Canada’s largest bank has reversed course on a policy to disclose how much it invests in green energy versus fossil fuel energy following demands from New York City’s large public pension funds, with environmental groups welcoming the move but pointing out it doesn’t actually reduce carbon emissions yet.
The Royal Bank of Canada (RBC) is one of three financial giants in North America that will start to disclose the ratio of how much money they put into clean energy projects compared to how much they invest in fossil fuel extraction. JPMorgan Chase and Citi also made similar agreements.
“Up until now, RBC had resisted calls to disclose that ratio clearly across all their lending and investments every year,” explained New York City Comptroller Brad Lander in an interview with CBC News.
Multiple pension funds overseen by Lander had put forward shareholder motions to compel the financial institutions to take these steps. Prior to RBC’s annual general meeting, set for April 11, the bank’s board of directors had recommended shareholders vote against doing this.
NYC Comptroller Brad Lander said making sure RBC is actually living up to its stated goal of going ‘net-zero’ by 2050 is the fiduciary duty of shareholders, such as the pension funds he represents. (Anis Heydari/CBC)
Essentially, up until April 4, when a press release was issued, RBC’s public position was that it would not disclose green energy to fossil fuel investment ratios. Now that it has voluntarily agreed to do, RBC will not face a public vote of shareholders that could have forced the issue.
Agreement does not reduce emissions
“All they’re doing with this agreement is agreeing to show their work,” said Lander, pointing out that the agreement does not require RBC to reduce investing in projects that generate or increase carbon emissions, though the company has said previously that its lending practices will be “net-zero” by 2050.
“We think that’s financially prudent and critical [going net-zero]. Making sure they actually are doing it is a responsibility of shareholders and entirely consistent with our fiduciary duty,” said Lander, whose pension funds held $28.22 million US in RBC stock as of November 2022.
WATCH | Candians calling out pension funds for continuing to invest in fossil fuel sector:
Call for pension funds to stop investing in fossil fuels
1 year ago
Duration 2:16
Climate change concerns are important to many Candians but some are calling out pension funds for continuing to invest in the fossil fuels sector.
It’s not unusual for large, institutional investors such as pension funds to take a more influential role in corporate environmental policies, according to Sebastian Betermier, an associate professor of finance at McGill University in Montreal and executive director of the International Centre for Pension Management.
“What we’re looking at here is not a one off,” said Betermier, who added that this type of investor activism is happening around the world — and often in ways that are not as public as the NYC funds influencing Canada’s largest bank.
JPMorganChase, along with Citi, are two American banks also making the move to report investment ratios. (Stan Honda/AFP/Getty Images)
“Over the past several years, many of the pension funds have committed to go net-zero by 2050 … engagement with firms is one of the ways that you can de-carbonize your portfolio,” he said.
RBC says it plans to disclose ratio next year
In a statement sent to CBC News, RBC’s vice-president of climate Jennifer Livingstone said that the company will provide a “clean energy supply financing ratio” in their 2024 climate report. As the company’s 2023 report was released in March of this year, that report would be expected next year.
“We appreciate the constructive dialogue that we have had with the [New York City comptroller] and plan to engage with them and industry partners in developing the ratio,” wrote Livingstone.
The bank declined an interview request from CBC News, but indicated in its statement that its plan is to “increase lending of low-carbon energy and the growth relative to fossil fuels over time.”
RBC avoids ‘highly embarrassing’ situation: environmental group
Climate finance director Richard Brooks with environmental group Stand.earth said he was surprised to see RBC change its mind on disclosing energy investment ratios.
“Institutional shareholders were voting on the shareholder resolution, and then management pulled back and basically capitulated to New York City and gave in,” said Brooks, who is based in Toronto.
Stand.earth climate finance director Richard Brooks said he’s surprised — but happy — to see RBC reverse course on reporting how much it invests in fossil fuels versus green energy. (Anis Heydari/CBC)
Brooks speculated that RBC may have been concerned it would lose the shareholder vote, and would be forced to disclose this information. Brooks’s opinion is that other institutional shareholders of the bank were “really keen to have this data” and so the RBC board’s directive to vote against the request may have been ignored.
“When a bank has an annual shareholder meeting and a vote goes against them, that’s highly embarrassing for management. So I think they did the calculus and determined that issuing this type of data would be better than having a failed vote at their annual shareholder meeting,” said Brooks.
But advocacy group Environmental Defence points out that these steps may not make enough of a difference for those concerned about climate change.
“They need to cut emissions, not count them,” said Julia Segal, senior manager for climate finance with Environmental Defence Canada, who pointed out that RBC has major investments in fossil fuel industries.
“They need to be reducing their investments in polluting industries,” said Segal.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
