:
Mr. Chair, the had committed to coming to see us by June 18, but we've learned that he won't be appearing on that date. As this is likely to be our last meeting, it will be impossible for him to testify. It is completely unacceptable that the minister refuses to appear before our committee and answer parliamentarians' questions.
We're seeing a lot of the minister in the House of Commons these days, which is great. We've even seen him answer the first questions during oral question period, which is fine. However, he also has a duty to answer questions from members of the Standing Committee on Environment and Sustainable Development, where we can get to the bottom of things, ask many more detailed questions and tackle many more themes. It's the minister's responsibility to be accountable.
[English]
It is totally unacceptable, Mr. Chair, that is not here and cannot answer questions for the parliamentarians in this committee. We have seen him many times in the House of Commons, which is great, by the way. He was the one who answered the leaders' questions in the first round. He was there. He's in the House. He's in the building, but he cannot attend the House of Commons committee. This is totally unacceptable and irresponsible, especially because he doesn't want to go into the deep questions we have when we are here, sitting in this room. We have had plenty of opportunities to talk to him. He has had plenty of opportunities to come here. He has decided not to answer questions from the parliamentarians in this committee.
This is shameful.
[Translation]
On the other hand, we have with us today the CEOs of five major Canadian banks.
First of all, thank you for being with us to participate in this important and interesting study for the committee and for the future of our economy, as we are in a period of transition to a greener economy.
I'd like to reassure Ms. Pauzé that the sound tests were carried out successfully.
Next, I'd like to invite witnesses participating by video conference to mute their microphones when they're not speaking to avoid ambient noise.
Each witness will have five minutes to deliver his or her message to us.
We'll start with Mr. Darryl White, who is the CEO of BMO Financial Group.
Chair and honourable members of the committee, my name is Darryl White. I am the chief executive officer of BMO Financial Group. I am pleased to join my competitors today to discuss the work of the financial sector relevant to this committee's study.
I'd like to begin by acknowledging the traditional lands of the indigenous people from which I am joining you today, and on which we have the privilege of doing business. We acknowledge that BMO's work spans many indigenous territories.
With that, I will continue my remarks.
[Translation]
BMO is a financial institution committed to facilitating Canada's growth while having a positive social impact. This role is reflected in our motto, “To boldly grow the good in business and life”. This purpose guides our strategy, fuels our ambitions and reinforces our commitment to progress towards a thriving economy, a sustainable future and an inclusive society.
While my remarks focus on BMO, it's important to note that the entire banking sector makes a considerable contribution to carbon neutrality. This includes working with international groups, such as the Net-Zero Banking Alliance, and with our domestic regulators, such as the Office of the Superintendent of Financial Institutions.
[English]
Within BMO, and relevant to today's discussion, we are leveraging our experts to support all of the communities we serve across Canada and their diverse economies.
Some specific examples of how we work collaboratively with clients, both within and outside the natural resources sector, include BMO's energy transition group, formed in 2021. Our team delivers innovative investment banking solutions for our clients as they look to decarbonize their businesses and pursue energy transition opportunities. This work is complemented by the BMO climate institute, which helps our clients bridge the complexities of climate science and policy with economics and business strategy. In 2022, BMO acquired Radicle Group, a sustainability advisory services firm with an established reputation as a leading developer of carbon offsets, helping organizations measure and reduce emissions. Regarding sustainable financing activities, we have mobilized $330 billion in capital for clients pursuing sustainable outcomes, surpassing our goal of $300 billion by 2025. These have been integrated across our businesses since 2019.
When it comes to managing our own value-chain emissions, BMO has been carbon-neutral in its operational emissions since 2010 and continues to aim for carbon neutrality and 100% renewable energy purchases. We're also setting net-zero-aligned operational emissions targets, including for commercial real estate. We've developed a robust sustainable procurement program to address our upstream value chain. In terms of downstream value-chain emissions, BMO has set targets for financed emissions for certain carbon-intensive aspects of our lending portfolio. In this work, BMO is focused on serving a constructive role to help our clients decarbonize and make real-world emissions reductions. We describe BMO's client ambition as being “our clients' lead partner in the transition to a net-zero world”.
This does not mean divesting from the energy sector. Instead, we are working with clients on the leading edge of new technologies and supporting the net-zero transition of traditional energy clients working hard to change their emissions profile. The transition to a net-zero world is not an either-or situation. It requires an “all of the above” response. Banks play a critical role in supporting the clients providing non-carbon energy sources, such as nuclear, hydro, wind, solar and others.
Over the past several years, we've transitioned the way we communicate about our policies, from making a collection of sector-specific statements to emphasizing what we've always done—conducting comprehensive, risk-based approaches to credit judgment and underscoring our commitment to sound and prudent business practices, while complying with the laws and regulations in the markets we serve.
