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Canadian bank the world's top fossil fuel financier, report finds

The Royal Bank of Canada was found to be the number one financing institution backing fossil fuel projects, a new report has found. The bank is currently facing an investigation by the Competition Bureau for greenwashing.
The Royal Bank of Canada says it wasn't consulted on the report.

Royal Bank of Canada was the world’s number one financier of the fossil fuel industry in 2022, a new report has found.

The report, published by a number of financial and environmental watchdog groups Thursday, analyzed the financing of oil, gas and coal operations from 60 of the world’s largest banks. Together the banks poured US$5.5 trillion worth of financing — including lending, underwriting debt and equity issuances — into fossil fuel companies since the Paris climate accords were signed in 2015.

“This is the greatest misallocation of capital the world has ever seen,” said Richard Brooks, climate finance director at, one of 623 organizations that endorsed the report.

“It's clear that our Canadian banks led by RBC can't be left to voluntarily do what is required to fight climate change. There's a more urgent than ever role for regulators, including the federal government to step in and force change at the banks.”

Caleb Schwartz, an analyst at Rainforest Action Network and one of the report’s lead authors, said Canadian and U.S. banks are “increasing their share of the pie for fossil fuel financing,” at a time organizations like the International Energy Agency says building new fossil fuel projects will undermine global agreements to limit warming to 1.5 degrees Celsius.

“There’s been a pretty clear line drawn in the sand that any expansion of fossil fuel investment will push us over the edge,” said Schwartz. “That spells climate chaos.”

The latest Banking on Climate Chaos report — authored by Rainforest Action Network, BankTrack, the Indigenous Environmental Network, Oil Change International, Reclaim Finance, the Sierra Club and Urgwald — drew on industry databases from Bloomberg and Rystad Energy. It also tracked new financing for fossil fuel projects through global oil, gas and coal exit lists.

A spokesperson for RBC said the report's authors did not consult with the bank before publishing their data.

“The authors of this report do not validate their figures or findings with us and we can’t confirm their conclusions,” wrote the spokesperson in an email.

An email seen by Glacier Media, however, shows the report’s authors reached out to at least two senior executives at RBC on March 7, 2023, to validate their findings.

“More than 20 other banks responded to us about this report last month concerning their own data we sent them,” Schwartz said.

Canadian, U.S. banks lead financing of fossil fuels, finds report

The report's numbers show global financing for fossil fuel companies plateaued in the first year of the pandemic, before rebounding in 2021 and then levelling out again in 2022.

Still, last year alone, US$673 billion were poured into oil, gas and coal projects, a sum the report says could have been bigger were it not for “unusual geopolitical and economic conditions” related to inflation, fears of oil and gas shortages and higher interest rates.

“The Russian invasion of Ukraine in February 2022 gave fossil fuel companies a chance to rake in record profits totalling $4 trillion,” stated the report.

Altogether in 2022, the 60 banks financed the expansion of fossil fuel projects at a cost of roughly US$150 billion.

Most of the financing came from banks in the United States, Canada and Japan. JPMorgan Chase continued to be the overall banking leader in fossil fuel financing since the the signing of the Paris climate agreement, having financed US$434 billion over that period.

But in 2022, the American bank fell to second spot in its role as a top financial backer of fossil fuels. RBC’s ascension into top spot marks the first time a Canadian bank has ranked as the number one financier of fossil fuels, the report notes.

RBC was found to have loaned or underwritten US$253 billion in debt to back fossil fuel projects since 2016. Financing climbed to US$42.1 billion in 2022, more than six per cent of the global total and RBC’s highest annual level of fossil fuel financing over the seven-year period.

Most of RBC’s financing in the oil and gas sector — which expanded 4.18 per cent in 2022 — targeted projects across North America. In Alberta's oil sands, its top clients included the Canada Development Investment Corp. and Enbridge Inc. 

“This is Canada's largest bank. We need them onside with us in terms of doing all that they can in terms of fighting climate change, but they're clearly heading in the completely wrong direction,” Brooks said.

“I think Canadians who have a banking relationship or investment relationship with RBC really need to reconsider that relationship and they need to also be looking to many of the big corporate clients of RBC  — everything from unions, to cities, to companies who have a banking relationship with them, and engage them in trying to turn around Canada's largest bank.”

