• Canada’s two largest lenders scrap 2030 financed emissions targets, citing policy shifts and market uncertainty
• Royal Bank of Canada maintains its 2050 net zero ambition, while Scotiabank withdraws both interim and long-term targets
• Transition finance expands despite target rollbacks, with billions committed to low carbon energy and climate-related funding

Two of Canada’s largest banks have rewritten their climate strategies, retreating from interim emissions reduction targets set just three years ago. The shift reflects mounting policy uncertainty and growing pressure from shareholders and regulators.

Royal Bank of Canada and Scotiabank have both retired their 2030 financed emissions targets. These targets covered key sectors such as oil, gas, power generation, and automotive manufacturing. They were first introduced in 2022 as part of broader net zero commitments.

The divergence lies in their long-term ambition. RBC has reaffirmed its 2050 net zero goal. Scotiabank has chosen to abandon it.

“We have evaluated our interim targets and the fundamental assumptions on which they were initially established in 2022 and have decided that, as of fiscal 2026, we are withdrawing our interim targets and our goal to achieve net-zero by 2050 for financed emissions”, Scotiabank stated in its latest sustainability report.

RBC reached a different conclusion. “Following our review, we have concluded that the changing and uncertain operating environment makes some of our interim targets not reasonably achievable and the outlook for others unclear. As a result, we have made a decision to retire our interim targets”, the bank said in its 2025 sustainability report.

ESG Backlash And Policy Rollbacks Reshape Strategy

Both lenders point to shifting political and regulatory conditions as a core driver. The evolving stance of the United States on climate policy has had ripple effects across global finance.

RBC’s Climate Action Institute described the shift in stark terms. “The retreat on several climate policies in 2025, led by the United States, might signal a shift from a Paris spring for climate action to an American autumn”.

The report also highlighted weakening investor pressure. “This wasn’t just an American phenomenon. Leading investors and financial institutions in Asia, as well as Europe, pulled back from collective efforts and commitments—in part because of regulatory pressures in some markets, notably the U.S., but largely because of pressure to meet other shareholder needs”.

Scotiabank pointed to specific policy reversals in North America. “These decisions include curbing major parts of the Inflation Reduction Act in the US and, in Canada, the elimination of the federal fuel charge, the decision not to implement the oil and gas emissions cap, and the postponement and elimination of other climate targets and policies”.

The bank also flagged declining data quality from clients, citing US executive orders that limit climate disclosure availability.

Transition Finance Expands Despite Target Retreat

While emissions targets are being scaled back, both banks continue to increase funding for energy transition activities.

RBC reported that lending to low carbon energy and enabling sectors has grown by 43 percent since 2023, reaching about $21 billion. The bank expects this to rise to $25.5 billion by 2030.

Scotiabank remains committed to a large-scale climate finance goal. It aims to deliver $255 billion in climate-related financing by 2030. As of 2025, it has already deployed about $154 billion across lending, capital markets, and advisory services.

These figures highlight a shift in strategy. Rather than anchoring progress to emissions targets, banks are emphasizing capital deployment and transition support.

RELATED ARTICLE: Scotiabank announces net-zero strategy and a commitment to mobilize $350 billion in climate related financing

Political Scrutiny And Industry Criticism Intensify

The policy shift follows heightened scrutiny from Canadian lawmakers. In 2024, executives from both banks testified before a parliamentary committee examining climate risks in the financial system.

Scotiabank CEO Scott Thomson stressed the limits of unilateral action. “No bank can deliver this transition alone”.

He added, “We are advancing sectoral targets by enhancing our understanding of our clients’ transition-planning activities, especially in industries where we have set 2030 interim targets, including oil and gas”.

RBC CEO David McKay framed the transition as gradual and complex. “If you look at the energy-intensive nature of the Canadian economy, it’s going to take us a while to transition. It’s a very complex journey. Therefore, our focus is obviously on transition financing and on emissions. That’s why you’ve seen us make commitments on absolute reduction and commitments on financing”.

Critics argue the retreat undermines accountability. Richard Brooks of Stand.Earth called the move an “abdication of responsibility”.

“Neither bank properly recognizes the role they have played in negatively influencing government climate policies and the underfinancing of renewables they have done to hurt their ability to meet the targets they’ve abandoned. There is no self-reflection here”, he said.

What It Means For Investors And Policymakers

The rollback highlights a broader recalibration in global finance. Climate targets set during periods of strong policy momentum are now being tested against political shifts and economic pressures.

For executives and investors, the takeaway is clear. Transition finance remains central, but measurable emissions pathways are becoming harder to define.

The Canadian banking sector now reflects a wider global tension. Institutions must balance climate ambition with regulatory uncertainty and shareholder demands.

How that balance evolves will shape the credibility of net zero commitments worldwide.

ESG News Editorial Team

The ESG News Editorial Team is comprised of veteran financial journalists and sustainability analysts dedicated to providing real-time, objective reporting on global ESG regulations, climate finance, and corporate governance. Our desk monitors daily developments from the SEC, IFRS, CSRD and international regulatory bodies to ensure our 1M+ readers receive accurate, data-driven insights into the evolving sustainable investment landscape. Follow the ESG News Editorial Team for expert reporting on global sustainability standards, ESG disclosures, and climate policy. Access over 10,000 investigative reports and real-time updates.