Royal Bank of Canada scraps sustainable finance commitment, holds back on disclosures

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

🗞️ Driving the news: Royal Bank of Canada (RBC), the country's largest bank, announced it is scrapping a major climate commitment to facilitate $500 billion in sustainable finance, citing methodological concerns and recent amendments to Canada's Competition Act
• The bank is also withholding disclosures on its energy supply ratio and progress towards a $35 billion low-carbon energy financing target, citing the same legal constraints around substantiating environmental claims

🔭 The context: Amendments to Canada's Competition Act were introduced to curb greenwashing by requiring companies to substantiate any environmental claims
• RBC had faced growing shareholder pressure to improve climate transparency, particularly from major investors like the New York pension system
• The bank’s original commitments were part of a broader trend among financial institutions responding to regulatory and reputational pressures to align financing activities with climate goals

🌍 Why it matters for the planet: RBC’s withdrawal signals a potential setback for financial sector leadership in climate action, particularly given the critical role banks play in steering capital toward low-carbon transitions
• Without transparent reporting, it becomes harder for stakeholders to assess progress against global net-zero targets
• There is also a risk that other institutions may follow suit, weakening broader market accountability on climate finance

⏭️ What's next: Stakeholders, including advocacy groups and policymakers, are likely to intensify calls for stronger regulatory requirements to ensure meaningful climate disclosures
• There may also be increased scrutiny of RBC's internal methodologies and comparisons against third-party standards like BloombergNEF
• The move could influence upcoming federal discussions on mandatory climate reporting and the development of legally enforceable sustainability standards in Canada

💬 One quote: “RBC’s refusal to disclose its energy financing ratio suggests a lack of confidence in its own methodology.” — Tanya Jemec, finance lawyer at Ecojustice

📈 One stat: Under BloombergNEF’s methodology, RBC is among the worst performers globally in balancing financing between high- and low-carbon energy sectors

See on illuminem's Data Hub™ the sustainability performance of RBC and its peers TD Bank, Scotiabank, and CIBC

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