Canadian Banks Exit Climate Coalition Amid Political Pressure

The Royal Bank of Canada and other Canadian banks have exited the Net-Zero Banking Alliance, a climate coalition. These banks claim they can manage their climate strategies independently. The move follows similar actions by U.S. banks, under political pressure regarding reduced fossil fuel financing.

The Royal Bank of Canada announced its exit from the global climate coalition, the Net-Zero Banking Alliance, on Friday. This decision follows similar actions by domestic banking peers, signaling a shift away from the coalition which was initiated to combat climate change.

The alliance, backed by the United Nations and formed under the guidance of former Bank of Canada Governor Mark Carney in 2021, aimed to rally financial institutions toward net-zero emissions. Leading Canadian banks, including TD Bank, Bank of Montreal, National Bank of Canada, and Canadian Imperial Bank of Commerce, have already departed from this initiative earlier this month.

While Canadian banks assert their capability to tackle climate risks independently, this trend echoes a broader pattern. Goldman Sachs led the charge last December amid pressure from Republican politicians in the U.S., who raised legal concerns over the impact on fossil fuel financing. Subsequently, other major U.S. banks followed suit.

(With inputs from agencies.)