Royal Bank the No. 1 financier of fossil fuel development in the world, new report finds

A report from a coalition of environmental groups shows that Royal Bank of Canada was the biggest fossil fuel financier in the world last year after providing over $42 billion US in funding.

The annual Banking on Climate Chaos report shows the bank’s funding between 2016 and 2021 put it as the fifth-largest fossil fuel funder, but 2022 was the first year it provided the most money.

In 2021, RBC was the fifth-largest financier to fossil fuel projects in the world.

American bank JP Morgan was the largest financier to the industry in 2021 with just over $67 billion US, before being passed by RBC in 2022. JP Morgan financed the industry to the tune of $39.2 billion US last year. 

According to the data, Scotiabank ranked ninth globally last year with $29.5 billion US in funding and TD was just behind it at about $29 billion US, while Bank of Montreal ranked 15th and CIBC 16th at $19.3 billion US and $17.9 billion US respectively.

Collectively, the big five Canadian banks doled out almost $140 billion US to fossil fuel developments last year. 

At RBC’s annual shareholder meeting last week, chief executive Dave McKay emphasized the importance of energy security and an orderly transition away from fossil fuel funding as he defended the bank’s funding and climate record.

“We are actively working with government, our clients and many other stakeholders to achieve a net-zero economy,” McKay said. “Our bank believes the transformation to net zero must be orderly and inclusive to be successful, recognizing the significant changes that need to occur in our day-to-day lives and our economies, and in how we consume energy and resources.”

The bank did not immediately respond to a request for comment from CBC News for this story.

‘How is that money being spent?’

Environmental advocates have been pushing banks to phase out fossil fuel funding as a way to make it harder to build new oil and gas projects and to accelerate the transition to net-zero emissions.

Greenpeace Canada senior energy strategist Keith Stewart said in a statement that RBC becoming the world’s largest fossil fuel funder shows bankers can’t be trusted to do the right thing on climate change, so they need to be regulated to do so.

Warren Mabee, director of the Institute for Energy and Environmental Policy at Queen’s University in Kingston, Ont., says that it is not surprising to see Canadian banks being major financiers to fossil fuel companies since they are such a major part of Canada’s economy.

“They’re highly diversified, they have renewable energy holdings, they have carbon capture sequestration projects, they have energy efficiency projects,” he told CBC News in an interview.

He says financing the industry isn’t a problem per se. The question is: where is the money going within the industry?

“There are groups of Canadians … who believe that the only way to net zero is to cut those companies off — to kind of say, ‘No more money, we’re going to go in a completely different direction,'” Mabee said.

“What they should be asking is not so much how much money is the bank putting into these companies or into this sector, but how is that money being spent? Are we actually seeing decarbonization?”