Five major Canadian lenders have broke ties with a UN-backed climate initiative over the last week, mirroring similar moves by Wall Street giants and raising questions about banks’ preferred approach to environmental commitments.
Bank of Montreal (TSE: BMO) led the departure on Friday alongside Toronto-Dominion Bank (TSE: TD), National Bank of Canada (TSE: NA), and Canadian Imperial Bank of Commerce (TSE: CM), while Bank of Nova Scotia (TSE: BNS) followed on Monday. The Canadian exodus comes after US banking powerhouses including JPMorgan Chase (NYSE: JPM) and Goldman Sachs (NYSE: GS) severed their ties with the Net-Zero Banking Alliance.
The alliance demands participants chart a course to eliminate carbon emissions from their portfolios by 2050, with specific milestones required by 2030 for the heaviest-polluting industries they finance.
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BMO CEO Darryl White defends his bank’s split from the alliance while affirming its environmental goals. “We absolutely commit to climate transition,” White told investors at a recent conference, adding that BMO would not waver in its support for “legacy energy customers.”
National Bank plans to take what senior vice-president Debby Cordeiro calls a “pragmatic approach,” working with both fossil fuel companies and renewable energy providers to reduce emissions.
Royal Bank of Canada (TSE: RY) is the only one left standing among its peers, maintaining its NZBA membership as of this writing. However, CEO Dave McKay suggests formal alliance participation might not determine a bank’s environmental impact, telling investors that leaving “doesn’t lead to non-commitment” to climate objectives.
The alliance operates under the broader Glasgow Financial Alliance for Net Zero, established in 2021 to accelerate the financial sector’s shift away from fossil fuel investments. Former Bank of Canada governor Mark Carney recently stepped down as GFANZ co-chair ahead of his Liberal Party leadership bid.
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