Canada's banks keep climate pledges as rival RBC drops targets

illuminem summarises for you the essential news of the day. Read the full piece on Financial Post or enjoy below:

🗞️ Driving the news: Canada’s Royal Bank (RBC) has dropped its sustainable finance commitment, citing legal uncertainty under the country’s newly amended Competition Act and evolving definitions of sustainable finance
• The move has raised concerns that other major Canadian banks may follow suit, potentially signaling a retreat from previously stated climate finance goals

🔭 The context: The amended Competition Act restricts companies from making environmental claims not backed by internationally recognized methodologies, contributing to what some call a growing “greenhushing” trend — companies staying silent on ESG efforts due to legal or political pressures
• RBC’s decision follows its controversial exit from the Net-Zero Banking Alliance earlier this year, mirroring similar moves by U.S. banks amid increasing anti-ESG sentiment

🌍 Why it matters for the planet: Sustainable finance targets are critical for directing capital toward low-carbon and socially responsible projects
• RBC’s withdrawal, particularly from Canada’s largest financial institution, could weaken momentum for climate-aligned investing in North America
• It also risks undermining transparency and public trust in corporate climate pledges if firms abandon goals without clear alternatives

⏭️ What's next: While other Canadian banks like TD, Scotiabank, and BMO claim to be maintaining their climate targets for now, experts anticipate further withdrawals unless regulatory clarity improves
• The Competition Bureau is finalizing guidelines to help companies navigate new legal expectations
• The outcome could shape how — and whether — financial institutions continue to publicly commit to climate finance

💬 One quote: “It’s a very good excuse to stop making these commitments… there’s this wave of anti-ESG lawsuits and all these anti-ESG policies in the U.S.,” — Julien Beaulieu, a Canadian competition lawyer.

📈 One stat: Since the Competition Act’s revision in 2024, several major Canadian energy groups have removed environmental claims from their websites, highlighting the law’s chilling effect on corporate sustainability communication

See on illuminem's Data Hub™ the sustainability performance of RBC, Toronto-Dominion Bank, and Scotiabank 

Click for more news covering the latest on sustainable finance