RBC executive says fossil fuels sector needs investment to reduce emissions
A 2021 report from Rainforest Action Network showed RBC invested $201 billion between 2016 and 2021 in lending to and underwriting fossil fuel companies.
September 21, 2022 By The Canadian Press
Even as a growing number of activists urge financial institutions to take action against climate change by reducing funding to the fossil fuel sector, executives with Canada’s largest bank say this country won’t reach its net-zero goals without the oil and gas sector.
While increasingly, global financial institutions have been supporting the scaling up of green technology projects using innovative new methods of financing, such as green bonds, Lindsay Patrick — head of ESG and strategic initiatives for RBC Capital Markets — said on Sep. 20 that there’s growing recognition within the financial sector that some of these innovative tools may need to be used to support more conventional industries as well.
“There’s a very strong view that those green investments themselves aren’t going to be enough to get us to the full transition we need to achieve by 2050, and they don’t support the decarbonization of many heavy industry sectors that have an important role to play,” said Patrick, who was in Calgary for the Energy Disruptors Summit, a three-day conference that aims to tackle issues related to the global energy transition, in an interview.
Eighty per cent of the world’s energy supply still comes from traditional fossil fuels, so Patrick said all sectors have to be involved in the solution if countries aim to meet their Paris Climate Agreement pledges and keep global temperature increases below a dangerous 1.5 degree Celsius tipping point.
“The new idea is to support companies that aren’t 100 per cent green, but that have specific projects that are aligned with a 1.5 degree scenario,” she said, adding there may be opportunities for banks to invest in emission reduction projects in the oil and gas, industrial manufacturing, metals and mining, transportation, and other heavy emitting industries.
RBC, Canada’s largest bank by market capitalization, has been singled out in the past by environmental groups for its financing of the fossil fuel sector. A 2021 report from Rainforest Action Network showed RBC invested $201 billion between 2016 and 2021 in lending to and underwriting fossil fuel companies, making the Canadian bank the fifth highest on Rainforest’s ranking of 60 global financial institutions’ fossil fuel exposure.
But RBC Capital Markets CEO Derek Neldner — who also spoke at Sep. 20’s conference in Calgary — said the bank has estimated it could cost $2 trillion to get Canada to its committed target of net-zero greenhouse gas emissions by 2050.
He said in order to minimize the social and economic consequences of such a massive shift, investments will have to be made not just in renewable technology, but also in improving the environmental performance of every other industry.
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