This is the second year submitting this proposal. It was withdrawn last year in favour of discussions,
but despite a polite dialogue, the bank did not change anything.
In 2021 National committed to achieving net zero in its financed emissions by 2050. National has
also set 2030 sectoral emissions reductions targets in its commercial lending, oil and gas and power
lending portfolios.
National’s most prominent initiative to meet these targets is its commitment to “continue to grow the
portfolio of loans related to renewable energy at a faster pace than the portfolio of loans related to
non-renewable energy.”
While National’s use of a financial metric in this regard is laudable, its current construction makes it
impossible to relate to its 2030 targets because both factors – renewables and non-renewables – are
unrelated numerically to any climate model.
As currently stated, non-renewable energy loans can keep rising as long as renewable loans growth
stays ahead. As such, financed emissions can go up, not down. This happened in 2023 when
non-renewable energy loans increased by 0.2% and renewable energy loans increased by 0.5%,
resulting in an increase of 1.5 megatonnes.
National also does not currently include underwriting as part of this initiative, even though this plays
a significant role in energy financing of all kinds.
In 2022, BloombergNEF released a landmark report, Investment Requirements of a Low-Carbon World:
Energy Supply Investment Ratios, that aggregated climate scenarios to conclude that the ratio of
investment in low-carbon energy vs. fossil fuels needs to hit a minimum of 4 to 1 by 2030.(1) It found
National’s 2022 ratio was 1 to 1:1.
Other banks are setting financial targets for either/both the numerator (renewables) and denominator
(fossil fuels) in such a ratio. For example, BNP Paribas has set a 2030 target of “40 billion euros in
credit exposure for low-carbon by 2030, and especially renewable energy production,” and “by 2030,
financing for oil extraction and production will have been cut by 80% and will total less than 1 billion
euros.”(2)
Since the last filing, RBC also set a target of $35 billion for low-carbon energy lending by 2030,
including a tripling of renewable energy financing to more than $15 billion.(3)
Without a similar kind of financial benchmarking by National, investors are in the dark about whether
and how National’s energy lending commitment relates to climate scenarios and its financed emissions
targets, thereby raising the prospect of unforeseen transition risk.
The acquisition of Canadian Western Bank (CWB) should not stall National’s progress. In fact, CWB
has a proportionally lower exposure to fossil fuel loans.
Shareholders therefore request more comprehensive disclosure from National regarding its renewable
vs. non-renewable energy financing commitment, including relationships to climate scenarios and
its 2030 targets, and the role of underwriting