TORONTO, March 19 (Reuters) - Some of Canada's biggest

banks have admitted for the first time that their

climate-related finance efforts may not necessarily curtail

emissions growth, following years of pressure from climate

activists for banks to be more transparent about their claims on

climate goals.

Canadian banks, said to be one of the biggest fossil fuel

financiers globally, have drawn criticism from climate activists

and investors for years claiming they are using

sustainability-linked financing (SLF) merely for pretence of a

lower carbon footprint rather than take meaningful steps in that

direction.

In their latest annual climate reports released over the

past week, many Canadian banks have pledged billions of dollars

in sustainable financing to decarbonize high-emitting sectors,

while highlighting major challenges to meeting their goals.

Bank of Nova Scotia ( BNS ), CIBC and TD

noted that their sustainable finance targets may not necessarily

curtail the growth of emissions.

"The question for regulators will be whether it's enough

for the banks to insert these brief disclaimers deep in their

ESG reporting or whether they need to do a better job telling

their investors and the public that these huge financial numbers

they promote as green aren't necessarily adding up to emissions

reductions at all," said Matt Price, executive director of

Investors for Paris Compliance.

In January, the group urged securities regulators to

investigate major Canadian banks on their climate-related claims

and alleged misleading disclosures.

The complaint gave climate activists more fuel in their

fight, that is part of a broader international push for

accountability on corporate climate pledges.

Price said the latest revelations were still not enough to

obviate the need for an investigation. He noted that TD, for

example, is still leaning on its C$500 billion sustainable

finance initiative, without the qualifiers it makes elsewhere,

which he says is misleading.

Canada is the world's fourth-biggest oil producer, and

energy sector contributes about 5% to the country's GDP. Despite

the influence of the oil sector on the economy, the federal

government has set out aggressive emissions goals that include

pushing companies in the sector to cut emissions up to 38% from

2019 levels by 2030.

Bank of Nova Scotia ( BNS ) gave a total of C$132 billion

since 2018 towards its target of C$350 billion in

climate-related finance by 2030, but said that climate-related

projects "may - or may not - lead to reductions in overall

emissions."

The bank's Chief Sustainability and Communications Officer

Meigan Terry said it aims "to be transparent and support a clear

understanding" about its climate-related financing target.

CIBC echoed a similar narrative, saying "sustainable

financing may involve eligible green activities... but do not

necessarily curtail the growth of their absolute emissions."

Other big banks also highlighted the difficulties in

achieving climate goals.

Royal Bank of Canada ( RY ), Canada's No. 1 bank, said the

target of limiting global temperatures to 1.5 degrees Celsius

above preindustrial levels would be a key challenge and just 2%

of its clients have plans that are aligned with that goal.

The bank's plans this year include tripling lending for

renewable energy projects to $15 billion and boosting low-carbon

energy lending to $35 billion by 2030.

TD said greenhouse gas emissions impact of its business

activities that are eligible towards the C$500 billion

sustainable and decarbonization target cannot, be "reliably

measured at this time."

In a recent report, think tank InfluenceMap said between

2020 and 2022 the big five banks steadily increased their fossil

fuel financing exposure to an average of 18.4% in 2022 from

15.5% in 2020. That compares with an average of 6.1% for leading

US banks and 8.7% for European banks across the same period.

Several global banks have committed to "net-zero financed

emissions" by 2050 but have drawn doubts from many investors,

due to concerns over the lack of a defined goal.

Regulators in the Americas and Europe have increasingly been

worried about greenwashing, whereby companies exaggerate their

environmental credentials.