RBC to increase renewable energy lending to meet climate goals

TORONTO (Reuters) – Royal Bank of Canada plans to triple its renewable energy lending to C$15 billion ($11 billion) by 2030 as part of a push to achieve net-zero emissions in its lending practices by 2050, Canada’s largest bank said on Wednesday.

RBC is under attack by climate activists because it is one of the largest investors in fossil fuels.

“As we look to 2024, we are accelerating our strategy to finance the energy sources needed to build a net-zero economy, increasing our focus on developing low-carbon energy,” CEO Dave McKay said in the climate report.

The Toronto-based bank said it also plans to increase its low-carbon energy lending to C$35 billion and allocate C$1 billion by 2030 to funds and companies that help clients achieve climate goals.

RBC’s outstanding loans to the oil and gas sector stood at about C$5.58 billion at the end of January, down about 8% from a year earlier. A report by nonprofit InfluenceMap released Wednesday said Canada’s five largest banks increased their exposure to fossil fuel financing to 18.4% in 2022 from an average of 15.5% in 2020, for a total of C$275 billion.

By comparison, during the same period the average for leading US banks was 6.1% and for European banks 8.7%.

RBC announced the creation of a new decarbonization financing category that aims to accelerate the deployment of capital for emissions-reduction activities in high-emitting sectors.

Jennifer Livingstone, vice president of climate at RBC, said the bank’s measures will help clients reduce emissions and provide capital for innovative climate solutions.

RBC reported that its physical Scope 1 emissions intensity declined from its 2019 baseline due to actions to increase power generation lending to customers using renewable and other low-carbon energy sources.

The company said 79% of its energy clients had developed transformation plans and 48% had met the minimum criteria.

RBC noted that meeting the global goal, set out in the 2015 Paris Agreement on climate change, of limiting temperatures to 1.5 degrees Celsius above pre-industrial levels has been difficult. Only 2% of the oil and gas sector and 34% of the power generation sector are compliant with 1.5 degrees, it noted.

“RBC took a small step forward by committing to triple the funding of low-carbon energy by 2030. However, this falls far short of the target given the continued funding of dirty coal, oil and gas, which stood at $37 billion in 2023,” said Richard Brooks, director of climate finance at environmental group Stand.earth.

(1 dollar = 1.3524 Canadian dollars)

(Reporting by Nivedita Balu in Toronto; Editing by Richard Chang)