The challenges to achieving a net-zero future are significant, and the investment needed will be substantial. Attracting the substantial capital needed for the net-zero transition requires strong public-private sector collaboration, as well as regulatory predictability. I hope the committee will consider these as it reflects on its recommendations.
Thank you for your attention, and I look forward to your questions.
Before I begin my remarks, I'd like to thank my counterpart for the land acknowledgement to begin the meeting today, which we also acknowledge.
Thank you and good afternoon to everyone.
Mr. Chair, our bank, CIBC, traces its roots back to 1867. Since Confederation, we've been an integral part of helping Canadians achieve their ambitions. In our early days, as the Canadian Bank of Commerce, we helped capital flow to Canadian business owners who had aspirations to build our nation. Over the years, we've played a key role in enabling growth and prosperity for families and businesses across our country.
Today we have more than 1,000 banking centres in Canada. Our team, over 48,000 strong, operates with a single purpose, which is to help make your ambitions a reality. That's true for our clients. It's also true for the millions of Canadians who hold an investment in our bank, either directly by holding shares or indirectly through mutual funds and pension plans.
In addition, we're making significant investments to support communities across our country. In 2022, we announced a goal to contribute $800 million over the next decade to community investment initiatives.
Over our long history, we have consistently addressed key issues facing our stakeholders and climate change is no exception. Climate change is a critical global issue of our time. It's one that requires significant coordinated effort to drive change and achieve a more sustainable future for all.
Our bank recognizes that we have a role to play in enabling solutions. We also recognize that natural resources, including oil and gas, play a critical role in Canada's economic foundation and that Canada has a key role to play as a responsible provider of energy to the world—today and through the transition to a lower-carbon future.
We work alongside our clients in these industries to help them achieve their sustainability goals. We provide capital and financial advice to help make innovative energy solutions possible, and we're a leading provider of financing for the renewable energy sector. Our commitment to a more sustainable future includes our stated ambition to achieve net-zero GHG emissions associated with our operational and financing activities by 2050. This ambition is integrated into our business activities.
We also actively engage with our stakeholders to understand their perspectives, just as we're doing today, and to ensure that we're listening, learning and taking into account a wide range of views. We disclose our progress publicly, as in our recent climate report.
We are making progress toward many of the goals we have put in place, including interim targets related to emissions intensity in specific carbon-intensive sectors and mobilizing sustainable finance towards our $300-billion goal by 2030 in support of environmental and social outcomes. This disclosure also enables productive dialogue with our stakeholders on climate-related issues.
We've built accountability into the process. Our ESG index, which includes climate-related goals, forms 10% of our business performance factor at our bank, which impacts compensation across our CIBC team.
It's important to acknowledge that indigenous communities are also central in resource development. The road to net zero involves indigenous lands. CIBC is dedicated to providing tailored and accessible financial services to first nations, Inuit and Métis clients in Canada. We take an active role in partnering with our indigenous clients at the national and local levels. We're proud that, just recently, we received the indigenous reconciliation award as part of the 2024 employment equity achievement awards organized by the Minister of Labour and Seniors.
Within our capital markets business, renewables and energy transition growth are one of our top strategic initiatives, and our team invests significant time and resources in helping companies in this space to grow and achieve scale.
Across our bank, we recognize that climate change is a defining issue of our time. As we've done at our bank since 1867, we're actively supporting the outcomes we all want for the future.
We have a clear ambition and comprehensive disclosures, and we are making progress in helping clients transition their businesses to a low-carbon future.
We acknowledge that there's more work to be done. I believe banks play a vital role as enablers in creating a more sustainable and inclusive future. We're committed to playing our part at CIBC.
Thank you.
Before I begin, I want to respectfully acknowledge and give thanks to the original peoples of the lands upon which all of us now live and work.
Thank you for the opportunity to speak about how RBC is helping to accelerate the transition to a greener economy. As this committee knows, we're in a decisive decade for Canada's economy and the collective work required by us all on the climate transition. The coming years must see banks, businesses and investors working alongside governments to drive a fundamental reimagining of nearly every sector of the global economy. This means a climate-smart, 21st-century approach to how we generate energy, grow food and construct buildings and infrastructure.
[Translation]
However, rising temperatures and the resulting storms and wildfires remind us how essential it is for countries, businesses and communities to share our strong sense of urgency and work together to make the carbon-neutral economy a reality.
At RBC, we are aware of the imperative of collective action in favour of the climate. We embrace our role as a bank that supports its customers and communities in their efforts to decarbonize. This is how we believe we can have the greatest impact.
