Environment Committee on June 13th, 2024

[Darryl White]

I should point out that the role of the banks in the ecosystem, whether it's in the transition or any other sector, is to decide whether or not we're going to finance a project or finance a company, and we assess each of them on its own merits. Rather than follow a prescription that's been given to us, we have to, at the same time, of course, stay within all the guidelines of our regulatory and legal requirements. However, in the end, if I use the transition as an example, we look to serve our clients on their decarbonization journey. We don't dictate their business practices, and we make decisions as we go through with each of them in terms of the projects that we choose to finance and those that we might not.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Thank you.

I'm going to switch over to Scotia, because I think they've been left out too. There was discussion regarding reconciliation, which is obviously important to everyone around this table, and I appreciate your land acknowledgements. Fort McKay First Nation and Suncor have recently signed an MOU. There have been claims made that first nations seem to not support energy projects. In your view—and I'll happily listen to others on this—is economic reconciliation an important piece of the broader reconciliation conversation? Do you as capital lenders have a role to play to ensure that happens?

[Scott Thomson]

I won't speak to the Suncor MOU that you referenced, but I think indigenous reconciliation and economic reconciliation are connected. I think that's important to consider. I also recognize that we've made progress in that regard, with some of these equity ownerships from indigenous communities into pipelines, for example. We as an institution have made great progress with the announcement of launching Cedar Leaf Capital, which will actually bring more capital into the system from indigenous-owned, indigenous-operated financial institutions.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Multiple pension plans hold investments in all of your banks, as well as in Canadian oil and gas companies and other natural resource companies. Obviously, I think we would all agree that we need our pension plans not only to be solvent, but to be maximizing the rates of return. Broadly speaking, do you have concerns when government is imposing policies on those pension funds and on our banking institutions that ultimately may reduce the return, and thus far have a track record of doing so, and take away from the legal fiduciary duty of the institution, of the businesses, to get a return on investment?

[Scott Thomson]

Mr. Chair, the energy transition is a business opportunity as well as the right thing to do. If we as institutions, pension funds, government and banks can make it attractive both from a scale perspective and a returns perspective for capital to flow into the energy transition, maybe it will be effective for the pension funds. It will be attractive for other stakeholders to participate in.

[Branden Leslie, Conservative, Portage—Lisgar, MB]

Maybe I'll switch to TD. We talked about emissions-free energy, which is important. I'm a big believer in nuclear and really see a lot of potential in small nuclear modular reactors. How does nuclear fit into your capital investments lending in terms of our future transition?

[The Chair, Liberal, Francis Scarpaleggia]

Please be very quick, Mr. Masrani.

[Bharat Masrani]

For the orderly transition we are talking about, we need to keep an open mind as to what makes sense to be included in that. Nuclear can play an important role, and I think you rightly point out that it's something we should be seriously considering.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Mr. Ali.

[Shafqat Ali, Liberal, Brampton Centre, ON]

Thank you, Mr. Chair.

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?

[Bharat Masrani]

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.

[Shafqat Ali, Liberal, Brampton Centre, ON]

Mr. Chair, I'll share the rest of my time with Mr. Adam, please.

[The Chair, Liberal, Francis Scarpaleggia]

Mr. van Koeverden. Okay.

Go ahead, Mr. van Koeverden.

[Adam van Koeverden, Liberal, Milton, ON]

Thank you, Mr. Ali.

I'm not sure if this is something we're able to do, but I'd like unanimous consent from the committee to table a report from the Financial Post, indicating that all five Canadian banks were in the top 20 for fossil fuel funding in 2022 and that RBC topped the list in 2022 and 2023. Would that be possible?

[The Chair, Liberal, Francis Scarpaleggia]

Well, I'll ask. Do we have unanimous consent to table a document?

It would seem so.

[Adam van Koeverden, Liberal, Milton, ON]

Thank you, Mr. Chair.

[The Chair, Liberal, Francis Scarpaleggia]

Wait a minute. Is it bilingual?

[Adam van Koeverden, Liberal, Milton, ON]

I'll have it translated, yes.

[The Chair, Liberal, Francis Scarpaleggia]

Great, and then you can send it to the committee for distribution.

[Adam van Koeverden, Liberal, Milton, ON]

Okay. Thank you very much.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you. I appreciate that.

The time's up on this. It was Mr. Ali's time.

Ms. Pauzé, you have the floor for two and a half minutes.

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you, Mr. Chair.

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?

[Scott Thomson]

Thank you.

Mr. Chair, my message to Canadians was that we can be a leader in the energy transition. We have a stable economy, innovative companies and strong talent. We should move away from emissions reductions at all costs to a comprehensive strategy that encompasses all sources of energy. We should aggressively decarbonize fossil fuel production through innovative technologies like carbon capture. We should embrace nuclear. We should provide more incentives to accelerate renewables. We should support our hydro companies to build necessary—

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you, I'll stop you there—

[The Chair, Liberal, Francis Scarpaleggia]

I'm sorry. There's a point of order.

Go ahead, Mr. van Koeverden.