An ambitious climate plan to cut emissions and sell cleaner energy to the world “could be the story of Canada’s decade,” Royal Bank of Canada RY-T chief executive officer Dave McKay said Thursday, as his bank faced a barrage of criticism from investors and Indigenous leaders over its financing of oil producers and a contentious pipeline project.
At an annual’ shareholders’ meeting that lasted more than two hours, Mr. McKay repeatedly made his case that the climate transition “has to be an orderly journey.” He told investors that the shock to global energy from the war in Ukraine demonstrates the risk of an abrupt disruption to energy sources, and that Canada will need $2-trillion of investments to pull off a smooth transition.
The meeting was dominated by debate over the bank’s actions on energy and climate. Climate advocates took aim at RBC as a major financier of oil and gas companies, in some cases urging it to stop lending to them altogether. And critics of the Coastal GasLink pipeline rebuked the bank for helping finance the project, which would cross the traditional, off-reserve territory of the Wet’suwet’en Nation.
In response to calls for RBC to cut its financing of carbon-intensive oil and gas, Mr. McKay said the emphasis should instead be on lowering emissions. He noted that oil and gas accounts for roughly 10 per cent of Canada’s economy, and that the energy industry will need to invest tens of billions of dollars in new technology to capture carbon.
“The focus is on a transition to reduce emissions and the focus shouldn’t be on the fact that we’re financing energy sources,” Mr. McKay said.
Wet’suwet’en leaders who oppose the Coastal GasLink pipeline planned to attend RBC’s annual meeting in person, but RBC made a decision on Wednesday to move it entirely online after staff and participants were exposed to a person with COVID-19. Instead, hereditary chiefs called into the meeting and accused RBC of ignoring Wet’suwet’en sovereignty and enabling environmental damage to Indigenous lands.
Mr. McKay acknowledged disagreements over the pipeline project, but said that all 20 elected First Nations councils along the route have approved the pipeline, and 16 have chosen so far to take an economic interest in it. “It’s not for RBC to take away from communities that support this project,” he said.
Wet’suwet’en hereditary chiefs who oppose the natural gas pipeline say elected Indigenous leaders don’t have jurisdiction over the Wet’suwet’en’s traditional territory, and RBC should not be helping finance Coastal GasLink.
“When they ignore us through their process at Royal Bank of Canada and say that they are doing it for the betterment, they’re only doing it for the betterment of their bottom line,” John Ridsdale, who goes by the hereditary name Na’ Moks, said during a news conference in Toronto.
RBC is the only Big Five bank that has yet to set interim targets to reduce financed emissions, and has promised to publish its goal this fall. Other banks have set targets based on the intensity of emissions, rather than overall emissions levels, drawing criticism from environmental groups that fear total emissions could still rise.
“Our belief is that the only one that really counts over time is absolute reduction,” Mr. McKay said. “We’re just taking a little bit more time. In a 10- and 30-year journey, does two months make a big difference between what our peers are doing and what we’re doing? No.”
The bank’s shareholders also rejected a proposal to introduce an annual vote on its climate strategy. Banks have opposed say-on-climate votes, which would be similar to existing, non-binding shareholder votes on executive compensation practices. On Thursday, only 20 per cent of votes supported adopting a say-on-climate policy at RBC, and the same proposal failed by similar margins at meetings held by Bank of Nova Scotia and Canadian Imperial Bank of Commerce this week.
With a report from Brent Jang in Vancouver
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.