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Annual Climate Report provides first insights on assessment of RBC Capital Markets’ energy client transition plans; new actions from RBC to provide capital for renewable energy and other low-carbon energy, invest in climate solutions and accelerate capital deployment to support clients’ emissions reduction efforts
RBC announced three new actions it intends to take to help accelerate the transition to a greener economy. These actions are included as part of the release of the RBC Climate Report 2023, an annual update from the bank on progress made against the bank’s climate strategy. The bank also released its 2023 Environmental, Social & Governance Progress Report and 2023 Public Accountability Statement.
- Triple lending for renewable energy across RBC Capital Markets and Commercial Banking and grow RBC’s overall low-carbon energy lending to $35 billion by 2030
- Allocate $1 billion by 2030 to support the development and scaling of innovative climate solutions
- Accelerate capital deployment to emissions reduction efforts with a new decarbonization finance category within RBC’s Sustainable Finance Framework
In 2023, RBC was the first major Canadian bank to release a formal approach – the Client Engagement Approach on Climate – Energy Sector – for how its capital markets business will engage with energy clients (oil & gas and power generation) on climate, including a framework to assess their transition plans. The results of the initial assessment show that the majority of energy clients have started preparing for the energy transition, with 79 per cent of RBC Capital Markets’ lending exposure in energy to clients who have established transition plans.
“These insights into how prepared our clients are for the transition to net-zero are critical to helping us identify opportunities and areas of focus to help them bring down emissions. It tells us that most are on the journey, and they need advice and capital to get there,” said Jennifer Livingstone, vice president, Climate. “The actions we are announcing today will help support our clients in their efforts to reduce emissions, contribute to bringing more renewable energy online and provide needed capital to innovative climate solutions.“
The assessment results highlight the need to move more urgently to reduce emissions. RBC found that aligning to a 1.5°C temperature outcome is challenging at this early stage.
In addition, RBC disclosed progress against its interim emissions targets for the first time. Client actions to transition to low-carbon energy sources are beginning to be reflected in progress for the power generation sector, where the Scope 1 physical emissions intensity has declined relative to the 2019 baseline. This decline also reflects steps RBC has taken to grow lending in the power generation sector to clients that have a greater share of renewable and other low-carbon energy sources. Scope 1-3 physical emissions intensity for the oil and gas sector has stayed relatively flat compared to the 2019 baseline.3
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| 1 As defined in RBC’s Client Engagement Approach on Climate – Energy Sector. |
| 2 See Climate Report 2023 for details, including clients which were in-scope for the assessment. |
| 3 5% decrease in Scope 1 and 2 physical emissions intensity between 2023 and the 2019 baseline; 5% increase in Scope 3 physical emissions intensity between 2023 and the 2019 baseline. |
Tripling lending for renewable energy across RBC Capital Markets and Commercial Banking and investing in new climate solutions
RBC plans to triple its lending for renewable energy across RBC Capital Markets and Commercial Banking in support of global ambitions to increase renewable energy supply, and to grow the bank’s low-carbon energy lending to $35 billion by 2030.
To achieve their climate goals, clients will require new and emerging climate solutions that are not yet at scale. To support the development and scaling of these solutions, RBC also plans to allocate $1 billion by 2030 to funds and companies that are advancing climate solutions. This new goal is in addition to the continued philanthropic funding provided by RBC and the RBC Foundation through RBC Tech for Nature™ and its support through RBC’s national cleantech practice within RBCx™.
Accelerating capital deployment for decarbonization
RBC has established a decarbonization finance category within its Sustainable Finance Framework that aims to increase clarity for its clients on eligible decarbonization activities and to help accelerate capital deployment to emissions reduction efforts in high-emitting, hard-to-abate sectors. The category is informed by emerging industry guidance as well as the business realities of its clients. RBC recognizes the need for greater harmonization of standards, taxonomies and reporting of sustainable finance activities across the financial sector and will continue to contribute to national and international efforts in this direction.
Related Article: RBC Climate Report Calls for Increased Investment to Achieve Canada’s Net Zero Goals
Advancing accountability and reporting on progress
RBC has included additional disclosures in this year’s Climate Report on its absolute financed emissions for the oil & gas sector on an authorized loan basis. Absolute emissions from the oil & gas sector must decline over time as part of the transition to a net-zero economy. RBC is committed to taking action to bring down its absolute financed emissions for this sector over time. This includes support for clients’ decarbonization efforts alongside the acceleration of the bank’s strategy to prioritize working with clients who are proactively taking steps to decarbonize.