Royal Bank of Canada | Phase out lending to fossil fuel projects at Royal Bank of Canada

Status
12.98% votes in favour
AGM date
Previous AGM date
Proposal number
5
Resolution details
Company ticker
RY:CN
Lead filer
Stand.earth
Resolution ask
Adopt or amend a policy
ESG theme
  • Environment
ESG sub-theme
  • Fossil fuel financing
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Financials
Company HQ country
Canada
Resolved clause
RESOLVED: Shareholders request that the Board of Directors of the Royal Bank of Canada (RBC) adopt a policy for a time-bound phase-out of the RBC’s lending and underwriting to projects and companies engaging in new fossil fuel exploration, development and transportation.
Supporting statement
Climate change poses a systemic risk, with estimated global GDP loss of 11-14% by midcentury under current trajectories.1 The climate
crisis is primarily caused by fossil fuel production and combustion. According to scientific consensus, limiting warming to 1.5°C means the world cannot develop new oil and gas fields, pipelines or coal mines beyond those already approved (new fossil fuel exploration, development and transportation).2 Existing fossil fuel supplies are sufficient to satisfy global energy needs.3 New oil and gas fields will not produce in time to mitigate energy market turmoil resulting from
the Russian invasion of Ukraine.4
RBC has committed to align its financing with the goals of the Paris Agreement,5 achieving net-zero emissions by 2050 consistent with
limiting global warming to 1.5°C. The High-Level Expert Group (HLEG) on the Net-Zero Emissions Commitments of Non-State Entities standards released November 2022 make it clear that RBC’s current policies and practices are not a credible pathway to net-zero by 2050.7

RBC is the world’s fifth largest funder of fossil fuels, providing over US$200 billion in lending and underwriting to fossil fuel companies during 2016-2021, including over US$38 billion USD to 100 top companies engaged in new fossil fuel exploration and development. Without a policy to phase out financing of new fossil fuel exploration, development and transportation, RBC is unlikely to meet its climate commitments and merits scrutiny for material risks that may include:
• Greenwashing: Banking and securities regulators are tightening and enforcing greenwashing regulations, which could result in
major fines and settlements.9 The Competition Bureau of Canada, a federal law enforcement agency, began an investigation into
the bank’s alleged deceptive marketing practices related to its stated climate actions.10
• Regulation: Central banks are starting to implement climate stress tests11 and scenario analyses,12 and some have begun to
propose increased capital requirements for banks’ climate risks.13 The Office of the Superintendent of Financial Institutions (OSFI)
has begun to develop climate risk management guidance that will include measures on capital and liquidity adequacy.
• Competition: Dozens of global banks have adopted policies to phase out financial support for new oil and gas fields14 and coal
mines.15
• Reputation: Continued fossil fuel expansion project financing like the Coastal GasLink fracked gas and Trans Mountain oil sands
pipelines have been shown to conflict with Indigenous rights and are opposed by some communities, resulting in increasing
negative media articles and demonstrations at RBC locations.16
By exacerbating climate change, RBC is increasing systemic risk, which will have significant negative impacts – including physical risks and transition risks17 – for itself and for diversified investors. We urge you to vote FOR this proposal

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
Anima SgrAgainstWhile some global banks have adopted more progressive positions on financing oil and gas projects,
the Canadian government's current position and signaling do not lend weight to a blanket phase-out of lending by the banks
in an economy where the sector is a strong contributor to employment, and no large Canadian bank has adopted a blanket
phaseout approach. Investors may want to engage with the company as it develops its methodology for its 2050 net zero
goal. However, a strict policy to stop lending or underwriting fossil fuels is not industry practice; therefore, support is not
warranted at this time.

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