Support journalism that lights the way through the climate crisis

Goal: $100k
$19,202

Environmental advocacy groups and allied investors are pushing some of Canada’s largest banks toward better climate action using a series of shareholder resolutions.

The resolutions announced Wednesday will go to a vote next month during the banks’ annual general meetings. The proposals are separate from one another and are designed to pressure banks to stop investing in companies expanding fossil fuels or lean on them to reduce emissions in the companies they finance.

The RBC proposal, if passed, would require the bank to adopt a policy to phase out financing for new fossil fuel expansion. The Scotiabank resolution is asking the bank for a report detailing what it expects from the net-zero transition plans of its highly polluting clients. And the TD resolution, if passed, would force the bank to publicly disclose its own transition plan explaining how it will align its financing with its 2030 emission reduction goals.

Stand.earth, the Shareholder Association for Research and Education (SHARE) on behalf of the Trottier Foundation, and Investors for Paris Compliance alongside Vancity Investment Management announced the shareholder resolutions filed with RBC, Scotiabank and TD, respectively, on Wednesday.

RBC, TD and Scotiabank all told Canada’s National Observer they would respond to the shareholder proposals in documents called proxy circulars ahead of their annual meetings in April.

Each of those banks has promised to hit net zero by 2050, but nonetheless have continued pumping billions of dollars into fossil fuels — the primary driver of climate change.

“The first rule of holes is to stop digging,” Investors for Paris Compliance director of corporate engagement Matt Price told Canada’s National Observer. “Obviously, if you're expanding fossil fuels, you're not going to hit net zero.”

A recent study from Oxfam Quebec estimated TD, through its investments and lending, is responsible for 447 million tonnes of planet-warming greenhouse gas emissions, more than any other Canadian bank. Canada’s total emissions in 2021 were estimated at 691 million tonnes.

That means TD is facing a huge transition risk and has a long way to go to meet its net-zero promise, Price said, adding it’s unclear how the bank plans to actually reduce its emissions.

RBC, TD and Scotiabank have all promised to hit net zero by 2050 but nonetheless have continued pumping billions of dollars into fossil fuels — the primary driver of climate change. Will these shareholder resolutions force stronger climate action?

That’s why “we think it's an entirely reasonable resolution,” he said, because “it's basically saying, ‘Tell us more, give us more specifics, because right now it's too vague.’”

Price added that the shareholder resolution is an opportunity for other institutional investors, like pension funds or insurance companies who’ve also made net-zero commitments to use their influence on the banks to encourage better disclosure.

“Institutional investors themselves are the ones who are going to need this level of disclosure if they're going to meet their own targets,” he said. “So this (resolution) calls that question very directly … with your vote, are you going to uphold your own net-zero commitments?”

Meanwhile, Scotiabank, is the world’s ninth-highest lender to the fossil fuel industry, providing over $200 billion to fossil fuel companies since the Paris Agreement was signed, and is facing a shareholder resolution aimed at understanding how the bank works with its clients to reduce emissions. That resolution was filed by SHARE, which represents over $90 billion worth of assets controlled by its members, including foundations, universities, pension funds, Indigenous trusts, and others.

Climate change “is an existential risk to the global economy,” explained SHARE’s acting director of shareholder advocacy Jennifer Story. So a “savvy institutional investor is asking two questions.

“One is how do I manage to move towards a net-zero portfolio? Number two is how can I be a responsible actor with respect to an economy that I need to see remain stable and healthy in order to maximize my investments across the board?”

Story said investors in Scotiabank need to know how the bank is working with clients to curb emissions because one challenge in the financial world is aligning net-zero commitments with investments. For example, if a pension fund has made a net-zero promise and is invested in a bank, it needs to know how the bank is intending to hit net zero too.

“What we're stressing in the conversation with Scotia (is) it's time, across the board, to move from risk management to impact,” she said. “What exactly are you expecting from (clients), and over time, how does that materialize into increased expectations as we get closer to 2030 and 2050 and we have some hard targets we need to meet?”

RBC CEO David McKay is broadcast on a laptop screen as delegates, dignitaries and supporters of Wet'suwet'en Nation react while listening to the bank’s virtual annual general meeting in Toronto on Thursday, April 7, 2022. Photo by Christopher Katsarov/Canada’s National Observer

If passed, Stand.earth’s resolution filed with RBC would prevent it from financing fossil fuel expansion and comes as the bank grapples with other resolutions filed by New York City pension funds calling on the bank to set absolute emission reduction targets for 2030.

“Right now, people across Canada and North America are paying the costs of RBC’s misguided fossil fuel financing through devastating fires and floods,” said Stand.earth climate finance director Richard Brooks in a statement. “Science and justice make it clear: for any shot at curbing the worst of climate destruction, there can be no new fossil fuel projects.

“We are calling on all shareholders — from retail investors to big pension funds — to support this resolution, and direct RBC to align its financing with its rhetoric of honouring Indigenous sovereignty and acting on the climate crisis.”

Using shareholder resolutions as a tool to advance climate action and Indigenous rights is a tactic growing in popularity. On Wednesday, a coalition of 240 organizations across the United States and Canada launched a campaign targeting banks called “shareholder showdown.” That campaign involves shareholder resolutions filed by pension funds, asset managers, and environmental groups against Goldman Sachs, JP Morgan Chase, Morgan Stanley, Wells Fargo, Bank of America, Citigroup, and several others.

Keep reading