5 of Canada’s Big Six banks quit global climate alliance #CanadaFinance

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Five of Canada’s biggest banks have quit a global climate alliance that aims to support the energy transition away from fossil fuels, just days before Donald Trump officially becomes the next president of the United States.

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On Friday, the Bank of Montreal, Toronto-Dominion Bank, National Bank of Canada and Canadian Imperial Bank of Commerce said they have withdrawn from the Net-Zero Banking Alliance, which aims to align lending, investment and capital markets activity with net-zero greenhouse gas emissions by 2050.

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The lenders join several big banks in the United States, such as JPMorgan Chase & Co., Morgan Stanley, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc., that have withdrawn in recent weeks from the group convened by the United Nations. Bank of Nova Scotia on Monday withdrew as well.

“BMO is no longer a member of the Net-Zero Banking Alliance (NZBA),” the bank said. “We are fully committed to our climate strategy and supporting our clients as their lead partner in the transition to a net-zero world. We have robust internal capabilities to implement relevant international standards, supporting our climate strategy and meeting our regulatory requirements.”

National Bank senior vice-president Debby Cordeiro in a statement said the bank will continue “to have a pragmatic approach and work with companies across all sectors, including large emitters and renewable energy providers, to promote impactful decarbonization strategies.”

TD said it notified the NZBA regarding its decision to exit the group.

“We have the resources, relationships and capabilities to continue to advance our strategy, deliver for our shareholders and advise our clients as they adapt their businesses and seize new opportunities,” a TD spokesperson said in a statement.

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Scotiabank said it remains committed to delivering its climate transition plan, “and will continue to finance the transition and support our clients in implementing their sustainability strategies — this is the most important role that we can play.”

BMO’s announcement came a couple of weeks after chief executive Darryl White said the bank would stick to its climate goals regardless of the pathway or mechanism it chooses.

“We absolutely have a commitment to climate transition,” he said at a conference. “We also have a commitment, particularly here in Canada, to our legacy energy customers completely, and we will not abandon that. What mechanism you choose to join or bodies that you choose to align with to enforce that, that’s just a pathway. The ultimate goal is unchanged.”

At the same conference, Dave McKay, Royal Bank of Canada’s chief executive, said that pulling out of the alliance “hypothetically, doesn’t lead to non-commitment” to net-zero goals.

“It just means that mechanism, that organization that fostered oversight and policies and rules around what you can and can’t do and how you report, maybe is not the right mechanism to do it,” he said.

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As of Jan. 17, RBC is still shown as a member of the alliance on the NZBA website.

Members of the alliance are required to transition their lending and investment portfolios to align with the pathways to net zero by 2050 or sooner and also set a 2030 target.

“Banks’ first 2030 targets will focus on priority sectors where the bank can have the most significant impact, i.e., the most GHG-intensive sectors within their portfolios,” the NZBA website said.

The NZBA alliance is a subgroup of the Glasgow Financial Alliance for Net Zero (GFANZ), which was formed in 2021 to support the transition towards a net-zero economy by moving away from fossil fuels and relying more on sustainable energy.

Mark Carney, who announced on Thursday his bid to become the leader of the Liberal Party, was the co-chair of GFANZ. He resigned from the position before his announcement.

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