Over the past few years, we've been laying the foundations to help our customers progress along the path to carbon neutrality. We have achieved this by working more actively than ever on ways in which we can help our customers in emission-intensive sectors of the economy who are keen to adopt measures to reduce the level of emissions associated with their activities.
[English]
I'm proud that we were the first major Canadian bank to disclose a formal approach for engaging with our Capital Markets clients in the energy sector, including a framework that will guide how we assess their transition plans. This will help us deepen the support and advice we bring to those who are producing the energy our world relies on while we continue to work on bringing more renewable sources of energy online. Importantly, this new client engagement framework will also inform the decisions we make to disengage from clients who don't have credible plans to reduce their emissions.
I'm pleased to share that almost 80% of RBC Capital Markets' lending exposure in the energy sector is to clients who have transition plans. While many of these plans are still in the early stages, we're encouraged by the progress we're seeing as clients move forward on this complex, multi-decade journey to net zero. As a recent RBC Climate Action Institute report projects, Canada needs about $60 billion of annual private and public investment to reach its net-zero goals by 2050. This is double what we currently spend. It means we all need to do more—all banks, every level of government, businesses both large and small, and all Canadians across the country.
To help play a role in generating and attracting more capital to finance the shift to a new economy, we're accelerating our strategy to finance the energy sources needed to build a net-zero economy. We're doing this by stepping up our focus on low-carbon energy development opportunities, including new goals to triple our renewables lending by 2030 across RBC capital markets and commercial banking, allocating $1 billion of RBC capital by 2030 to support the development and scaling of innovative climate solutions, and a new decarbonization finance category that will help us accelerate the deployment of capital to emissions reduction efforts in high-emitting, hard-to-abate sectors.
We're matching these actions with an even sharper focus on accountability and transparency, disclosing how we're tracking against our goals and more clearly and actively outlining the steps we are taking to support our clients. For example, we're now reporting our absolute financed emissions on an authorized basis for the oil and gas sector, and we will continue to do so every year to show our progress. We also plan to disclose a clean energy supply ratio in RBC's 2024 climate report.
Over the past year, I've spent a lot of time with our leaders and teams across the bank to find ways to better support our clients as they take action to reduce emissions. We also engaged with many external experts and organizations, including government and indigenous leaders, because getting to net zero will require unprecedented collaboration across all areas of the economy and all segments of society. While we know there's still much work to be done, RBC is up for the challenge and ready to continue helping our clients and communities build a greener economy.
:
Good afternoon, Mr. Chairman. I am pleased to have this opportunity to provide comments during today's meeting.
I am joining this meeting today from our Scotiabank office in Toronto, which is home to many first nation, Inuit and Métis communities. I acknowledge the treaty holders, the Mississaugas of the Credit First Nation, and recognize that Toronto is “one dish with one spoon” territory. What this acknowledgement means to me is that I'm grateful to the indigenous stewards of these lands, who have made it possible for me to participate in these important discussions today. It also serves as a reminder of my commitment to continue to remove barriers that have, in the past, made it difficult for indigenous peoples to access financial services and have meaningful careers in the financial industry. I make these commitments as an individual and as the president and CEO of Scotiabank.
I have the honour of leading this bank, which has an almost 200-year history supporting Canadians with their financial needs. Employing 40,000 people and serving more than 11 million clients from coast to coast to coast, we take our role as an important pillar of the Canadian economy seriously. We're also a leading bank across North America, including being a top-10 foreign bank in the United States and the fifth-largest bank in Mexico, with a market-leading presence in jurisdictions across the Caribbean and Latin America. In all the markets in which we operate, climate change represents both an economic and a business opportunity and a complex risk for our clients and to our economy and physical environment.
For Scotiabank's part, we're focused on working with our clients—including large corporate clients in high-emitting, hard-to-abate sectors, as well as smaller companies in the clean energy and technology sectors—to support them in the energy transition. Earlier this year we released a stand-alone climate report to provide information about the ways in which Scotiabank is addressing climate action.
Our climate goals are organized around three pillars in which we as a bank can make the most significant impact. First, we are financing climate solutions, with $350 billion in climate-related finance by 2030, and are supporting our clients through advisory services and products as they invest in less carbon-intensive business models, finance emission-reducing technologies and develop sustainable supply chains.
Second, we are advancing sectoral targets by enhancing our understanding of our clients' transition-planning activities, especially in industries where we have set 2030 interim targets, including oil and gas. We also enhanced our financed emissions reporting and support for innovative research aimed at moving the needle on climate change.
Finally, we are reducing our own emissions. In 2023 we committed to reduce the bank's own greenhouse gas emissions by 40% by 2030. This year we reached our goal to have 100% of our electricity come from emission-free sources in Canada.
