Canadian lender RBC abandons sustainable finance goals citing competition act

Royal Bank of Canada signage is pictured in the financial district in Toronto, Friday, Sept. 8, 2023. THE CANADIAN PRESS/Andrew Lahodynskyj

Royal Bank of Canada RY.TOsaid on Tuesday that it would abandon its sustainable finance goals, citing recent changes to Canada’s competition act that require companies to prove their environmental claims.

“We have reviewed our methodology and have concluded that it may not have appropriately measured certain of our sustainable finance activities as presented on a cumulative basis,” Canada’s biggest lender said in its 2024 sustainability report published on Tuesday.

RBC had committed to facilitate C$500 billion ($361.19 billion) in sustainable finance by 2025. Its refreshed climate strategy is an “action-oriented plan,” it said.

The bank said last year’s changes to Canada’s Competition Act that target greenwashing and environmental claims limited the bank from sharing certain sustainability disclosures and the progress being made.

“Recent amendments to Canada’s Competition Act limit the information we can share on certain sustainability disclosures and the progress we are making and have restricted our ability to publicly report on several metrics,” the bank said in a statement.

The bank provided a methodology to calculate its energy supply ratio, the ratio of financing for low-carbon energy projects compared with their financing for fossil fuel projects, but was unable to disclose the number.

The bank said it would continue to monitor and report the ratio internally.

RBC along with US peers Citigroup C.N and JPMorgan JPM.N agreed to disclose the metric following an agreement with the New York City Comptroller.

RBC and other big banks have quit the Net-Zero Banking Alliance, a United Nations-sponsored initiative set up by Mark Carney, who won an election on Monday and will stay on as Canada’s prime minister.

Climate advocacy groups said the onus is now on Carney to improve sustainable and climate financing goals in the financial sector.

“The banks are not showing leadership ... so the ball is in Carney’s court to step in and take action,” said Richard Brooks, climate finance director with Stand.earth, a Toronto-based advocacy group.

Campaigners worry that banks are seizing on a shift in the political climate, particularly under U.S. President Donald Trump, to dilute commitments to act quickly on decarbonising their portfolios.