Two of Canada’s biggest lenders have scrapped key climate targets, blaming the weakening of climate legislation in the US and Canada and changes in energy demand due to AI for the decision.
On Thursday, almost a year after it ditched its sustainable finance target, Canada’s biggest lender RBC announced it had “retired” its 2030 interim emission reduction targets for heavy emitters. The announcement was flagged in its latest sustainability report.
Interim emission reduction targets are key signposts of a bank’s progress towards 2050 net zero goals.
Scotiabank went further, dropping both its interim targets and the goal for its loan book to be net zero by 2050. The bank cited the weakening of key climate legislation in the US — including former President Joe Biden’s Inflation Reduction Act — as well as Canada’s decision to scrap its carbon tax on fuel, as reasons for the move.
Banks relied on tax incentives under the IRA to finance new clean energy projects. However, President Donald Trump, who labelled the clean energy transition the “green new scam”, scrapped some of the tax incentives.
“Recent government policy decisions are likely to decelerate the uptake of decarbonisation activities in the North American economy,” Scotiabank said in its 2025 Sustainability Report published on Thursday.
It also said executive orders in the US, which resulted in less client disclosure, had “undermined” its initial assumptions when it first set out its emission reduction targets in 2022.
Since becoming Canada’s prime minister in March last year, former Bank of England governor Mark Carney has also moved to scrap key climate legislation.
Last November, in an effort to diversify oil exports following Canada’s trade war with the US, he abandoned a planned oil and gas emissions cap.
Scotiabank said other factors, such as the “growth in AI”, had changed projections for energy demand. The uptake of carbon reduction technologies and electric vehicles were also impacted by “policy uncertainty”, it added.
RBC did not mention specific policy changes but blamed a raft of factors, including changes to government policy, regulatory frameworks and energy demand, as reasons for scrapping some of its interim emission reduction targets.
It said the clean energy transition needs to be led by clients from the “bottom up”, and that other metrics — its renewables and low-carbon energy lending goals and energy supply ratio (the rate at which it finances clean energy versus fossil fuels) — were “important indicators” of its progress.
RBC was contacted for comment.