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As climate-concerned central planners continue to discover, their actions have unintended consequences — some of which work completely contrary to their stated intentions. The latest example: as the result of changes to Canada’s Competition Act that were cheered on last year by environmental organizations like Greenpeace, RBC is now scrapping some of its environmental commitments and disclosures. Last week, the bank, which has Canada’s largest corporate market cap at $237 billion, announced it was “retiring” the “sustainable finance commitment” it made in 2019 and would no longer disclose its energy supply ratio, citing the Competition Act changes as a reason for its decision.
The changes in question require companies to substantiate claims about their environmental performance according to “internationally recognized methodology.” Canada’s largest oilsands companies denounced the policy, writing that the prescribed “internationally recognized methodology” for environmental reporting “may or may not exist,” which “opens the door for frivolous litigation.” Alberta’s Minister of Environment, Rebecca Schulz, called the legislation “an attack on freedom of speech” and the Saskatchewan government called it a “gag law” on oil and gas companies.
David Suzuki wrote in a blog post last year that “the fact that it’s just the fossil fuel industry complaining is telling.” But RBC is not an oil company. As it describes in its annual sustainability report, it believes environmental reporting should be accurate, but “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.” In other words, the oilsands companies were right: the government’s prescription that companies’ environmental claims be backed up by “internationally recognized methodology” is impossible because these methodologies are not well defined.
If the activists’ goal in supporting the Competition Act changes was to increase companies’ contribution to fighting global warming and force them to improve their environmental reporting, the latest developments indicate their central planning initiative has backfired. Whether RBC dropping its sustainable finance targets and reducing its external disclosures is a good or bad thing is a separate debate, but the activists certainly did not intend either. While unintended, however, this result was not unpredictable: oilsands companies also reduced their environmental communications last year as a result of the Competition Act changes.