Royal Bank of Canada | SP 1: Disclose Clean Energy to Fossil Fuel Financing Ratios

Status
Withdrawn
AGM date
Proposal number
1
Resolution details
Company ticker
RY:CN
Lead filer
New York City Office of the Comptroller
Resolution ask
Other ask
ESG theme
  • Environment
ESG sub-theme
  • Fossil fuel financing
  • Net Zero / Paris aligned
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Financials
Company HQ country
Canada
Resolved clause
At management’s discretion, we recommend the Company:
• Set timebound Ratio targets aligned with its net zero commitment.
• Consult BloombergNEF Report when setting Ratio targets and defining “low carbon” and “fossil fuel” financing.
• Work to establish standardized industrywide methodologies.
• Disclose a comparable ratio for its lending.
Supporting statement
The Intergovernmental Panel on Climate Change (“IPCC”) has advised that greenhouse gas emissions must be halved by 2030 and reach net zero by 2050. According to the International Energy Agency (“IEA”), this requires a rapid transition away from fossil fuels and a tripling in global annual clean energy investment by 2030.1
Banks aligning their activities with their own climate goals are better prepared to manage the risks, including legal, reputational and financial risks, associated with the global energy transition. Furthermore, they can capitalize on profitable opportunities in clean energy and position themselves as leaders in a rapidly changing market. Since 2022, banks have reportedly earned more in lending and underwriting fees from clean energy projects than from oil, gas, and coal companies.2
According to their 2022 Climate Report, the Company has a goal of $500 billion in sustainable finance by 2025.3
Furthermore, the Company has a commitment to reach net zero emissions by 2050.
Despite these commitments, however, the Company is the worst financier of fossil fuels – it provided $41 billion to fossil fuel companies in 2022, an increase over its 2021 financing. Since 2016, the total sum has been $252.5 billion.4
According to BloombergNEF’s recent report, Financing the Transition: Energy Supply Investment and Bank Financing Activity (“BloombergNEF Report”),5 the pace at which low-carbon energy supply is scaled up will dictate the rate at which fossil fuels are phased down. Synthesizing the seven most frequently referenced 1.5ºC – aligned pathways (IEA; Network for Greening the Financial System; IPCC), it concluded that, to achieve net zero emissions by 2050, the Ratio must reach a minimum of 4:1 by 2030, rise to 6:1 in the 2030s and 10:1 thereafter.
Clean-energy-to-fossil-fuel financing ratios have emerged as a key metric for assessing progress in financing the clean energy transition. The IEA tracks one,6 and they have been recognized by the leading bank climate alliances in which the Company participates, including the Glasgow Financial Alliance for Net Zero and the Net Zero Banking Alliance, which advised that comparable indicators for “reporting requirements could include …a transition finance ratio.”7
At management’s discretion, we recommend the Company:
• Set timebound Ratio targets aligned with its net zero commitment.
• Consult BloombergNEF Report when setting Ratio targets and defining “low carbon” and “fossil fuel” financing.
• Work to establish standardized industrywide methodologies.
• Disclose a comparable ratio for its lending.

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