National Bank of Canada's (NA-T) operational emissions reached a four-year high in 2023, but the sixth-largest Canadian bank still beat its 2025 target for the metric, according to its 2023 ESG Report.

The document outlined its strategy to be aligned with the Paris Agreement by 2050, which is centred around addressing its own emissions, supporting the clean energy transition, and taking on its high-emitting portfolio.

“As a leading player in Quebec and Canada, we play an important role in supporting a just transition, which we believe must also promote the energy independence and security required to create wealth and economic strength . . .” president and CEO Laurent Ferreira, and senior vice-president of communications, public affairs and ESG Debby Cordeiro, said in a joint statement in National Bank’s 2023 ESG Report.

National Bank, headquartered in Montreal, has set a 2050 net-zero target for its operating and financing activities. For its operations, the aim is to cut its operational greenhouse gas (GHG) emissions 25 per cent by 2025 against a 2019 baseline.

Emissions reduction targets for its portfolio by 2030 include the commercial real estate, Canadian oil and gas producers, and the power generation sectors.

Taking on its own emissions

For 2023, National Bank reports 9,052 tonnes of carbon dioxide equivalent (tCO2e) in operational emissions, according its 2023 Climate Report. The figure compares to 8,996 tCO2e in 2022, 6,848 tCO2e in 2021 and 8,747 tCO2e in 2020. Though reaching its highest total in four years, the 2023 figure remains an improvement from 12,323 tCO2e in 2019.

The 0.6 per cent increase from 2022 to 2023 was explained as the result of an increase in business travel, offset by a reduction in energy consumption.

The bank reports it remained carbon neutral and has made a 27 per cent reduction in operational emissions compared to 2019 as of Oct. 31, 2023. That is ahead of its 2025 deadline to meet that target.

The effort was made possible by:

• improving energy efficiency in its buildings;
• shifting away from natural gas-powered HVAC equipment to electric systems in Quebec, Ontario and Manitoba;
• installing electric vehicle chargers in the parking lots of branches and offices;
• encouraging hybrid work and virtual meetings to cut travel emissions; and
• purchasing 21,392 carbon credits from Will Solutions and forestry projects.

As a highlight of its effort to reduce building emissions, National Bank is working to certify its new head office in Montreal at the LEED Gold standard.

Addressing portfolio emissions

National Bank met its goal for operational emissions, but its total GHG footprint reached the highest level since 2019. In 2023, it reports being responsible for 21,392 tCO2e of emissions, with 20,848 tCO2e in 2019 as the second-highest figure over the past five years.

To diminish its portfolio emissions, the bank focused on three sectors in its portfolio that are deemed climate intensive by the Net-Zero Banking Alliance.

Based on a 2019 baseline, National Bank’s 2030 targets for GHG intensity are:

• a 50 per cent cut in the commercial real estate sector portfolio;
• a 31 per cent cut in the Canadian oil and gas producers subsector portfolio; and
• a 33 per cent cut in the power generation sector portfolio.

The commercial real estate portfolio has seen its intensity slashed by 27 per cent; the Canadian oil and gas producers portfolio a 27 per cent reduction for Scopes 1 and 2 and a 15 per cent reduction for Scope 3; and a 27 per cent reduction in the power generation portfolio.

The drop in intensity for the commercial real estate portfolio was explained as a result of the “over-concentration of the portfolio in Quebec combined with sustained growth in the financing of multifamily housing.” Quebec’s electricity mix is largely renewable.

The reason for the decline in the Canadian oil and gas producers subsector portfolio was lower financing for carbon-intensive clients, favourable market valuations for public companies and an “atypical” period of rapid de-leveraging by oil and gas producers due to the COVID-19 pandemic.

For its power generation sector portfolio, a mix of financing related to renewable projects, and supporting its clients in the energy transition, were cited for the reduction in emissions intensity.

National Bank’s strategy to reduce its commercial real estate sector portfolio intensity is “financing strategy to optimize portfolio mix, with an emphasis on real estate projects in Quebec, to favour buildings with a low energy footprint, such as those using hydroelectric power.”

For its Canadian oil and gas producers subsector portfolio, the bank implemented a risk management process such as a climate risk sensitivity test, reduced the financing of high-emitting clients and prioritized those with a decarbonization strategy, and supported clients in their climate transition plans.

To cut the intensity of the power generation portfolio, National Bank says it is supporting renewable energy and added more restrictions on existing clients in the thermal coal subsector.

Financing the clean energy transition

Across its banking activities, National Bank says it supports its clients in the low-carbon transition with sustainable finance products such as sustainable bonds, advising over 450 cleantech companies — including electric vehicle charging network company FLO — and offering sustainable investment products.

As of Oct. 31, 2023, its sustainable bonds helped finance over $3.3 billion in green and social projects, according to its 2023 Climate Report.

The bank has invested $11 billion for renewable energy projects in North America; $8.7 billion for wind, solar, battery and hydroelectricity developments.

Its commitment on coal includes:

• not financing new thermal coal mining and processing activities;
• halting financing of thermal coal mining or processing activities for existing mining and energy producer clients unless they have pledged to reach net-zero by 2050 or to retire their thermal coal operations; and
• not granting new financing for oil and gas exploration, exploitation or production in the Arctic.