Royal Bank of Canada Climate Pledges Lack Absolute Emission Reduction Targets

IEEFA has released a briefing finding that the Royal Bank of Canada's climate and sustainable finance commitments are insufficient, with 2030 interim targets focused on emissions intensity rather than absolute reductions and significant segments of its business excluded from stated climate goals. RBC has been responsible for the fifth-largest total fossil fuel financing globally since the 2015 Paris Agreement, totalling almost US$254 billion.

RBC ranked first globally in fossil fuel financing in 2022 and is widely recognised as Canada's largest financier of fossil fuels. The bank's 2030 interim emission reduction targets are structured around emission intensity metrics rather than absolute financed emissions, meaning RBC could technically achieve its goals without any actual reduction in the total volume of emissions it finances. The bank's Sustainable Finance Framework is characterised by IEEFA as reflecting the demands of an oil and gas client base rather than a science-based decarbonisation pathway.

RBC's net-zero lending goal targets 2050, a date IEEFA notes conflicts with Canada's economy-wide net-zero target because investments in decarbonisation infrastructure must precede the 2050 deadline by many years. The plans also fail to address the ending of fossil fuel expansion financing and exclude meaningful portions of RBC's business from its stated climate commitments. IEEFA describes the combination of these plans as a lackluster commitment to net-zero finance goals, given RBC's scale and the bank's positioning at the apex of the Canadian banking industry.

IEEFA argues that RBC must recognise that the global energy transition is already affecting fossil fuel asset values and that the long-term financial prospects of the fossil fuel industry have begun to decline. The briefing is the first in a series examining RBC's climate pledges and practices. For ESG-focused investors and Canadian pension funds with RBC exposure, the report raises questions about whether the bank's climate commitments are sufficient to manage the climate-related financial risks accumulating in its lending portfolio, particularly as regulatory pressure on financed emissions disclosure intensifies globally.

Key figure — US$254 billion — RBC's total fossil fuel financing since the 2015 Paris Agreement, ranking it fifth globally and first among Canadian banks.