At the end of this year we'll be publishing a more fulsome climate transition plan that will outline our strategy and implementation plans to embed climate into relevant discussions across the enterprise. However, even with these actions, no bank can deliver this transition on its own. The transition to a low-carbon economy is a complex process that will take time and will need to occur in an orderly and responsible way, with close partnership between the private sector, government and institutions, to tackle the multipronged challenge of decarbonization and energy security, access and affordability.
As I have this opportunity before you, as representatives from all our major political parties, my message is this: Canada is blessed with an abundance of natural resources, a highly educated population, strong governance and a reliable financial system, all of which are required to accelerate economic growth and overcome many environmental challenges before us. Our production and environmental standards are among the highest in the world, regulated by institutions that ensure that industry practices are monitored, measured, verified and authenticated. Our extensive geography and geology allow for a growing mix of energy products at a time when the need for new and sustainable infrastructure across the continent, especially electricity generation, is undeniable. By clearing the obstacles that inhibit investment in technology and infrastructure, we have an opportunity to link Canada's climate strategy with our industrial strategy to reduce emissions and become recognized as a low-carbon, high value-add and high-IP leader in global sustainable infrastructure.
I recognize that the path forward will not be easy, but Canada's potential to reduce emissions while having a thriving economy is there. Scotiabank is here to support those efforts.
Thank you very much for your time today.
:
Thank you, Mr. Chairman, and good afternoon.
Thank you for the opportunity to speak about the important study this committee is undertaking. Thank you to my colleagues for providing the land acknowledgement, which we as well acknowledge.
Today, we find ourselves in the midst of a global economic transition to net zero that is unfolding against a backdrop of socio-economic and geopolitical challenges. This transition requires focus, investment, innovation and new technologies in all sectors of the economy. Progress will take engagement and partnership between the private and public sectors, and all of this is happening as people and societies, including financial institutions, face increasing climate risk.
This afternoon, I'd like to make three key points related to this global context: the economic imperative, the critical importance of a balanced approach and the need for engagement among all stakeholders.
First is the economic imperative. We believe TD has an important role to play in supporting our clients in the transition to a low-carbon economy, and that focus on sustainability drives long-term value for our shareholders, the Canadian economy and the many communities we serve. For a sense of the type of economic opportunity before us, TD Economics' analysis shows that connecting new renewable power generation assets to the grid could require upwards of $25 billion to $50 billion in transmission investments alone by 2035 in the context of Canadian emissions reduction pathways.
TD has a long history of environmental engagement that we are building on. More than 30 years ago, we launched the TD Friends of the Environment Foundation, helping to support grassroots projects in communities across Canada. We have been focused on decarbonizing our own operations. We were the first major bank in Canada to set a 2050 net-zero goal, and in 2020 we launched our climate action plan.
TD has also announced financing targets. In 2017, we introduced an initial low-carbon economy target for lending, financing, asset management and internal corporate programs, and we met it ahead of schedule. We then set our $500-billion sustainable and decarbonization finance target in 2023 and, in the first year under the new target, delivered nearly $70 billion in business activities toward our goal. As we navigate this transition landscape, our focus is on resilience for the bank and our clients strategically, financially and operationally.
That brings me to my second point. We believe it is critically important to take a balanced approach through this transition to net zero. TD supports and engages with clients across all sectors as they meet the world's needs today while investing in opportunities to meet the demands of tomorrow, all within the larger context of meeting our long-term climate objectives. As part of our efforts to support our clients, we've released specific targets related to the energy, power generation, automotive and aviation sectors. Led by our TD Securities ESG solutions group, we focus on understanding our clients' decarbonization initiatives and future plans and support them through advisory and financing solutions.
That brings me to my third point: engagement with a range of stakeholders and partners. Our transition plan continues to evolve through work with clients and experts, engagement in industry forums and consideration of new guidance. We think engagement with a broad set of stakeholders is critically important for us, Canada and the world in enabling us to meet our collective objectives and obligations. On the role of policy-makers specifically, government policy shapes how our clients navigate the net-zero transition.
I look forward to our discussion today, because we are on this journey together. In the complex economic and geopolitical environment in which we find ourselves, we understand that TD has an important role to play and can make a positive contribution through our own efforts and by supporting engagement among stakeholders and partners.
Thank you.
:
Thank you very much, Mr. Chair.
It is with enormous pleasure that we welcome this very impressive group of quality people and decision‑makers in the Canadian financial and banking world.
Gentlemen, welcome to your House of Commons and to your Parliament.
We all know that we're facing climate change and that we need to act appropriately, effectively and practically if we're to succeed in reducing greenhouse gas emissions.
