A sign for the Royal Bank of Canada in Toronto, Ontario, Canada December 13, 2021. REUTERS/Carlos Osorio/File Photo
Canada's Competition Bureau has launched an investigation into Royal Bank of Canada (RY.TO) over allegations that the country's largest lender had misled customers on its commitments regarding climate action.
The federal law enforcement body said it has commenced an inquiry on the bank's "alleged deceptive marketing practices after receiving an application requesting an inquiry under section 9 on behalf of six Canadian residents."
Regulators in the Americas and Europe have increasingly been worried about greenwashing, whereby companies exaggerate their environmental credentials, and also about those who downplay the impact of global warming.
This comes amid fast-rising climate awareness and investor interest in sustainable business practices that has seen companies across sectors and industries factor in environmental social governance (ESG) policies.
Several Canadian banks have committed to “net-zero financed emissions” by 2050 in recent times but have drawn doubts from many investors, given the lack of a defined goal, details and their continued support for oil and gas companies, even if partially aimed at helping them transition to alternatives.
RBC in an emailed statement to Reuters said it strongly disagreed with the allegations adding it "believes the complaint to be unfounded and not in line with Canada's climate plan."
The country's largest banks have drawn greenwashing criticism from some environmental groups and investors claiming banks are using sustainability-linked financing (SLF) merely to pretend to lower their carbon footprint rather than take meaningful steps in that direction.
The central bank and financial regulator have also already warned that a lack of preparedness by the banks could expose them and investors to "sudden and large losses."
In 2021, RBC had said it aims to achieve net-zero emissions across its lending operations by 2050 and that it has committed C$500 billion towards its sustainable finance target.