Lead bank CEO stressed the need to consider other factors
The top bosses of Canada’s five largest banks affirmed their commitment to aiding the energy transition during a parliamentary committee hearing on Thursday. This came in response to scrutiny over their substantial funding of the oil and gas sector, exceeding $100 billion annually.
Royal Bank of Canada (RBC) CEO Dave McKay, appearing via video conference with the other bank leaders before the House of Commons Standing Committee on Environment and Sustainable Development, stated that an abrupt halt in funding is not a viable option. He stressed the importance of a methodical approach to protect jobs and maintain stability throughout the transition.
“Just stop is just not an option for us,” McKay stressed. “It’s important that we do this in an orderly fashion, or we risk the entire journey. We have to protect jobs along the way.”
Transition to a net-zero portfolio
Executives from RBC, TD Bank Group, BMO Financial Group, Scotiabank, and CIBC highlighted their dedication to assisting clients through the transition rather than withdrawing support from the oil and gas industry. They reaffirmed their net-zero and sustainable finance targets but indicated that ceasing funding for fossil fuel expansion is not straightforward.
“This is a complex transition. We are not getting off fossil-based fuels immediately,” McKay remarked, addressing his role as head of both Canada’s largest bank and its largest oil and gas funder.
TD Bank Group CEO Bharat Masrani echoed this sentiment, emphasizing the dual need to support the oil and gas industry while also investing in cleaner energy sources. “We have to do both,” Masrani said. “We have to support oil and gas industry, responsible oil and gas industry, as we go through this orderly transition. And at the same time, make sure we are providing the capital in the to move to a net-zero world.”
Environmental groups, in a press conference prior to the hearing, commended the committee’s leadership in summoning bank executives. They urged lawmakers to implement regulations compelling banks to take more decisive action on climate change. Julie Segal, senior manager of climate finance at Environmental Defence, criticized the banks’ climate commitments as insufficient and lacking detailed plans.
“While each of the Canadian banks have climate commitments, none of them have a commensurate plan of action,” Segal stated. “Their voluntary climate commitments have proven fickle, with them continuing to overinvest in oil and gas and underinvest in clean climate solutions.”
Commitment to addressing climate change crisis
The bank CEOs’ testimony followed a previous session with leaders from Canada’s largest oil and gas producers, who are facing a proposed legislated cap on emissions. Efforts to address the banking sector’s indirect impact on climate change remain limited, with Independent Sen. Rosa Galvez’s proposed Climate-Aligned Finance Act still under review in the Senate banking committee.
Despite differing views on the necessary measures and regulations for the energy transition, there was a consensus on the urgency to progress more swiftly. McKay concluded, “There is anxiety in the country about making this transition, and therefore Canada has to move and keep moving forward. We have to accelerate that transition.”