In the financial world, of course, you are at the heart of the decisions and at the heart of the opportunities. I'm talking about the opportunities to grow, but to grow by reducing pollution, and also the opportunities to reduce pollution through the approaches that every company can adopt.
My first question is for Mr. White.
Mr. White, let's take the case of an entrepreneur who knocks on your bank's door to borrow, say, $10 million to increase production. The company is doing well, but it doesn't necessarily have the best environmental record. Are you going to refuse a loan to this company that wants to expand? What will your response be to this entrepreneur?
My other question will go to Mr. McKay from the Royal Bank of Canada. There is an annual report each and every year about the banking system and investment in hydrocarbons.
[Translation]
This is the world's top oil and gas financing list, and I assume you can see where I'm going with this. The Royal Bank, your institution, is seventh in the world among those with the most investments in hydrocarbons.
For you, is this a source of pride or rather an embarrassment?
I want to welcome all of the witnesses.
[English]
I receive a lot of emails from my constituents, and many of them are angry. They're worried. They find it hard to reconcile your net-zero commitment with the constant increase in investments in the fossil fuel sector. The transition pathway initiative assessed that Canadian banks score very poorly for their transition to net zero compared to their peers.
Mr. Dodig, how are you measuring real progress for your organization that includes interim targets, not just the objective of 2050 but real progress in the interim?
:
Madame Chatel, thank you for your question and for your service to our country.
I recognize that many Canadians are anxious about what lies ahead in the transition. How will this all play out? How will it benefit the environment? How will it benefit their own economic security? I want to assure you that at CIBC, our team works with our clients to ensure that our path to net zero is aligned with their path to net zero.
We've signed on to the Net-Zero Banking Alliance, pledging to be net zero by 2050. For us to achieve that, we need to achieve that as a bank on our own, but we also need to achieve it with our clients, so we work with them, regardless of their size. We start with the oil and gas sector, the energy sector and the automotive sector, and we continue to move on to understand what their targets are to 2050. What are their interim targets? Are they highly aligned with our own? If they don't have a plan, we work with them to achieve that plan.
I'm very encouraged by the interim targets that we've achieved so far. There's more work to do. We've set those targets for 2030, and I would say that in most instances, we're ahead in plans with our clients. We remain committed to that 2050 net-zero goal.
:
Thank you for the question.
[English]
I think it's important to consider the role of the banks in the overall ecosystem. In my opening remarks, I talked about partnering with our clients to be their partner in the net-zero transition. That means that our clients drive the decisions that work for their businesses, and we work to structure financial solutions around them. That's relevant to the taxonomy, because having a common language, i.e., a taxonomy, is generally useful as we look to couple the work we do with our clients with sourcing international capital.
It's been referenced in this meeting how much capital is going to be needed for the transition itself, and attracting international capital is made easier with a common taxonomy. It's not to say that without it we don't invest in the transition. We are, as we've demonstrated in our comments today, but to me, the value of the taxonomy is in the common language that we would all have internationally.
For investors, we want to invest in a clean and net-zero portfolio. We want to have that. We want our pension to have that. We want to be helping the transition of Canada, but it's hard when you don't have disclosure of scopes 1, 2 and 3. Well, scope 1 is something, but scope 2 and 3 emissions....
Do you support the work of the government to provide a good system of taxonomy? As you said, it's a common language. We will have to speak the same language, not only in Canada but with our trading partners and other capital investors, and we need the disclosure, because we need to know that we are investing in net zero.
I would have preferred the witnesses to be with us in person rather than by video conference, but I thank them nonetheless for being here.
From the outset, I'd like to make it clear that your institutions are important and that, if you're at the head of these institutions, it's certainly because of your skills and talents. That said, we are at a crossroads. You have a moral and fiduciary responsibility to take concrete action. In your opening statements, you all said that we need to structure an economic future that values the path to carbon neutrality.
My question could be addressed to all the witnesses, but I choose to put it to Mr. Masrani.
In May 2024, Canada's National Observer published an investigation into the overlap between bank directors and directors of fossil fuel companies. For the Toronto-Dominion Bank alone, the three members involved hold shares with a total value of over $6 million in fossil fuel companies. For BMO, one board director alone owns more than $2.2 million worth of shares in Suncor.
How can you ensure that these members aren't exerting influence for personal gain, i.e., to line their own pockets as shareholders? I'm talking here about decisions that would show bias, choices of investment or lending policies, or the very development of climate policies.
:
I understand that you do try to base your decisions on science, relying on experts who are out there.
My third question is for Mr. Thomson from Scotiabank.
