap on Wednesday said that Canada’s big five banks increased their fossil fuel financing exposure to 18.4% in 2022 from an average of 15.5% in 2020, to a total of $275 billion.
That compares with an average of 6.1% for leading US banks and 8.7% for European banks across the same period.
RBC said it has established a new decarbonization finance category to accelerate capital deployment to emissions reduction efforts in high-emitting sectors.
Jennifer Livingstone, RBC’s vice president of climate, said the bank’s measures will help clients cut emissions and provide capital to innovative climate solutions.
RBC said Scope 1 physical emissions intensity has declined relative to the 2019 baseline due to its efforts to increase lending in the power generation sector to clients with renewable and other low-carbon energy sources.
It said 79% of its energy sector clients have set transition plans and 48% have achieved the minimum criteria.
RBC noted that aligning to the global goal, set in the 2015 Paris Agreement on climate change, of limiting temperatures to 1.5 degrees Celsius above preindustrial levels was challenging. Only 2% of the oil and gas sector and 34% of power generations sector are aligned with 1.5 degrees, it noted.
“RBC has taken a small step forward with their commitment to triple low carbon energy financing by 2030. But this is vastly inadequate given the bank’s continued level of financing of dirty coal, oil and gas which was at $37 billion in 2023,” said Richard Brooks, a climate finance director at environmental organization Stand.earth.
($1 = 1.3524 Canadian dollars)
(Reporting by Nivedita Balu in Toronto; Editing by Richard Chang)
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