Oh, Canada, How Green are Your Banks?

After evaluating banks in the U.K.,  U.S., and Ireland, our focus now shifts to Canada. Overall, we rated all regulated domestic banks and some credit unions, for a total of 36 banking institutions.

Oil and gas account for roughly 28% of Canada’s total emissions. Even worse, as Climate Action Tracker notes, “Canada seems incapable of kicking its fossil fuel addiction.” Not to spoil the ending, but, as we know, the fossil fuel industry depends on bank lending to fund this addiction. And that’s what we’re seeing in these ratings, with 72% of Canadian banks needing improvement on climate responsibility. Don’t despair though, because there are some green banks.

How We Rate Banks

We assess banks based on their climate impact across five categories:

• Leader in climate responsibility (Great)
• Climate responsible (Good)
• Room to improve on climate (OK)
• Falling short on climate (Bad)
• Failing on climate (Worst)

Our analysis focuses on several critical factors, including the amount banks lend for fossil fuels versus renewable energy, the strength of their exclusion policies regarding harmful industries, their transparency in disclosing climate-related risks, and whether they have effective governance structures to address climate issues. For a breakdown of how we evaluate these factors, visit our methodology page.

Let’s Start at the Top!

Although it’s a smaller set of banks (only 28%), we do want to start by sharing the great and good news about the banks at this level. It’s important to note that overall, the highest rated green banks in Canada are credit unions and co-ops.  

We have five banks rated as “Great”, offering transparency about their greenhouse gas emissions with stated reduction goals, lending to renewables, and little to no fossil fuel lending. Most of these banks also offer a variety of “green” banking products. Some of these banks are also members of impactful organizations like B Corp and the Global Alliance for Banking on Values (GABV). These banks include Coast Capital Savings Credit Union, Desjardins, Laurentian Bank, Manulife, and last, but certainly not least, Vancity.

In fact, we’d like to highlight Vancity because they’re a shining example of what we’d like to see prioritized by more banks. It’s a great checklist for you to use when evaluating your banks:

✅ Does not fund or invest in fossil fuel companies.  

✅ Provides support for clean energy projects.

✅ Offers several “green” banking products like financing for EV and hybrid vehicles, bikes, and scooters, and EV charging stations.

✅ Discloses its greenhouse gas emissions associated with its lending and sets emission reduction targets.

So, what’s blocking the next set of five that received “Good” ratings from being “Great”? It’s not that they’re not doing some of those things, but they’re just not doing enough of them. Perhaps they don’t lend to fossil fuel companies, or they provide transparency, but they don’t go beyond that. If your bank is on this list, talk to them about other ways they could improve.

No Surprises from the Big 6

Let’s switch to the opposite end of the rating scale now where, unsurprisingly, we ranked each of the Big 6 as “Worst”. They continue funding the climate crisis and have withdrawn from the Net-Zero Banking Alliance. Among their alarming distinctions:

• Leading world in tar sands financing: #1 Toronto-Dominion (TD) and #3 Canadian Imperial Bank of Commerce (CIBC)
• Leading Canada in fossil fuel funding: #1 Royal Bank of Canada (RBC), #2 Scotiabank, and #4 Bank of Montreal (BMO)

The National Bank of Canada rounds out the top six and continues to invest in fossil fuel companies as well.

Although these banks typically serve corporations, many digital banking apps are owned by these companies, such as Tangerine (Scotiabank) and Simplii Financial (CIBC). If you’re using a banking app, be sure to track down the parent companies so you know how your money is being used.

Other Banks Falling Short on Climate

The Big 6 made up a small part of the 72% of Canadian institutions falling short. Let’s look at what’s driving these poor ratings for the rest.

Fossil Fuel Lenders

The problem isn’t just confined to the largest of banks. Even with renewable investments, the other poorly rated banks lend far more to fossil fuels. In those cases, we consider them to be funding the climate crisis, and as a result, we rated ATB Financial and Canadian Western Bank as “Worst”.

Transparency and Partnerships Make a Difference

Several banks simply aren’t providing enough transparency in their reporting, which prevents us from understanding where they’re investing. Lack of transparency results in a “Bad” rating for several banks. Others are further impacted by partnering with some of the worst-rated banks. Relationships matter - even in banking!

Coasting Along

The remaining “OK” banks are just coasting. While most don’t engage in commercial lending, they also aren’t taking other critical steps like funding renewables, providing measurements of their greenhouse gas emissions, offering green banking products, or anything that would suggest that they were actively taking the initiative to be a green banking leader. While these findings may be discouraging, you can take action.

Your Money, Your Impact

While Canada’s banking sector still has a long way to go in breaking free from fossil fuel financing, you do have some options. Check your bank’s rating, and if it’s “Good” or “OK”, you can advocate for changes if you don’t want to switch right away. If you’re ready to switch, find a “Great ” bank, and we can guide you through the steps.

The bottom line? If your bank isn’t aligned with your climate values, demand transparency, push for fossil fuel divestment, and explore greener alternatives. Make your money matter.