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

banks have for the first time said their green financing efforts

may not necessarily curtail emissions growth, after years of

pressure from activists to improve transparency in their climate

goals.

Canadian banks, said to be one of the biggest fossil

fuel financiers globally, have drawn criticism from climate

activists and investors over using sustainability-linked

financing (SLF) merely for the pretence of a lower carbon

footprint rather than take meaningful steps in that direction.

In their latest annual climate reports released during

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.

"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, which is part of a broader international push for

accountability on corporate climate pledges.

Price said the latest revelations were not enough to obviate

an investigation.

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

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

the influence of the oil sector, the federal government has set

out aggressive emissions goals that include pushing companies

to cut emissions up to 38% from 2019 levels by 2030.

Bank of Nova Scotia ( BNS ) has given C$132 billion ($97

billion) since 2018 toward 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.

Scotiabank's climate-related finance framework, released

last year, includes broader categories such as biodiversity,

sustainable agriculture and circular economy, which are not

necessarily measured in emissions reductions.

CIBC said "sustainable financing may involve

eligible green activities... but do not necessarily curtail the

growth of their absolute emissions."

TD said the greenhouse gas emissions impact of its business

activities cannot be "reliably measured at this time."

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

that the target of limiting global temperatures to 1.5 degrees

Celsius above preindustrial levels would be a key challenge and

that just 2% of its clients have plans 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.

In a recent report, think tank InfluenceMap said between

2020 and 2022 the big five Canadian 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 U.S. 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, in which companies exaggerate their

environmental credentials.

($1 = 1.3578 Canadian dollars)