Fossil Fuel Bankers RBC and BMO Signal Exit of Net Zero Banking Alliance

Royal Bank of Canada and Bank of Montreal have stated they are reconsidering their membership in the Net Zero Banking Alliance (NZBA) – a global initiative set up by former Bank of Canada Governor Mark Carney – to advance climate action by private banks. This comes as all major US banks quit the climate group in the past two weeks and climate change-fueled fires rage in Los Angeles. RBC’s City National Bank subsidiary is headquartered in LA. 

Richard Brooks, Stand.earth Climate Finance Director, offered the following statement: 

“We told you so. RBC and the other Canadian banks entered into the Net Zero Banking Alliance to greenwash their fossil fuel financing and to gain cover under increasing pressure from customers and investors. It appears they misled investors about their intentions with the alliance. While the world is on fire, quitting even mediocre climate initiatives is an out of touch move that shareholders, workers, and regulators should pay close attention to.”

In October 2021, Stand.earth along with 90 organizations warned Mark Carney about allowing Canadian and US banks to enter the NZBA. At the time, without stricter standards, we highlighted the risk of the banks and others using the initiative as a greenwashing tactic, to gain cover as they came under increasing pressure from fossil fuel impacted communities and civil society organizations. Full page ads were run in the Toronto Star and Financial Times to make the case. 

US and Canadian banks often referenced NZBA commitments in attempts to quell concerns and critiques among institutional investors. Many banks cited NZBA membership in annual and climate reports, as well as disclosures to investors, as proof of commitment to decarbonize financing. Behind closed doors, major fossil fuel financing banks worked to water down the ambition of the alliance.

In its 2023 Climate Report, RBC said, “[j]oining the NZBA in 2021 reinforced RBC’s commitment to playing a significant role in financing the climate transition, and supporting collaborative approaches between the public and private sectors to reach the goal of net-zero emissions by 2050.”

The big five Canadian banks did an outsized proportion of the total fossil fuel financing for the period of 2016-2023 at US $911.15 billion or 13% of all deals, including 45% of all tar sands deals in 2023. Three banks made the 2023 Dirty Dozen – RBC (#7), Scotiabank (#10), and TD Bank (#11) – and all five Canadian banks are in the top 16 spots globally.

RBC remains Canada’s #1 fossil bank, #7 globally, #4 for financing fossil fuel expansion in 2023; Scotiabank is #6 globally for financing expansion of fossil fuels in 2023. The top bankers of 130 companies expanding liquefied methane gas (LNG) in 2023 were Mizuho, MUFG, Santander, RBC, and JPMorgan Chase. Overall finance for liquefied methane increased to $120 billion in 2023.

###