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Written by Nivedita Bal
TORONTO (Reuters) – Some of Canada’s biggest banks are cutting back on climate-related finance after years of pressure from climate activists to make banks more transparent about their claims about climate change targets. It was the first to admit that action does not necessarily reduce emissions growth.
Canadian banks, said to be one of the world’s largest fossil fuel financiers, are using sustainability links simply to disguise carbon emissions reductions, rather than taking meaningful steps to reduce them.・It has long been criticized by climate change activists and investors for allegedly using SLF. That direction.
In their latest annual climate reports released over the past week, many Canadian banks have pledged billions to decarbonize high-emitting sectors, highlighting the major challenges to meeting the goals. committed to dollar-scale sustainable financing.
Bank of Nova Scotia, CIBC and TD noted that sustainable finance goals may not necessarily limit emissions growth.
“The question for regulators is whether it is enough for banks to insert these simple disclaimers deep into their ESG reports, or whether these huge financial numbers that banks are touting are environmentally friendly. “We need to do a better job of communicating to investors and the public that this is not necessarily going to contribute to reducing emissions at all,” said an executive at Investors for Paris Compliance. Director Matt Price said:
In January, the group asked securities regulators to investigate major Canadian banks over alleged climate-related claims and misleading disclosures.
The accusations have given climate activists even more fuel for their fight. This is part of a broader international effort to hold companies accountable for their climate change commitments.
Mr Price said the latest revelations were still not enough to eliminate the need for an investigation. He pointed out, for example, that TD is still relying on its C$500 billion sustainable finance initiative without the qualifiers it does elsewhere, which he said is misleading.
Canada is the world’s fourth largest oil producer, and the energy sector accounts for approximately 5% of the country’s GDP. Despite the oil sector’s impact on the economy, the federal government has set aggressive emissions targets, including requiring companies in the sector to reduce emissions by up to 38% from 2019 levels by 2030. are doing.
The Bank of Nova Scotia has committed a total of C$132 billion since 2018 toward its goal of C$350 billion in climate-related financing by 2030, but climate-related projects are “lower in reducing overall emissions.” It may or may not be connected.”
Maegan Terry, the bank’s chief sustainability and communications officer, said the bank aims to be “transparent and support a clear understanding” of its climate lending targets.
CIBC echoed a similar line, stating that “sustainable financing may include eligible green activities, but does not necessarily limit absolute emissions growth.”
Other major banks also highlighted the difficulty of meeting climate change targets.
Royal Bank of Canada, Canada’s No. 1 bank, says the goal of keeping global temperatures within 1.5 degrees Celsius above pre-industrial levels is an important challenge and plans to align with that goal. He said that only 2% of customers have achieved this.
The bank’s plans this year include tripling its lending to renewable energy projects to $15 billion and expanding low-carbon energy financing to $35 billion by 2030.
TD said the greenhouse gas emissions impact of its operations towards the C$500 billion sustainable and decarbonization target “cannot be reliably measured at this time.”
Think tank InfluenceMap said in a recent report that from 2020 to 2022, the five largest banks’ fossil fuel lending exposure steadily increased from 15.5% in 2020 to an average of 18.4% in 2022. By comparison, the average for large U.S. banks is 6.1%. European banks’ rate was 8.7% during the same period.
Several global banks have pledged to achieve “net-zero financing emissions” by 2050, but many investors are skeptical about the lack of clear targets. .
Regulators in the United States and Europe are increasingly concerned about greenwashing, where companies exaggerate their environmental credentials.
(Reporting by Nivedita Bal in Toronto; Editing by Nick Zieminski)
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