Royal Bank of Canada (RBC) and Bank of Nova Scotia (Scotiabank) have announced abandoning key interim targets to reduce the carbon footprint associated with their lending to heavy emitters, including oil and gas producers. The decisions, shared in separate statements on Thursday, mark a significant retreat from the climate commitments that defined the North American banking sector just five years ago.
Both institutions cited the shifting geopolitical landscape and energy-security concerns as primary drivers for the reversals. While RBC stated it will retain its overarching 2050 ambition to achieve net-zero emissions through its loan book, Scotiabank confirmed it has retired that long-term goal entirely.
RBC, which had been reviewing its 2022 goals for reducing emissions intensity in the automotive, power, and oil sectors, admitted that the current “changing and uncertain operating environment” has rendered several interim targets unachievable.
Scotiabank’s leadership pointed to broader policy shifts and economic headwinds as the reason for their re-evaluation. The bank specifically highlighted the curbing of major sections of the U.S. Inflation Reduction Act and Canada’s failure to implement an emissions cap for the oil and gas sector. According to the bank, these factors are “likely to decelerate the uptake of decarbonisation activities in the North American economy.”
The rise of artificial intelligence has also played a role in the shift. Scotiabank noted that the surge in energy demand required for AI data centres, combined with the slow adoption of carbon capture technology, has weakened the outlook for rapid decarbonisation.
The retreat follows a trend set by Wells Fargo & Co. last year, which became the first major lender to abandon its net-zero goals. Currently, no major North American banks remain signatories to the net-zero alliances established half a decade ago, as the industry recalibrates in the face of war, high interest rates, and political opposition.
