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RBC spotlights emissions targets for fossil fuel lending

RBC's ESG Performance Report noted the bank's efforts to become a net-zero lender by 2050, such as working to reduce its emissions intensity for sectors like oil and gas. (Courtesy RBC)

Royal Bank of Canada (RBC) has summarized its 2022 efforts to act against climate change, highlighted by a 2050 net-zero lending target, interim emissions targets on oil and gas lending, and investing billions of green capital.

“RBC is on a journey – monitoring and listening to our stakeholders to identify how best to address some of the most pressing challenges faced by the communities we serve,” Christoph Knoess, RBC’s chief administrative and strategy officer, said in its 2022 Environmental, Social and Governance (ESG) Performance Report.

“In turn, this helps inform our ESG strategy. In the context of our role in society, we bring our scale and assets to respond to these challenges and to make a measurable contribution.”

RBC is one of Canada’s largest banks with approximately $992 billion in assets under management in 2022. It is the largest Canadian investment bank, according to Dealogic.

It also published a separate 2022 Climate Report with greater detail on the bank's climate policies.

RBC’s 2022 emissions

In 2022, RBC reports it emitted 22,840 tonnes of carbon dioxide equivalent (tCO2e) of Scope 1 emissions, 65,577 tCO2e of Scope 2 emissions and 11,920 tCO2e of business travel Scope 3 emissions.

The 2022 total emissions of 100,337 tCO2e were higher than the 93,084 tCO2e of total emissions in 2021, largely due to an increase in business travel emissions. Its 2022 emissions were lower than its emissions from 2018 to 2020, however.

RBC did not disclose why its Scope 3 emissions included only business travel, but did state it “developed climate analytics capability relating to financed emissions, including improved quality of financed emissions data and advancing on embedding climate factors and data into decision-making."

PricewaterhouseCoopers LLP performed limited assurance engagement for RBC’s greenhouse gas emissions.

New targets for sector lending

RBC released its initial 2030 interim emissions reduction targets for lending in the oil and gas, power generation and automotive sectors in October 2022.

The bank has been criticized for its fossil fuel funding, with environmental group claiming it is Canada’s largest fossil fuel financier and the fifth largest in the world.

For oil and gas, RBC has set a target to reduce its Scope 1 and 2 physical emissions intensity by 35 per cent, and up to 27 per cent for Scope 3 physical emissions intensity against a 2019 baseline.

Within its investment portfolios, RBC's power generation target is to cut Scope 1 physical emissions intensity by 54 per cent, while the goal for the automotive sector is a 47 per cent reduction of physical emissions intensity across Scopes 1, 2 and 3.

RBC’s green initiatives in 2022

The bank provided $84.8 billion in sustainable finance in 2022, building toward its commitment of providing $500 billion in sustainable financing by 2025. RBC has now invested $282 billion in sustainable finance since 2019.

RBC committed $95 million to venture capital and growth equity funds that are investing in early-stage innovators focused on climate and decarbonization in Canada and globally, including Evok Innovations Fund II.

To encourage transparency, RBC said it worked with capital market clients in “key high-emitting sectors” representing 79 per cent of the available loan balances to report their Scope 1 and 2 emissions to RBC, and clients representing 59 per cent of available loan balances to disclose their plans to reduce greenhouse gas emissions to RBC.

RBC released its Sustainable Finance Framework, defining its approach and methodology to classify, track and disclose its performance toward its sustainable finance commitment.

The bank said it improved its climate analytics capability relating to financed emissions, including improved quality of financed emissions data, and furthered efforts to embed climate factors and data into its decision-making.

Other ESG initiatives

Other notes from the report include:

  • Providing over $109 million in cash donations and over $45 million in community investments. The donation contribution includes over $79 million from the RBC Foundation.
  • Helping Canadian youth access employment through work experience, skill development opportunities, networking solutions as well as mental well-being supports and services with RBC Future Launch.
  • Partnering with programs aimed at helping disadvantaged populations access financing, such as Indigenous communities, Black entrepreneurs, blind Canadians and human trafficking survivors.
  • Executive compensation is linked to its ESG strategic priorities.

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