In Canada, companies operating in the Alberta oil sands received $21 billion in financing in 2022, of which 89 per cent came from the Canadian banks TD, RBC and Bank of Montreal.

Since the Paris Agreement, Scotiabank and TD rounded out the top 10 global financiers of fossil fuel companies, accounting for US$182.3 and US$173.2 billion in financing, respectively.

In the Arctic, Chinese banks — including the Industrial and Commercial Bank of China, Agricultural Bank of China, and the China Construction Bank — were the top financiers in fossil fuel projects, though several U.S. banks also had a heavy financial footprint in the region, the report found. Chinese banks were also found to finance 87 per cent of the top 30 coal mining companies and 97 per cent of world’s top 30 coal power companies.

The Spanish bank Santander led lending for oil and gas extraction projects in the Amazon.

The financing of fracked oil and gas — which grew six per cent in 2022 — was led by RBC and JPMorgan Chase, according to the report.

Banks not living up to net-zero promises, report claims

The report also analyzed the policies of all 60 banks surrounding their fossil fuel financing and commitments on moving their operations toward net-zero emissions. In 2022, 49 banks were found to have net-zero commitments while at the same time supplying 81 per cent of the financing to the top 100 companies expanding their fossil fuel footprint.

“Of the 60 banks that are profiled in this report, 59 do not have policies robust enough to meet the goal of keeping global warming below 1.5 C,” concluded the report. “Some banks strengthened their policies, but few are sufficient to meet the challenge of the moment.”

Alan Andrews, director of the climate program at the Canadian law firm Ecojustice, said Canadian banks' historic financing in fossil fuels threatens to derail government efforts to fight climate change.

“The Canadian financial system weathered the 2008 financial system better than most. But it has a blind spot on fossil fuel investments,” he said. “The whole federal climate agenda risks being undermined.”

An RBC spokesperson said the report did not measure progress made in meeting the bank’s climate goals.

“This includes setting initial interim emissions reduction targets for lending in three key sectors which inform our lending decisions, adding climate considerations to executive compensation and establishing the RBC Climate Action Institute, focused on advancing climate policy research and action,” said the bank spokesperson in an email.

The spokesperson added the company is actively working toward a net-zero economy, including financing renewable energy products and helping high-emitters access capital to transition to renewables.

“We are committed to being transparent on our progress. This includes audited quarterly disclosures on RBC’s outstanding wholesale loans and acceptances exposure by sector and annual disclosures on our absolute financed emissions,” read the statement.

RBC named top fossil fuel financier amid greenwashing investigation

The report comes as Canada’s Competition Bureau investigates RBC for misleading its customers on the action it has taken on climate change.

The industry watchdog launched its probe in October 2022 after six individuals claimed the bank had made false and misleading statements on its commitments to address the climate crisis.

“Until RBC stops financing fossil fuels, advertising itself as Paris Agreement-aligned is greenwashing — and it shouldn't be tolerated,” Kukpi7 Judy Wilson, secretary-treasurer at the Union of BC Indian Chiefs and chief of the Skat'sin te Secwepemc-Neskonlith Indian Band, said in a written statement at the time.

When the complaint was first submitted in April 2022, RBC spokesperson Rafael Ruffolo told Glacier Media the bank "strongly disagrees with the allegations" and believes the complaint to be unfounded.

Ecojustice, which brought the complaint on behalf of the six individuals, is “in dialogue” with the bureau on the RBC case, according to Andrews.

“RBC is the chief climate villain. But this is really a much wider systemic problem within the Canadian financial system,” he said.

“We’re looking at ways the legal system could be changed within the Canadian regulatory system.”

Andrews said those changes should apply to financial regulations, as well as legislation targeting banking and insurance. But the Competition Act, currently under review by the Canadian government, offers a “golden opportunity” for reform, according to Andrews.

Canada’s Competition Bureau is set up to protect and promote competitive business practices across the country. In recent years, it has increasingly taken on cases related to ‘greenwashing’ — false or misleading environmental claims often advertised to make a company or product appear more sustainable than it really is.

In January 2022, a global report found 40 per cent of companies make misleading environmental claims; the bureau responded, warning Canadians to be on the lookout for the practice. 

“The Competition Bureau risks being inundated with these greenwashing claims,” said Andrews.

“There needs to be a stick for regulation. And so far, we’re seeing a government not willing to wield that stick.”