NGO Investors for Paris Compliance recently filed a complaint with the Ontario Securities Commission and the Autorité des marchés financiers of Québec asking the Canadian government agencies to investigate climate pledges made by five major banks. The Compliant alleges that Royal Bank of Canada, Bank of Montreal, Canadian Imperial Bank of Commerce, Bank of Nova Scotia, and Toronto-Dominion Bank claim that they are net zero aligned through the use of “sustainable finance,” but there is little to no transparency on the Banks’ actions. According to Paris Compliance’s press release, the Complaint’s core allegations are:
- “Canada’s securities regulators, via the Canadian Securities Administrators, have clarified that ESG disclosure is subject to the same rules of accuracy and completeness as financial disclosure, and have flagged concerns regarding greenwashing.
- Each of the banks has acknowledged climate change poses significant risk to their business, and therefore to their securities holders.
- Each of the banks has made a net zero commitment and lists sustainable finance – or something similarly worded – as a central way they will meet its commitment.
- Yet, there is no disclosure of the emissions impact of deals in this business segment, meaning there is no practical distinction with the banks ‘regular’ financing.
- Worse, there are several examples of deals done under this label increasing rather than decreasing emissions – this is greenwashing and exposes the absence of rules governing the segment.
- Bank securities holders are therefore being misled as to the nature of the banks’ response to the business risk that climate change represents.”
The Complaint requests that the Canadian authorities investigate these allegations and bring appropriate remedial actions if necessary.
This is a reminder of the difficulties facing sustainable finance and decarbonization generally. In the years following the 2015 Paris Climate Agreement, many companies made net-zero commitments without clear plans of how to fulfill them. Now that intermediate target dates are on the horizon, investors and the public demanding progress, turning those initial promises into manifesting liabilities. Companies without clear concrete paths to net zero would be wise to develop those now.
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