By Leilani Farha & Richard Brooks
Canada’s six largest banks just reported their highest quarterly profits on record. RBC’s earnings jumped 29% to $5.4 billion. CIBC climbed 16% to $2.2 billion. Even TD, amid restructuring costs and anti-money-laundering penalties, saw adjusted profits rise 22%. All six banks beat analysts’ estimates as capital markets surged and fee income soared.
These record profits weren’t earned by accident. They came from financing the very crises that are devastating Canadian communities.
In 2024, the hottest year on record, Canada’s five largest banks increased their fossil fuel financing by billions of dollars. RBC poured $34.3 billion into oil and gas, TD increased its funding by 46%, and CIBC by 41%. Collectively, these banks provided $131 billion to fossil fuel companies, three times more exposure than their European peers.
But Canada’s banks don’t just finance climate breakdown through fossil fuels. They’re also key players in the housing crisis. Through their mortgage lending, commercial financing terms, and valuation systems, Canada’s six largest banks actively shape a market that rewards evictions, encourages rent increases, and ignores climate impacts.
The six largest banks control 80% of Canada’s mortgage market: $2.2 trillion in debt, about 85% of our GDP. But their impact extends far beyond mortgages. Whether financing developments, facilitating property acquisitions by REITs, or packaging real estate into “green” portfolios, banks fail to evaluate CO₂ emissions from a sector representing 18% of Canada’s greenhouse gas emissions.
Despite real estate’s significant climate impact, banks market it as a climate-friendly alternative to fossil fuels; a dangerous myth that obscures how housing finance contributes to Canada’s third-largest emissions sector, after oil and gas and transportation. Canadians understand what’s at stake: recent polling shows 84% of Torontonians support building requirements that reduce emissions, while 111 organizations—from builders to environmental groups—demand the federal Build Canada Homes program commit to clean heating technologies rather than polluting furnaces. Yet banks continue financing housing construction that locks in decades of pollution and displaces communities.
When “Improvement” Means Displacement
When housing providers seek loans for older apartment buildings where tenants pay affordable rents, banks offer restrictive terms. But if they commit to renovations that will push out those tenants and increase rents, the lending terms become far more generous. As a result, longstanding tenants are forced to move to the peripheries of our cities, and they are replaced by wealthier ones. Their once affordable apartments are rented for double or triple the price.
This is displacement financing: lending conditions that reward evicting people and extracting higher rents. The human costs are immediate and climate costs accumulate; construction emissions, increased commute distances, higher per-unit energy consumption from wealthier replacement tenants.
Meanwhile, non-profit housing providers committed to affordable rents receive worse lending terms: lower loan ratios, government guarantee requirements, shorter repayment periods. The system structurally blocks organizations providing stable, affordable housing with lower environmental impact.
Profiting From Crisis
While the Carney government’s recent budget acknowledges the need for reduced emissions and more non-market housing, it falls short of the investment and regulatory oversight needed to address these generational crises—even as banks post record earnings from practices that deepen them.
Prime Minister Carney helped create the Net Zero Banking Alliance because he understood that banks need to be held accountable to the way their business practices impact our planet and people. The mass exodus from NZBA, and banks’ refusal to track the climate impacts of real estate investments prove that stronger oversight is needed.
Breaking the Cycle
A new report on banks’ role in fueling our housing and climate crises highlights necessary action. Banks must assess and disclose climate impacts of residential lending. Loan criteria must include affordability metrics and tenant security considerations. Lending should reward energy-efficient construction and genuine retrofits that don’t displace people. Government must shift from expanding access to debt toward ensuring actual affordability.
Most fundamentally, banks must take responsibility for financing both crises. We know how banks maximize profits while socializing risks through government guarantees. To truly correct course, we need to name what’s happening: a financial system privatizing enormous profits while Canadians pay through budget cuts and tax dollars feeding government guarantees, is actively impeding attempts to resolve these crises in the name of profit.
Canada’s banks are on track for their most profitable year ever. But these record earnings are built on the back of climate destruction and housing displacement. It’s time for regulatory accountability that recognizes banks’ role in fueling Canada’s twin housing and climate emergencies – not voluntary frameworks they’ll abandon when convenient, but real consequences that protect communities over shareholder returns.
