Evidence of meeting #114 for Environment and Sustainable Development in the 44th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bank.
A recording is available from Parliament.
Bloc
Monique Pauzé Bloc Repentigny, QC
Thank you, Mr. Chair.
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?
Group President and Chief Executive Officer, TD Bank Group
We've set out a climate action plan, as I mentioned in my opening remarks, and we also report on it on a regular basis. In fact, I refer you to the March 24 release of our sustainability suite of reports, which clearly outlines the methodology—
Bloc
Monique Pauzé Bloc Repentigny, QC
I apologize again for interrupting, but I only have two and a half minutes.
Have you considered exiting this sector, given that emissions are much higher than reported, yes or no?
I understand the answer is no, you're not thinking of getting out of the fossil fuel sector. Is that correct?
Group President and Chief Executive Officer, TD Bank Group
We are a great believer in an orderly transition, and we have to do both. We have to support the responsible oil and gas industry as we go through this orderly transition, and at the same time make sure we're providing the capital and the investment to move to a net-zero world.
We have solid reporting on this, and we give you the methodology that we use. That is available to you.
Bloc
Monique Pauzé Bloc Repentigny, QC
I'll ask Mr. McKay the same question quickly. I think I have 30 seconds left.
The figures given by Yale University and the Department of Environment and Climate Change are quite worrying.
There's a European fund that got out of this sector by selling assets worth a total of 10 billion euros. Are you considering exiting this sector? I understand it won't be tomorrow morning, but are you planning to do so at some point?
President and Chief Executive Officer, Royal Bank of Canada
I think it's important that we continue to work with our clients on a transition. We have 80% of our clients who have presented a transition plan to get to net zero. It's important that we do this in an orderly fashion, or we risk the entire journey. We have to protect jobs along the way. Therefore, it's about the transition: helping our clients make the transition, helping them reduce their emissions and working collaboratively with them.
NDP
Matthew Green NDP Hamilton Centre, ON
Mr. McKay, following up on that, your company released the client engagement approach on climate, and it stated that RBC “is prepared to make difficult business decisions and ultimately step away if a client, after repeated engagement, does not demonstrate sufficient planning for the energy transition.”
In your previous answer, you said that 80% of your oil and gas investments do. What have you done with the other 20%? Have you stopped providing financing to any oil and gas clients?
President and Chief Executive Officer, Royal Bank of Canada
We have definitely exited relationships around the world. It is, overall, part of our risk strategy.
As for your question on the 20%, we're actively working with them. We have set targets around moving that 80% number towards 100%. This is a 30-year journey, so we're on that way. We're working with clients—
NDP
Matthew Green NDP Hamilton Centre, ON
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?
President and Chief Executive Officer, Royal Bank of Canada
What is actually transpiring is that we're working with our clients to help them reduce their emissions. We're helping finance that transition. We're making unprecedented commitments to investing in Canadian renewable energy. We're making unprecedented commitments and executing on investing in equity and new solutions. We made an unprecedented first commitment to $500 billion in sustainable finance. We have already financed $400 billion. We are working with our clients to make this transition for everybody.
NDP
Matthew Green NDP Hamilton Centre, ON
Canadian banks, including the RBC, finance oil sands activities to the tune of $2 billion.
When you look at all the land acknowledgements that all of you have done here today.... First nations and Métis nations in northern Alberta and the Northwest Territories have been outspoken about the fact that the oil sands activities are poisoning their water and causing high cancer rates, and these nations aren't getting any of the benefits. Is it fair to these nations that are opposed to the expansion of the oil sands that you continually pump billions of dollars into this highly polluting sector?
President and Chief Executive Officer, Royal Bank of Canada
We are working with first nations across the country. Many first nations are equity participants in energy projects, including pipelines across Canada. It's a big part of reconciliation—
President and Chief Executive Officer, Royal Bank of Canada
—in our country to allow our first nations to participate. They're a big part of the solution in our energy transition, and they are participating.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Thank you, Mr. Chair.
Thank you to all the witnesses for being here today and for sharing your financial institutions' decarbonization and net-zero plans. I was wondering if each of the witnesses could share for the committee how much of their activities has been mandated by governments and how much of them has been voluntary at this point.
That's for anyone who wants to jump in.
Why don't we start with Mr. McKay?
President and Chief Executive Officer, Royal Bank of Canada
I think it's really important that we continue to work with all levels of government, not just federal but provincial and municipal, to come up with the solutions, ideas and policies that enable us to make this transition.
Conservative
Michael Kram Conservative Regina—Wascana, SK
At this point, though, the federal government hasn't imposed any of this. For all of the decarbonization net-zero plans that you shared in your opening statements, that has all been voluntary at this point. Is that correct?
Conservative
Michael Kram Conservative Regina—Wascana, SK
Okay. Very good.
How have the financial institutions paid for these voluntary activities to date? Has it all been through new service charges or through internal efficiencies? How have you come up with the money to do all these activities?
Why don't we start with Mr. McKay?
President and Chief Executive Officer, Royal Bank of Canada
These activities come from the resources of RBC. They come from the balance sheet of RBC. They come from the health and strength of RBC. When we can make a commitment of $500 billion, it comes from our balance sheet. When we make an unprecedented commitment of $15 billion on renewables, it comes from our balance sheet. When we make a commitment to the climate institute and to investing tens of millions of dollars in researching policy, researching ideas and helping Canadians understand how to take this journey smartly and inclusively, it comes from our resources.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Okay.
Mr. McKay, earlier you spoke in favour of a standard taxonomy. Could you elaborate for the committee on how that would work and who would pay for it?
