A recent study revealed that major Canadian banks provided funding of approximately $200 billion for fossil fuel ventures last year, surpassing the $104 billion allocated to low-carbon energy projects. The report by BloombergNEF, a research firm specializing in energy transition, emphasized the importance of analyzing the proportion of global bank financing dedicated to traditional fossil fuels versus sustainable options like wind, solar, and electric grids to assess the financial sector’s role in facilitating or impeding the transition to a greener economy.
Globally, the ratio for bank investments favored low-carbon technologies, with 89 cents allocated to such projects for every dollar directed towards fossil fuels in 2024, a rate consistent with the previous year. Despite this positive trend, the lead author of the report, Trina White, expressed concerns that the ratio was not increasing rapidly enough to meet global climate targets.
In contrast to the global average, Canada’s top six banks exhibited a lower ratio of 0.61 to 1 in 2024, down from 0.67 to 1 in the previous year. The funding distribution varied among the banks, with some increasing their support for renewables while others reduced it. The Canadian Bankers Association spokesperson, Nathalie Bergeron, highlighted that banks in Canada are dedicated to assisting clients in their transition efforts as part of the country’s climate change strategy.
Excluding National Bank, which stood out by funding more renewables than fossil fuels, the combined ratio for the remaining major lenders in Canada was 0.49 to 1 in 2024, compared to 0.47 to 1 in the preceding year. RBC, leading among the Big Five banks, committed to providing $35 billion in low-carbon financing by 2030 and achieved a ratio of 0.61 to 1. The bank aims to support clients in various sectors during the transition to a sustainable economy.
Despite these efforts, TD Bank Group had the least favorable ratio among its Canadian counterparts, with only 31 cents allocated to low-carbon energy for every dollar invested in fossil fuels. The bank did not respond to requests for comments on this matter.
Richard Brooks, the climate finance program director at Stand.earth, criticized the lack of progress among banks compared to the previous year, suggesting that voluntary actions and commitments to achieve net-zero financed emissions by 2050 are insufficient. He called for government intervention and stricter regulations to ensure meaningful change in the banking sector’s approach to climate action.
Brooks also pointed out positive examples like BNP Paribas, which achieved a 2:1 ratio favoring low-carbon energy, as a model for other banks to emulate. Notably, Canada’s major banks have collectively committed to achieving net zero financed emissions by 2050.