All the banks represented here are members of the Net‑Zero Banking Alliance, which includes over 140 financial institutions worldwide. Clearly, as part of this commitment, there must be an intention to have a science‑led internal policy to lead towards carbon neutrality.
However, you're also a member of the Canadian Bankers Association and the Canadian Chamber of Commerce, both of which have publicly opposed climate policies that affect the economy in Canada.
So, do you give your loyalty to the Net‑Zero Banking Alliance, or to the Canadian Bankers Association and the Canadian Chamber of Commerce? Your loyalty can't go in those two different directions.
:
Thank you very much, Mr. Chair. My questions, through you, sir, will be for the CEO of RBC, Mr. McKay.
Mr. McKay, I'm going to put a series of questions to you. It might feel like it's in a bit of a rapid-fire way. For example, if I interrupt you to reclaim my time, it's not personal. I just want to make sure that I have a chance to ask all of the questions.
Mr. McKay, as Canada's top fossil fuel bank, RBC disclosed a bombshell data point a few months ago, that RBC's emissions from financing oil and gas companies are equal to the emissions from all cars and light trucks in Canada every year. This is a shocking amount of pollution that a single company, RBC, finances and is responsible for every year.
Through you, Mr. Chair, to Mr. McKay, what are you doing to cut this in half over the next six years—as scientists say must happen to avoid more fires and floods?
:
Okay, Mr. McKay, I'm satisfied with your response.
In 2021, the Queen's University Finance Association hosted an event called “Road to CEO”, featuring you, sir.
At the start of the appearance, in relation to RBC's financing of fossil fuels, you said:
I have not had one prime minister, one cabinet member.... Not one single elected official has called me and said, “Dave, why are you doing this?” And you'd think if we were doing something wrong, if we were financing something that we shouldn't be, somebody in the Liberal government...would call and say, “Dave, why are you doing this?”
Then you said, “In fact, they call me and say, 'You have to finance the transition.'”
Who in the Liberal government has called you and asked you to finance the oil and gas sector?
:
Thank you, Mr. Chair, and thank you to our witnesses for joining us today.
My questions will be for the CEO and executive director of RBC, David McKay.
Mr. McKay, in your opening remarks today, you espoused your commitments to net zero and reducing emissions. You reiterated your recently published goal to triple renewable energy lending to $15 billion per year by 2030.
For reference, RBC currently finances fossil fuel industries in Canada with more than $30 billion per year.
If you achieve your objective without reducing funding for fossil fuels in the oil sands in Canada, RBC's clean-to-fossil-fuel financing ratio will be less than 1:1. That's in 2030. The International Energy Agency states that a 6:1 ratio of clean-to-fossil-fuel energy funding is necessary to achieve net zero, which, as I said, is your stated goal.
Is your goal that was published earlier this year—which is to, within six years, still fall within about 12 times short of what the International Energy Agency states is necessary—sufficiently ambitious?
RBC is the world's largest financier of the oil sands. RBC has provided about $13.4 billion in financing for the oil sands. The oil sands in Canada is the largest-emitting sector in the energy industry or at all, accounting for over 12% of our country's total emissions, more than the entire province and all the activities in British Columbia. It's also important to note that for a lot of the products that come from the oil sands, it would be a stretch to describe them as energy. Bitumen is often used as tar for shingles and roads. Calling it an energy product is perhaps a bit of a stretch.
Despite that, research recently revealed that emissions from the oil sands were possibly 6,300% even more polluting than they reported.
Last week we had the oil executives here, and I asked the CEO of Suncor about that. I asked him how it's possible, with all the funding that's coming from Canadian banks delivered to the oil sands sector, that the carbon required to produce a barrel of oil sands bitumen has actually increased over the last 20 years. You'd think all that investment could inspire a bit of innovation.
Do you feel like it's a good investment, regardless of whether they're profiting—we know that they continue to make record profits—if the carbon intensity of a barrel of oil is increasing? Is that a good outcome and a good use of $13.4 billion of Canadians' hard-earned and invested dollars?
I'd like to ask Mr. Masrani the question my colleague just asked.
At the end of 2023, Europe's largest pension fund sold oil, gas and coal assets worth around 10 billion euros. The fund's managers took this decision because they had determined that the risk was too high.
You already know that the administrator has a legal obligation to act impartially and in the best long-term interests of the bank.
I'll take my colleague's figures. Emissions from oil sands operations are said to be 1,900% to 6,000% higher than what companies claim. This is confirmed by a study produced by Yale University and the Department of Environment and Climate Change, the results of which were published in January. Our record was bad enough, but it turns out to be even worse than we thought. So you should reassess the risk upwards.
Have you considered exiting this sector, as the European pension fund has done?
:
We don't have 30 years, Mr. McKay.
