IPC’s letter grades were based on the banks’ performance so far on financed emissions, interim emission reduction targets for the oil and gas and the power sector, and their plans for a transition off fossil fuels. RBC fared worst in that assessment, with three D’s and a C, followed by the National Bank of Canada with two D’s, a C, and an incomplete for its reporting of its interim power sector target. Scotiabank, BMO, and CIBC each scored a D, two C’s, and a C-.
Investors for Paris Compliance said it arrived at the letter grades by setting out criteria for an A rating in each category, then marking institutions down by one grade for each criterion they missed. Some of the criteria for the banks’ emission reduction targets included:
• Targets for absolute rather than intensity-based emission reductions;
• Coverage of Scope 3 emissions;
• Interim targets that “align with a well-respected, science-based 1.5°C future scenario, with no or limited overshoot”;
• Transition plans that are consistent with climate science, set out comprehensive short- and long-term goals, support a just transition for fossil fuel workers and communities, respect Indigenous rights, and lay out “clear interventions” to support climate solutions and reduce climate-related risk.
The report includes point-form assessments of each bank’s climate performance and shortcomings. RBC receives credit for reporting emissions across its entire financing portfolio—as far as its assessment goes. “But by not reporting its clients’ material Scope 3 emissions, most notably for its oil and gas clients, RBC is significantly underreporting its financed emissions,” the report card states, contrary to its commitments as a member of the UN’s Net-Zero Banking Alliance. “Assuming that its oil and gas Scope 1 and 2 emissions represent the average 20% of the sector’s total emissions, RBC may be underreporting by about 50 megatonnes of carbon dioxide equivalent.”
TD, by contrast, scores a B- by reporting but not setting targets for the absolute emissions it finances, including Scope 3 emissions. IPC says the bank’s emission reduction target for oil and gas doesn’t match up with the International Energy Agency’s 1.5°C scenario, and it leaves out the power sector entirely.
