Royal Bank of Canada (RY.TO)(RY) has overtaken JPMorgan Chase (JPM) as the top lender and financial service provider to the fossil fuel industry, according new analysis funded and authored by climate activist groups.
The 14th annual Banking on Climate Chaos report says 60 of the world’s largest banks funnelled US$673 billion into the sector in 2022, spanning lending, as well as underwriting for bonds and equities. That figure includes US$150 billion to the top 100 companies expanding fossil fuels, as identified by the report’s authors. Those include Canada’s TC Energy (TRP.TO)(TRP), TotalEnergies (TTE), ConocoPhillips (COP), and Saudi Aramco (2222.SR).
The latest Banking on Climate Chaos report released on Thursday was authored by the Rainforest Action Network, the Indigenous Environmental Network, BankTrack, Oil Change International, Reclaim Finance, the Sierra Club, and Urgewald.
The US$673 billion in total loans and financial services provided to the oil and gas industry last year marks a 19 per cent drop from the US$800 billion total from 2021. RBC offered the most financing in 2022, according to the report, at US$42.1 billion. Canada’s biggest bank by market capitalization was followed by JPMorgan, which had topped the list between 2016 and 2021.
The shakeup at the top was largely the result of JPMorgan’s 41.7 per cent decline in loans and services last year, from $67.3 billion in 2021 to $39.2 in 2022. At the same time, RBC increased its business with the fossil fuel sector by 4.2 per cent. Wells Fargo (WFC) (US$38.9 billion), Bank of America (BAC) (US$36.9 billion), and Citigroup (C) (US$33.9 billion) rounded out the top five, respectively.
This report does not measure progress in meeting our climate goals.Andrew Block, spokesperson, Royal Bank of Canada
April Merleaux, research manager at the environmental nonprofit Rainforest Action Network, says all of the banks included in the report were offered the opportunity to review data attributed to their institution prior to publication. RBC disputes this.
“The authors of this report did not validate their figures or findings with us, and we can’t confirm their conclusions,” spokesperson Andrew Block said in an email to Yahoo Finance Canada. “Further, this report does not measure progress in meeting our climate goals.”
The Royal Bank of Canada has been the primary target for environmental critics among Canada’s largest six banks. Last year, Canada’s Competition Bureau opened an investigation into allegedly deceptive advertising related to climate action following a complaint from Ecojustice, a non-profit environmental law group. Earlier this month, environmental protestors gathered outside the bank’s shareholder meeting in Saskatoon. Speaking at the event, CEO David McKay defended the bank’s climate plan in the face of shareholder resolutions calling for stronger and faster climate action.
Charlotte Powell, a spokesperson for JPMorgan, confirmed the Wall Street bank was able to verify its figures included in the report. Asked about the 41 per cent year-over-year decrease in lending and services to the fossil fuel sector, she points to trends in the broader market, such as lower loan volumes and oil and gas companies flush with cash thanks to higher commodity prices.
Not having seen data of JP Morgan’s peers, Powell said similar declines would be expected. Morgan Stanley (MS) and Goldman Sachs (GS) booked 52.9 per cent and 50.4 per cent decreases, respectively.
TD Bank the biggest lender to Canada’s oilsands
While RBC has caught the brunt of recent environmental backlash against big Canadian banks, Toronto-Dominion Bank (TD.TO)(TD) has more financial exposure to Canada’s domestic oil and gas industry, according to additional data from the report’s authors provided to Yahoo Finance Canada.
The data show TD Bank has been the top Canadian banker to oilsands companies since 2016, providing loans and services to the tune of US$38.5 billion. RBC ranked second, at US$31.8 billion. Last year, TD Bank increased its business with oilsands companies slightly, while RBC’s lending saw a small decrease.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.