I would state to you, sir, that yesterday, four seniors from Elders for Climate Sanity had their day in court, because back in April, four of them, including 98-year-old Gail Lorimer, were dragged out of a Hamilton-area RBC branch for stating the obvious: that RBC, as one of the number one contributors to oil and gas financing, is not only greenwashing their communications but actively investing in the ecological demise of our country.
I want to know. For 98-year-old Gail Lorimer, what message do you have for her in terms of the inherent contradictions between what you're saying here at committee and what you advertise to the public, versus what is actually transpiring with the hundreds of billions of dollars you invest in oil and gas?
:
Thank you, Chair, and thank you to the witnesses.
It's incredibly valuable for us to have the senior executives from our major banks at the table all at the same time. I don't remember that happening in a committee in the last eight and a half years, so thank you for taking the time to discuss this important issue.
Mr. McKay, I know you've had a lot of questions, but I want to drill down a little in terms of the sustainable financing, the sustainability-linked loans and bonds, the SLLs and SLBs, to the oil and gas companies that RBC is employing. How do those funds work, and how are you measuring success toward net zero using those funds?
That links to the disclosure, so that we could show the targets that they're working towards, that you're agreeing on through your financial instruments. I'm seeing a nodding head, so thank you for that.
I'm sorry to stay with you, but, because of some of the other questions, I'd like to clarify one or two things.
When we're looking at stability, we had the oil executives here last meeting or a few meetings ago, and they talked about the importance of stability in terms of the instruments that they're dealing with, either through the government or through financial institutes.
The Canadian banking industry is known for stability and regulations that are agreed on and publicly managed, I can also add, which is unusual for a banking industry in the world. When you look at the political pressures that we put on you of firing the Bank of Canada president, axing the tax or things that could have a real impact on Canadian businesses or businesses investing in Canada, how important is it for us to be as stable as you are?
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What a wonderful question.
Stability is the essence of investing—predictability. When you talk to the energy industry, when you talk to the manufacturing industry, when you talk to the EV battery industry, and when you talk to the banking industry, we're making long-term commitments. These aren't one-year commitments or two-year commitments. We make four-, five-, 10- and 20-year commitments; therefore, the predictability of the world we operate in is very, very important. The tax predictability, the operating, the rules, how stable are they? The government in Canada should take pride in its banking industry. We have the top banking industry in the world, and we have to protect that. It's so important to the prosperity of our economy.
I'm going to pick on somebody different, because Mr. McKay has taken a lot. Maybe I'll look to BMO.
To make this simple for any Canadians watching, when a bank lends money to a project, to a company, they are, of course, considering risks, but they basically want to make sure they're going to get the loan repaid. Is that a simple way of saying how this money flows?
I'd like to thank all of the witnesses for taking the time out to be here today.
I'd like to comment on Mr. McKay's.... When he was speaking, he said that “Canada should take pride”. I agree with that. Certainly, we should take pride in our banking system. Because of the strong banking system in Canada, we survived in 2007; we avoided that meltdown. Even in this difficult time of COVID, we have gone through that because banks have played a key role in it.
I agree with him that when we are transitioning from one side to another, we need to have long-term investments, and we also have to make tough decisions. I just wanted to comment on that.
Thank you for your role in our economy and keeping Canada's banking system strong.
Mr. Masrani, in 2021, TD Bank committed to the Net-Zero Banking Alliance and acknowledged the material financial risk that the climate transition presented to its shareholders. Since 2021, TD has had the dubious distinction of having the largest increase of investments in companies that are not aligned with net zero.
I would refer to a recent report that found that TD's ratio of financing for clean energy versus financing for companies not aligned with net zero is the lowest among Canada's largest banks.
In response to your investors resolution calling for increased transparency, you have claimed that TD is largely meeting transparency requirements, but this statement ignores the more substantive transition plans developed by its Canadian and international peers.
I just want to ask you this: Would you commit to developing more substantive transparency requirements, or is it necessary for regulators to step in to ensure that this is happening?
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We've been one of the leaders in announcing a climate action plan as to our path to net zero, but I've also been very vocal and a big proponent of an orderly transition. We've been very transparent as to how we get there, the commitments we've made, and what kinds of interim targets we plan to meet as well.
We've been reporting on this, the methodologies we use and the criteria we use, on an annual basis. In fact, our last report was issued in March of this year, and it clearly lays out how we plan to meet our commitments and what stage we are at in that journey.
We are meeting all of the disclosure requirements that various entities impose on us, and we plan to continue to engage with various standard-setters to ensure consistency and measurable criteria for disclosure. We intend to follow those.
I'm going to approach this from somewhat the same angle as Mr. van Koeverden.
