What impact can we expect from TD’s new climate pledge?

Like the other big CDN banks, when it comes to climate, TD is one of the worst banks in the world. They are responsible for more than $100B in fossil fuel operation and expansion and the scored 3 out of 200 in a recent evaluation of their climate policies. Yikes!

Like RBC, who recently made a lot of noise about a minor update to their policies around thermal coal, TD doesn’t like being known as a world-class climate criminal and has decided to update their policies around lending for and investing in fossil fuels.

What impact will this pledge have?

Let’s take a look at the details of TD’s Announcement.

• A target to achieve net-zero greenhouse gas emissions associated with its operations and financing activities by 2050.
• An industry-specific approach to prioritize and advance GHG reduction opportunities.
• Establishment of GHG emissions baselines across its business and financing portfolio.
• Will work closely with clients to set interim GHG reduction goals on the path towards 2050.
• Report on its progress starting with 2021.
• Creation of a new “TD Sustainable Finance and Corporate Transitions Group” and “TD ESG Centre of Expertise.” 
• No new project-specific financial services, including advisory services, for activities that are directly related to the exploration, development, or production of oil and gas within the Arctic Circle, including the Arctic National Wildlife Refuge (ANWR).

At first glance, there’s a lot going on here. But the longer you look the less you find.

The thing about getting saying you aim to get your portfolio to net-zero by 2050 is that the whole world has to be at net-zero by 2050, so even if TD does ABSOLUTELY nothing, as long as governments and scientists and activists and ordinary people somehow miraculously get the job done, TD will have a net-zero portfolio. This a way to join the transition without carrying weight. In theory at least, you can just maintain a diversified portfolio or client list and it will all decarbonize itself.

Interestingly, this pledge is almost exactly the same as U of T’s decarbonization pledge which Meric Gertler and U of T’s investment advisors offered up in a bait-and-switch after Gertler unilaterally cancelled a real divestment plan that had been approved by U of T’s governing council. While we aren’t necessarily opposed to plans that aim to decarbonize their whole portfolio instead of divesting from fossil fuels directly – such a plan needs to be more ambitious in the short term in order to ensure it is driving change, rather than simply tracking change.

Many, many investors say they will ‘work closely with clients’ when they are pressured to divest. But how do you work with a coal company to grow their business while also reducing their emissions? Without pointing to specific reductions that were initiated by TD, this claim is just window-dressing. So there’s a lot riding on the contents of the first more detailed report in 2021.

The pledge about Artic Drilling is more substantive, but given current oil prices and the high cost of Artic projects, it may just be that TD has decided they won’t fund this anyway.

But, despite all that is missing from this pledge, it’s still a GAMECHANGER in the Canadian Banking landscape.

Until now, most of the big banks had simply been pretending that their extensive fossil fuel investments had no significance whatsoever. The annual reports and new transparency about carbon emissions are a really big deal. All of sudden we have a metric that lets us compare one bank against another! Let the games begin!

What’s the takeaway for BankSwitch? This means the big banks are listening and they don’t like the many campaigns from different groups calling them out. If you’re with TD it might be worth letting them know that you saw this and didn’t find it very substantive, but that said, you can probably stick around until the first detailed report comes out sometime in 2021 rather than moving your account. If you’re not with TD, you might send a note about this to your branch manager, because, as we’ve said before the big 5 aren’t scared of Climate Pledge Collective, but they are scared of each other.