• RBC has retired its $500B sustainable finance commitment, citing methodological concerns and new anti-greenwashing laws.
• Canada’s amended Competition Act is reshaping corporate climate disclosures, prompting RBC to withhold key climate-related metrics.
• The move could trigger a broader retreat from voluntary ESG goals across Canada’s financial sector.

Royal Bank of Canada (RBC) has dropped its $500 billion sustainable finance target, citing increased regulatory scrutiny and methodological uncertainty following recent amendments to Canada’s Competition Act. The decision, outlined in its 2024 Sustainability Report, signals a potential shift in how Canadian financial institutions approach climate finance.

“In light of these developments, we will no longer be using this methodology going forward, and we are also retiring our sustainable finance commitment,” RBC said in the report.

The original goal, set in 2021, aimed to mobilize $500 billion in financing for sustainable initiatives by 2025. RBC had reached $394 billion by the end of 2023. But after reviewing its accounting practices, the bank admitted it “may not have appropriately measured certain of our sustainable finance activities as presented on a cumulative basis.”

The changes follow Canada’s updated Competition Act, which now requires environmental claims to be backed by recognized standards to combat greenwashing. Legal experts had warned the amendments could chill legitimate sustainability efforts due to the risk of litigation or penalties.

“RBC believes that ensuring the accuracy of environmental representations and enhancing the comparability of environmental representations are important,” the report stated. “However… there are limited and evolving recognized methodologies for claims in these areas.”

As a result, RBC is suspending disclosures on metrics such as its energy supply ratio—which compares financing for low- vs. high-carbon energy—and progress on low-carbon energy lending targets. These metrics were central to RBC’s ESG reporting but now face disclosure delays due to the lack of standardized methodologies.

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“We are disappointed not to share these metrics externally but will continue to monitor and report them internally to measure our progress,” said Jennifer Livingstone, RBC’s VP of enterprise climate strategy.

The move comes as Canada’s largest banks are recalibrating their climate strategies. Earlier this year, RBC and other major institutions withdrew from the Net-Zero Banking Alliance, an initiative led by former Bank of Canada Governor Mark Carney. Meanwhile, Canadian securities regulators have paused efforts to mandate climate-related disclosures, citing economic and competitive concerns.

RBC insists it remains committed to the energy transition and claims progress on renewable energy lending and green building strategies. Still, its withdrawal from firm, measurable targets reflects a broader hesitation in the sector.

“I think there is a risk of a new dangerous trend – that companies start using the Competition Act as a (legitimate or not) reason to stop disclosing information,” warned Julien Beaulieu, competition lawyer, in an email.

Richard Brooks, climate finance director at Stand.earth, echoed this concern: “This shows why the federal government – now led by a climate finance expert in Mr. Carney – should push for required disclosures to replace voluntary measures.”

While RBC repositions its ESG reporting framework, the bank has signaled that interim targets set in 2022 may no longer be achievable due to geopolitical shifts, evolving energy forecasts, and lagging technology performance.

This latest pivot from Canada’s top bank may set a precedent—raising questions about whether voluntary climate finance commitments can withstand increasing regulatory scrutiny.

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