Almost $7,000 billion U.S. from 60 banks has been used to finance hydrocarbon-related projects since 2016, i.e., since the Paris Agreement. The five institutions you represent here alone have extended more than $900 billion U.S. over the same period. In other words, 13% of the world's bank financing comes from financial institutions based in a country that accounts for 0.5% of the world's population. Indeed, the five Canadian banks are all ranked in the top third of the global list of oil and gas financing institutions.
My question is for Mr. Thomson of Scotiabank, which is ranked 11th on this list.
What do you want to say to the thousands of Canadians who consider that your actions and positions serve to finance climate chaos, population displacement, deforestation, contaminated water, toxic residues, cancer and the destruction of ecosystems?
My questions will be directed to Mr. Thomson and will focus on First Nations.
We all recognize that we need the support and assistance of First Nations more than ever to develop our economic future, as well as our energy future and our environmental future, in particular. First Nations are part of the solution.
That's why our party has made very firm commitments to make First Nations partners in every project for the future that touches one of their ancestral lands. We want First Nations to be partners in these projects, whether they involve natural resources or energy, and to benefit from the prosperity of these projects. For centuries, they've been given a cheque to get out of the way. Now, we want to create paycheques together with First Nations.
Mr. Thomson, in your opening address, you talked a lot about First Nations, in fact.
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The point is that first nations don't own the land like that. They have to go through the government.
How do you deal with a first nations community that would like to do a big project, but you have to address it as if they don't own the land as it is?
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Mr. Thomson, in your opening address, you rightly praised Canada's potential. We have everything we need to succeed in the energy transition, to make it a reality and secure our future in terms of energy and natural resources.
I remind you that oil consumption in Quebec has increased by 7%. If the business model imposes rules that are too strict, companies won't invest in Canada and projects will be developed elsewhere. If we turn off the Canadian tap, it's not the planet that will come out a winner, but Qatar and Saudi Arabia.
How is it winning to have overly strict measures, which put the brakes on Canadian momentum, when the planet needs Canada more than ever?
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Thank you very much, Mr. Thomson.
I would also like to thank all the other witnesses for their contributions.
Mr. Chair, I'd like to use the little speaking time I have left to share a final thought with you.
I'll confess my conflict of interest right away: I'm one of the 7.7 million members of the Desjardins Group. I must say that I was very disappointed to learn that no Desjardins representative was able to appear before our committee today. Desjardins Group has 56,000 employees. I'm sure Ms. Pauzé agrees with me that Desjardins Group represents the economic strength of Quebec. As I was saying, I was surprised to learn that Desjardins was unable to send a representative to testify before the committee. I think that's unfortunate.
It has to be said that Desjardins is a major player when it comes to finances in Quebec. When I attend community events in my riding on weekends, I always say it's suspicious when Desjardins isn't there. That's how present Desjardins Group is in the community. It's also everywhere in Quebec's financial world. I believe that Desjardins Group should have appointed a representative to come and testify. I can't believe they couldn't find someone, among the 56,000 Desjardins employees, to come and testify here...
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Thank you very much, Mr. Chair.
I'd like to start by thanking all of the witnesses here today.
Today, we have the CEOs of the major banks. Last week we had the CEOs of the major oil and gas companies. While it's a great pleasure to have you here to testify, I do hope that one day we will see a woman among the ranks of the CEOs.
I would like to start by saying that Canadians have always been able to trust our banks to protect our deposits and the financial stability of our country. However, today many Canadians do not trust our banks to protect the future of our planet. This is very troubling. There are many reasons this is the case. With my questioning, I'd like to address this.
There have been comments regarding how you're working with all clients on sustainability and meeting goals, but we know that the oil and gas sector, although it represents less than 5% of our GDP, is responsible for more than 31% of our emissions. We also know that the five major Canadian banks have been increasing their investments in fossil fuel companies. This seems very inconsistent with meeting the net-zero goals that we have set.
I'm wondering if each of you would be willing to commit to only financing fossil fuel companies if the projects are verified to have an impact that will reduce the greenhouse gas emissions significantly.
Mr. Dodig, I'll start with you.
I think part of the problem is that the commitments are vague. We're talking about sustainable investments. There's no real definition around it. There's not a lot of transparency around it.
I want to switch my question to something else. I referenced the fact that we had the CEOs of the oil and gas companies here last week. They all said that the price on pollution program was very important in terms of their making decisions on long-term investments to reduce emissions. Today you've talked about the need for certainty and stability.
Would you agree that a Leader of the Opposition saying that he's going to get rid of that program at this point is somehow introducing uncertainty and instability into some of the investments that are being made?
We can start with Mr. Masrani.