Royal Bank of Canada (RBC) announced that it has decided to drop its target to mobilize $500 billion in sustainable finance, and has held off on providing some climate finance-related disclosures, following changes to greenwashing regulations in Canada.

The announcement, revealed in RBC’s 2024 Sustainability Report, follows the passage of amendments last year to Canada’s Competition Act, aimed at tackling greenwashing, or unsupported claims by companies about the environmental benefits of their products or business activities. At the time of the law’s passage, experts warned that while aiming to protect consumers from misleading claims, the amended law could also introduce significant risks for companies and even slow corporate progress on environmental initiatives.

RBC set a goal in 2021 to mobilize $500 billion in sustainable finance by 2025. In the bank’s 2023 Climate Report, RBC said that it had reached $394 billion towards its goal.

In its new report, however, RBC said that following a review of its methodology, the bank “concluded that it may not have appropriately measured certain of our sustainable finance activities as presented on a cumulative basis,” and the company also noted the recent changes to the Competition Act. RBC stated:

“In light of these developments, we will no longer be using this methodology going forward, and we are also retiring our sustainable finance commitment.”

In addition to retiring its sustainable finance goal, RBC said that it is not currently able to provide disclosures including on its energy supply ratio, which compares the bank’s energy sector financing for low-carbon energy compared to high-carbon energy, or on its progress towards its low-carbon energy lending goals, due to the regulatory developments.

In the report, RBC said:

“RBC believes that ensuring the accuracy of environmental representations and enhancing the comparability of environmental representations are important. However, given the nascent nature of climate-related metrics, there are limited and evolving recognized methodologies for claims in these areas. As a result, this limits the information we can share on certain sustainability disclosures and the progress we are making.”

The report also noted the impact of the new regulations on some of the disclosures provided by RBC’s clients. RBC said:

“Our clients continue to navigate an evolving regulatory and legal environment, including amendments to the Competition Act… 34% of our oil and gas sector clients (on an authorized exposure basis) have withdrawn or reduced the scope of their climate and sustainability-related disclosures since our 2023 assessment, or have added disclaimers that the disclosure is for informational purposes only.”