RBC, Scotiabank Revise Climate Targets as Low-Carbon Lending Hits $21B

Royal Bank of Canada (RBC) and Scotiabank are recalibrating their climate strategies as policy changes and shareholder pressures reshape banking priorities, even as RBC reported a 43% rise in low-carbon lending to approximately $21 billion (C$29 billion) since 2023, highlighting continued capital flow into transition-related sectors.

Policy Changes Drive Climate Target Revisions

Both RBC and Scotiabank have cited shifting public policy frameworks as a key reason for revising interim emission reduction targets. According to RBC, the pullback from collective climate commitments extends beyond the United States, with financial institutions across Asia and Europe also stepping back from coordinated efforts.

The bank attributed this trend to a mix of regulatory pressures in certain markets—particularly the U.S.—and increasing demands from shareholders for financial performance. This combination has prompted lenders to reassess timelines and near-term decarbonisation goals.

Scotiabank similarly pointed to government actions in North America as a major factor behind its decision to retire interim targets. The bank noted that changes to public policy have slowed the pace of decarbonisation and introduced uncertainty for long-term planning.

Regulatory Shifts Impact Decarbonisation Efforts

Key policy changes cited include the scaling back of significant components of the Inflation Reduction Act in the United States. In Canada, the removal of the federal fuel charge, the decision not to implement an oil and gas emissions cap, and delays or cancellations of other climate-related policies have altered the regulatory landscape.

These developments have reduced the urgency and feasibility of meeting previously announced emission reduction milestones. Financial institutions, which rely on stable policy signals to guide capital allocation, are now adjusting their strategies to reflect these evolving conditions.

Data Limitations Add to Execution Challenges

In addition to policy uncertainty, data constraints are emerging as a critical challenge. Scotiabank highlighted that executive actions in the United States have affected the availability and quality of client disclosures related to emissions.

This reduction in reliable data complicates the measurement of financed emissions and makes it more difficult for banks to track progress against climate targets. As a result, institutions are increasingly cautious in setting interim goals that depend on consistent and transparent reporting from clients.

Low-Carbon Lending Expands Despite Target Cuts

Despite scaling back interim targets, RBC reported strong growth in transition-related financing. Lending to low-carbon energy and enabling activities has increased by 43% since 2023, reaching about $21 billion (C$29 billion). The bank expects this figure to rise further to approximately $25.5 billion (C$35 billion) by 2030.

This expansion reflects a shift toward financing practical decarbonisation pathways, where capital is directed to projects that support energy transition rather than focusing solely on near-term emission reductions.

The growth in low-carbon lending underscores continued demand for funding in renewable energy, clean infrastructure, and related sectors, even as banks adjust their broader climate commitments.

Scotiabank Advances Long-Term Climate Financing Goals

Scotiabank reaffirmed its long-term commitment to climate-related financing, maintaining a target of $255 billion (C$350 billion) by 2030. As of 2025, the bank reported that it has already deployed approximately $154 billion (C$212 billion) toward this goal since 2019.

This total includes a combination of lending, capital markets activity, and advisory services, indicating a diversified approach to supporting climate-related initiatives. The bank’s progress highlights sustained capital deployment even as interim emission targets are revised.

Shift Toward Transition Finance Strategy

The actions taken by both institutions point to a broader shift in banking strategy, where transition finance is gaining prominence over rigid emission reduction timelines. By focusing on financing low-carbon projects and enabling technologies, banks aim to balance sustainability objectives with financial performance and regulatory realities.

This approach reflects the complexity of aligning climate goals with changing policy environments and market expectations. While interim targets may be adjusted, long-term financing commitments remain a central component of banking strategies aimed at supporting the transition to lower-carbon economies.