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TD Aims to Cut Emissions Intensity From Loans in Net-Zero Plan

A Toronto-Dominion (TD) Canada Trust bank branch in Toronto, Ontario, Canada, on Wednesday, March 2, 2022. Toronto-Dominion Bank agreed to buy First Horizon Corp. for $13.4 billion, putting its massive capital stockpile to use for its largest deal ever and expanding its presence in the U.S. Southeast.

(Bloomberg) —

Toronto-Dominion Bank set targets for reducing the emissions intensity of lending to certain energy industries, charting a clearer path for a plan to reach net-zero emissions by 2050 while still boosting its loan book in those sectors.

For lending to oil, gas and coal producers, Toronto-Dominion is targeting a 29% reduction in a metric called “financed emissions lending intensity” from 2019 levels by 2030. The measure incorporates the lender’s total financing to a company and its sector, as well as the borrower’s enterprise value and emissions. For its lending to power generators, Toronto-Dominion is planning for a 58% decline in physical emissions intensity from 2019 levels by 2030.  

Toronto-Dominion’s focus on intensity measures allows it to expand lending to companies in those industries and help finance their own decarbonization efforts, said Janice Farrell Jones, senior vice president for sustainability and corporate citizenship. The bank’s targets are in line with the International Energy Agency’s Net Zero Emissions by 2050 scenario and largely track with emissions-reduction plans from companies in those industries, Farrell Jones said.

“For many of our big and important clients, they’ve been working on their own decarbonization plans for many years, and that requires capital,” she said in an interview. “They are growing their own businesses in less carbon-intensive spaces and looking for both capital and advice to do that.” 

Read more: TD Swears Off Arctic Oil Deals, Sets 2050 Net-Zero Carbon Goal

Toronto-Dominion in 2020 became the first major Canadian bank to make a net-zero commitment, and it swore off oil and gas projects in the Arctic Circle. The bank also established a group to provide advisory services and sustainability-focused financing to help clients with their own ESG efforts.

Bank of Montreal announced its own targets for curbing the emissions associated with its lending business earlier this week. Those included a 33% cut in scope 1 and 2 emissions from oil and gas borrowers and a 24% reduction in scope 3 emissions by 2030.

Toronto-Dominion decided on energy and power generation for its first set of interim targets because they can have the greatest effect, due to their higher emissions and their prominence within its portfolio, Farrell Jones said. Targets for other sectors will be set in future years as the bank gets more clarity on government policies and potential industry innovations, she said.

“The decision we made was not to wait for perfect information,” she said. “We know that the warming planet isn’t waiting and that it was really important for us to take decisive action and set targets.”

© 2022 Bloomberg L.P.

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