Four of the big five have yet to commit to reporting their Energy Finance Ratio
With Canada’s big banks having followed many Wall Street titans out of the Net Zero Banking Alliance, investors with sustainability as a priority are keen to ensure that addressing climate change does not slip further down the agenda.
An international coalition which includes Canadian-based SHARE – the Shareholder Association for Research and Education – is calling on four of Canada’s five biggest banks to commit to reporting a key metric for transparency.
TD, CIBC, BMO, and Scotiabank are being urged to follow the decision a year ago of RBC to report their Energy Finance Ratio, which compares an institution’s investment in low-carbon and high-carbon energy sources. RBC was the latest big bank to leave the NZBA earlier this year.
This metric helps investors understand where a bank stands on reducing its exposure to the fossil fuels industry and in benefitting from the energy transition.
“For investors looking to understand climate financing by these influential institutions — not to mention navigating the new landscape of greenwashing regulations in Canada — nothing can replace a dollar-to-dollar comparison of a bank’s core financing of the energy sector,” said Amanda Carr, Associate Director, Climate Advocacy at SHARE.
SHARE has submitted proposals to the four banks urging them to begin reporting. This tactic worked with RBC. Third party data is available from BloombergNEF but SHARE says this lacks some of the internal data that would provide a more rounded view.
“Investors and banks have been tracking financed emissions of banking clients, which is critical, but these ratios allow us to track relative financing of the energy transition,”said Carr.
“Such data would give investors crucial insight into a future-forward, solution-focused approach to climate action by the financial sector.”
Among those backing the coalition’s challenge to the banks is the Trottier Family Foundation which has committed $150 million by 2030 to fight the climate crisis. Its executive director, Eric St. Pierre, says the ratio provides transparency and accountability on how banks support Canada’s path to Net Zero.
“We need this to track steady and consistent progress of the real-economy energy transition. The Trottier Family Foundation’s request at TD supports our philanthropic approach to funding innovative climate solutions,” he said. “As long-term investors committed to bettering Canada, we believe that climate risks must be addressed now to avoid irreversible ecological and economic damage. We urge other investors to vote for the proposal.”
