RBC (RY-T) is abandoning its commitment to facilitate $500 billion in sustainable finance by 2025 and its methodology for measuring progress toward the goal, according to its 2024 sustainability report.

The Toronto-headquartered bank attributed the decision to shifting industry practices for measuring and reporting on sustainable finance, and amendments to the Competition Act that requires a business's environmental claims be proven with an internationally recognized methodology.

“However, given the nascent nature of climate-related metrics, there are limited and evolving recognized methodologies for claims in these areas,” RBC said in the report. “As a result, this limits the information we can share on certain sustainability disclosures and the progress we are making.”

Data on its energy supply ratio and low-carbon energy lending were impacted. The progress toward the 2025 target is absent in the 2024 report; RBC said it had facilitated $393.9 billion in sustainable activities in its 2023 report.

RBC, one of Canada’s largest banks, had set out to support hundreds of billions in financing for activities that support clean energy, decarbonization and social activities such as affordable housing.

The sustainability report states RBC will support the transition to a net-zero economy, though the bank made headlines for leaving the Net-Zero Banking Alliance alongside many of its Canadian and U.S. peers after the inauguration of U.S. President Donald Trump.

RBC did not reply to a request from Sustainable Biz Canada for further comment by time of publication.

RBC blames Competition Act, changing industry standards 

RBC said upon review of its sustainable finance methodology, it decided it “may not have appropriately measured certain of our sustainable finance activities as presented on a cumulative basis.”

Potential changes to its approach to sustainable finance and RBC’s Sustainable Finance Framework are on the table, it said.

The anti-greenwashing amendments to the Competition Act have led to organizations such as the Pathways Alliance, a consortium of Canada's largest oil sands producers which working to mitigate the climate impact of the industry, removing mention of net-zero emissions. Similarly, RBC has scrubbed the website for its Sustainable Finance Framework.

An analysis of the act by lawyers Rujuta Patel and Andrew Pollock posted on Lexpert said the vague nature of the amendments and the possible risks and penalties from making environmental claims would lead to companies removing sustainability goals from their websites. 

It would particularly impact the oil and gas sector, Patel and Pollock wrote.

RBC's fossil fuel and clean energy funding

RBC is a large lender to fossil fuel companies, with a group of non-profits called Banking on Climate Chaos estimating it is one of the largest financiers globally and the largest contributor to date from Canada. Its data says RBC financed US$256.4 billion of fossil fuel projects from 2016 to 2023.

The bank states a goal to increase its lending to low-carbon energy, including renewables, to $35 billion by 2030; and to triple its lending to renewable energy across RBC Capital Markets and Commercial Banking to $15 billion by 2030. As of 2024, RBC had authorized $12.5 billion in lending to low-carbon entities, with approximately half in electricity control, transmission, distribution and storage. But RBC also said it is no longer able to disclose progress against these targets.

“We remain committed to sustainable finance and to reporting on our sustainable finance activities in a clear and transparent manner in compliance with applicable laws,” RBC said.

Richard Brooks, director of climate finance at Vancouver- and San Francisco-based non-profit Stand.earth, told Sustainable Biz Canada RBC’s move to abandon its sustainable finance goal is concerning because it is Canada’s biggest bank, one of the largest energy lenders in the world, and the first North American bank to retract its sustainable finance commitment.

He predicts other large Canadian and U.S. banks will begin to withdraw their sustainable finance targets now that the first move has been made.

"They've removed the target, they blamed the Competition Act, and unfortunately set a really dangerous precedent for the rest of the banking sector."