RBC: Leading by Example

Introduction

The Royal Bank of Canada (RBC) has aligned themselves with Task Force on Climate-Related Financial Disclosures (TCFD), reporting ESG issues, and developing a sustainable bond framework. This article will showcase RBC’s leadership in sustainable financing, their innovative approach, and how 15Rock can make you an industry leader.

Sustainable Finance Reporting

RBC has impacted over 36 countries, assisted 17 million clients, with over 86,000+ employees, all within one year - 2020. The same year, they have allocated $73.3 billion to sustainable finance, building towards their goal of providing $500 billion by 2025.

RBC has achievements in the sustainability sector over the years. In 2020, they were the first financial institution to sign a contract for renewable energy. The same year, the Carbon Disclosure Project (CDP) rated RBC with a prestigious grade of A- out of 9,600+ companies. RBC acquired the  title “leadership level” for their climate change initiatives.

RBC is the 11th top valued bank globally and [5th largest bank](https://www.rbccm.com/en/about-us.page#:~:text=Founded in 1864%2C RBC is,of highly rated global banks.) in North America in 2022.

RBC’s Global Impacts

RBC takes an active stance on integration, only investing in ESG-related issues that have a direct meaningful impact. RBC believes long-term thinking including ESG is the core of their approach, directly pricing ESG risks.

In the industry, RBC has resulted in a low ESG risk rating, ranking 175 out of 993. Compared to TD Bank’s medium risk, ranking of 222 and Bank of China’s high risk, ranking of 806.

RBC global asset management division released their TFCD report for 2021. RBC will continue to globally impact, a few continuous actions:

• Over 1,650+ ESG-related engagements.
• 54% of RBC Global Asset Management’s (GAM) assets were conducted & reported, targeting for carbon emissions analysis & net-zero alignment.
• Focused on their climate scenario analysis on transition scenarios to plan for potential risks in climate change.
• Active guidance & advancement toward their climate change commitments.

RBC established a Climate Strategy Steering Committee and ESG Disclosure Council (ESG DC) in 2021 . The same year, they published Canada’s road to net zero, a $2 trillion transition. RBC is leading a climate initiative, follow their actions:

• Continue to support TCFD & annual reporting.
• Continual membership of Climate Action 100+.
• Active involvement with those lacking a net zero goal or action plan.
• Track, analyze, & report asset’s emissions and climatic scenarios.
• Climate research and build climate expertise, & investment.
• Climate data ensures important climatic factors are considered while investing.
• Proxy voting to express climate change perspectives. Voting results are publicly displayed.

In an effort to achieve net zero, RBC will act to reduce carbon emissions by 70% and rely 100% on renewable and non-emitting electricity by 2025. Additionally, they will minimize electronic, paper, and plastic waste. They will continue to maintain net zero in their global operations and offset any remaining emissions through purchasing carbon offsets.

RBC: How did they do it?

RBC offering responsible investing (RI); a broad term in which they encompass a number of ESG initiatives to be included in their clients investment portfolio.

RBC includes five values to their global asset management plan: client first, collaboration, accountability, diversity & inclusion, and integrity. RBC strictly defined their investment strategies: ESG integration, ESG screening and exclusion, thematic ESG investing, and impact investing.

RBC seeks to offer valuable insight by providing investment outcomes, promoting ESG issues with metrics, and helping clients who has fallen short of their goal. RBC identifies, plans, then impacts. To guarantee RBC leaves a positive impact, they have established an impact measurement framework (IMF) to accurately assess the overall impact on society, environment, economy, and to their employees.

Building on the frameworks above, RBC created a sustainable bond framework to specifically address environmental needs. The framework addresses the use and management of proceeds to assets, evaluation, and reporting. Proceeds will be exclusively applied to one of three bonds, each thoroughly defined by eligible categories. The eligible category must have certain requirements to receive funding.

The three bonds are green, social, and sustainability. Green and social are categorized separately. The sustainability bond category excels, being included in both green and social bonds. RBC’s framework was created with alignment to the Sustainable Development Goals (SDG).

Green Bond Categories:

• Renewable Energy: Wind, solar, geothermal, waste biomass, tidal.
• Energy Efficiency: Reducing energy consumption or reducing of greenhouse gas (GHG)
• Pollution Prevention & Control: Collection, treatment, recycling, or reusing emissions, waste, or contaminated soil.
• Sustainable Land Use: Forest management & forest certified products.
• Clean Transportation: Low or no carbon transportation operations.
• Sustainable Water & Waste Management: Collecting, treatment, recycling, or reuse of water, rainwater, or wastewater.
• Green Buildings: Certification according to third party verified building standards.
• Climate Adaptation & Resilience: Adaptation measures to reduce vulnerability to climate change impacts.

Social Bond Categories:

• Access to Essential Services: Education, healthcare, care centres, and public spaces.
• Affordable Housing: Jurisdiction dependent, providing access for low-income residents.
• Indigenous Communities & Businesses: Minimum of 51% owned or operated by indigenous group or individuals.
• Women-owned Businesses: Minimum of 51% owned and operated by women.
• Leadership in Diversity & Inclusion: Demonstrating advancements in diversity.

Why Stop There?

RBC defined each criteria. They know exactly what they are looking are, what their goals are, and how to achieve their goals. They continue to set an example to other firms while striving towards net zero through their strict guidelines and clear direction and target on what must be done. It is no wonder why they are the leading experts in this industry.

15Rock can help you manage your ESG portfolio while providing data to investors. We forecast investor behaviour by tracking a company's environmental footprint. 15Rock provides insight and offers understanding on your environmental impact and decide where to allocate your proceeds to have the largest impact. At each step, we will be there to provide data, guidance, and consultation. We combine data with machine learning to help you understand and mitigate ESG risk. On your platform we can design a flow and action plan for achieving your goals.

Whether your goals follow RBC’s alignment with SDG or not, we provide reporting and alignment to various standards, including:

• CDSB - Climate Disclosure Standards Board
• CDP - Carbon Disclosure Project
• GRI - Global Reporting Initiative
• IIRC - International Integrated Reporting Council
• SASB - Sustainability Accounting Standards Board
• TCFD - Taskforce on Climate Related Disclosures

So what are you waiting for? To learn more on how 15Rock can help, contact us here for a quick demo.

If you have any suggestions, ideas, or concerns, leave a message! To learn about the latest climate transition plan taskforce created by the UK’s government, check out “Climate Action: We Must Transition.”