TLDR:

An advocacy organization called Investors for Paris Compliance has called on the Ontario Securities Commission and Autorité des marchés financiers to investigate whether Canada’s “Big Five” banks – RBC, TD, CIBC, Scotiabank, and BMO – have misled investors about their response to climate risk. The organization submitted a complaint alleging that the banks’ sustainable finance disclosures were inadequate and inaccurate. They also called for the banks to disclose the emissions impact of their sustainable finance departments. The complaint argues that sustainable finance is being used as a “placebo” rather than a solution to reduce emissions. The Canadian Bankers Association, which represents the five banks, stated that Canadian banks follow prevailing North American market standards for disclosure and are working to advance sustainability reporting and disclosure practices. The complaint calls for regulators to establish clearer standards for sustainable finance.

Key Points:

• An advocacy organization has called on regulators to investigate the sustainable finance disclosures of Canada’s Big Five banks.
• The organization alleges that the banks have misled investors about their response to climate risk.
• They also argue that sustainable finance is not effectively reducing emissions.
• The complaint calls for clearer standards for sustainable finance.

An advocacy organization called Investors for Paris Compliance (I4PC) has submitted a complaint to the Ontario Securities Commission and Autorité des marchés financiers, urging them to investigate whether Canada’s major banks – RBC, TD, CIBC, Scotiabank, and BMO – have misrepresented their response to climate risk. The organization claims that the banks’ sustainable finance disclosures are inadequate and inaccurate. They also criticized the banks for failing to disclose the emissions impact of their sustainable finance departments.

According to I4PC, sustainable finance as practiced by Canada’s big banks is either a placebo or a form of greenwashing that misleads investors and the public about the seriousness of the banks’ response to climate risk. The organization argues that the banks need to provide evidence that sustainable finance is effective in reducing emissions.

The complaint cites specific deals within the banks’ sustainable finance divisions as evidence of their failure to address climate risk. For example, Scotiabank acted as a joint bookrunner for a utility company that sought to expand its use of fossil fuels. RBC and National Bank were also involved in a deal that involved purchasing an oil and gas company.

In response to the complaint, the Canadian Bankers Association stated that Canadian banks follow prevailing North American market standards on environmental, social, and governance disclosure. The association also noted that it continues to work with industry forums and relevant governing bodies to improve sustainability reporting and disclosure practices.

The complaint calls on regulators to establish clearer standards for sustainable finance. It argues that existing standards, which allow emissions-increasing deals to comply, are too vague. There is hope that regulators will take action, as they have recently identified greenwashing as a securities problem and issued reminders that the disclosure of ESG issues is subject to the same rules as all disclosure.

Currently, the Ontario Securities Commission and Autorité des marchés financiers have not confirmed whether they will investigate the complaint or not.