Canada’s banks can help lead the energy transition

Canada’s banks have a well-earned reputation for stability and strong governance in challenging times. But our current moment of political, economic and technological transformation at a global scale requires more than continued strength and stability from our financial institutions; it’s an opportunity for renewed ambition and leadership.

One area where banks can lead is seizing financing opportunities of the clean energy transition that is already well underway. Worldwide, investment in renewables now outpaces fossil-fuel spending nearly two-to-one, according to the International Energy Agency — a promising trend, but not one our Canadian banking sector is not yet reflecting.

Canada’s banks – and, by extension, the shareholders who own them – have a lot to gain by understanding how a bank’s energy financing stacks up.

With support from SHARE, investors have been encouraging Canada’s “Big Six” banks to disclose their Energy Supply Finance Ratios — a metric developed by BloombergNEF that compares bank financing of low‑carbon energy projects with its spending on fossil fuel activities. Our promotion of this metric has been based in the following factors:

• This ratio is a necessary tool to help investors understand how and to what extent the banks are accelerating the pace and scale of investment in clean energy.
• The ratio supplements and complements a banks’ existing and ongoing financed emissions disclosures.
• Ratio disclosure from four leading banks in North America demonstrates both feasibility and the growing consensus that this is a necessary metric for investors.
• There is already a well-established methodology, developed by Bloomberg NEF with guidelines also issued by a leading financial industry association, that can support industry harmonization.

The Canadian banking sector is now past the tipping point of disclosing this important metric to investors. Earlier this month, Royal Bank of Canada (RBC) became the second Canadian bank to disclose its ratio, after the Bank of Nova Scotia (ScotiaBank) did so in April. National Bank has agreed to publish its methodology by April 2027, while Canadian Imperial Bank of Commerce (CIBC) has released its methodology for calculating the ratio, and investors are hopeful that their ratio will be shared soon. This leaves Toronto Dominion Bank (TD) and Bank of Montreal (BMO) to catch up with their peers and meet the expectations of more than a third of investors who supported ratio-related shareholder proposals in 2025.

These are encouraging developments, to be sure; investors increasingly rely on such metrics to assess climate‑related financial risks, transition exposure and whether banks’ lending practices align with their stated climate commitments.

For investors to make the most informed decisions, however, banks must keep their sights on “apples-to-apples” ratios for comparison. That means, for example, dispensing with the idea that liquefied natural gas (LNG) is not fossil fuel, or the confusing practice of separating the ratio into two parts, compelling investors to piece it back together to get a full picture.

Such inconsistencies are expected as the banks begin the journey, but harmonization will be key to maintaining the value of this disclosure to investors over time.

We are still in the “turnaround decade” to facilitate a responsible, calm and fair energy transition. The scales of global investment are already tipping to the future. Disclosing their Energy Supply Finance Ratios is an encouraging step toward leadership for Canada’s banks, but the journey is far from over.

SHARE and the investors we work with are committed to seeing it through, and it’s encouraging to see signs that the banks are, too.