A 2024 Toronto Climate Observatory report estimated that fossil-fuel financing linked to 18 major Toronto financial institutions enabled at least 1.44 billion tonnes of carbon-dioxide-equivalent emissions in 2022. The estimate was far larger than the institutions’ reported totals, renewing debate over how banks, asset managers and pension funds account for financed emissions.
The analysis covered three financial groups
The University of Toronto-hosted observatory examined six banks, six asset managers and six pension funds headquartered in or strongly associated with Toronto. It reviewed loans, bonds and equity connected to fossil-fuel companies using publicly available financial and emissions information.
The report said the institutions financed more than C$1.43 trillion in fossil-fuel companies in 2022. Its calculated emissions were almost twice Canada’s national emissions and close to 100 times the City of Toronto’s territorial total.
Financed emissions differ from office emissions
A bank can reduce electricity use in branches while continuing to lend to high-emitting projects. Financed-emissions accounting allocates part of a borrower’s or investee’s emissions to the institution supplying capital.
That does not mean a bank physically released every attributed tonne. It is an accounting method for measuring exposure and influence in a financial portfolio. The result changes with attribution rules, company data, asset class and the treatment of underwriting.
The report identified large disclosure gaps
The researchers said institutional disclosures omitted important portions of Scope 3 emissions or used inconsistent boundaries. They characterized their own estimate as an indicative minimum because public information did not cover every financed activity.
For example, the study compared Royal Bank of Canada’s reported 2022 financed emissions of about 38 million tonnes with an estimate above 233 million tonnes under the report’s broader method. A difference that large demands an explanation of boundaries rather than an assumption that either number measures exactly the same thing.
Comparisons with countries need context
Saying Bay Street would rank among major national emitters makes scale understandable, but portfolio emissions can overlap. Several lenders or investors may each receive an attributed share, and national inventories measure emissions produced within defined territory.
The comparison therefore illustrates financial exposure; it does not turn Toronto into a sovereign emitter or prove that every financed tonne would disappear if one institution sold an asset.
The report called for common rules
Recommendations included uniform climate disclosure, credible transition plans, stronger federal oversight and a larger advocacy role for Toronto. Standardized methods would let investors and the public compare institutions without rewarding the narrowest reporting boundary.
Disclosure alone does not cut emissions. Transition plans need interim targets, sector pathways, governance, capital-allocation evidence and reporting on whether clients are moving away from high-carbon activity.
Financial institutions raised a different concern
Canadian banks have said they can support an orderly transition by financing clients as they reduce emissions, and that withdrawing capital indiscriminately may shift assets to less transparent owners. That argument has merit only when engagement has measurable deadlines and consequences.
Continuing finance without verified change can preserve emissions while producing optimistic targets. Conversely, an abrupt exit can affect jobs, energy security and communities. Transparent data allow those trade-offs to be assessed rather than hidden.
Toronto’s authority was limited but real
Bank regulation is primarily federal, so city council could not impose a complete national disclosure regime. Toronto could examine its own investments and procurement, advocate for standards and participate in municipal climate-finance initiatives.
The report’s strongest contribution was exposing how profoundly totals depend on what is counted. Its 1.44-billion-tonne estimate was a research finding with methodology and uncertainty—not a direct corporate confession. The policy test was whether regulators could create consistent, audited accounting that led to real-world emissions reductions.
