RBC Expands Sustainable Finance Product Suite for Businesses
Offerings include risk-sharing solution with EDC, will support corporate banking clients in advancing their sustainability goals while delivering on RBC’s commitment to provide $500 billion in sustainable finance by 2025
Royal Bank of Canada (RBC) announced the introduction of a new solution to its suite of sustainable finance products aimed at supporting businesses in realizing their climate objectives. Launched today, the RBC-EDC Sustainable Financing solution will join RBC’s existing Sustainability-Linked Loans and Green Loans products to offer a range of options to address the needs of Corporate Client Group clients. It represents another step toward meeting the bank’s commitment to provide $500 billion in sustainable financing by 2025.
“Climate change is one of the most pressing issues of our time. At RBC, we are committed to helping businesses across sectors and regions accelerate their climate goals, prepare for an orderly transition to a net-zero future, and support their social objectives,” says Andrea McLane, Senior Vice-President and Head, Corporate Client Group, RBC. “We are proud to provide these finance products to support a more sustainable future.”
RBC-EDC Sustainable Financing
Through a risk-sharing, pilot solution with Export Development Canada (EDC), RBC will provide up to US$1 billion in financing over the next three years to support Canadian businesses in their transition towards greener business operations.
RBC’s collaboration with EDC will open up funding to companies in a variety of sectors, with financing available for eligible green activities, as defined in RBC’s Sustainable Finance Framework. Eligible activities are those that address key environmental objectives, including but not limited to climate change mitigation, climate change adaptation, biodiversity and ecosystem protection, sustainable use and protection of water and marine resources, pollution prevention and control, and the circular economy.
EDC will guarantee 50 per cent of an RBC term loan – up to a maximum of US$60 million per obligor, for a period of up to seven years – providing more capacity for RBC to support its clients’ low carbon transition.
“EDC’s goal with sustainable financing is to enable real progress towards a more sustainable future,” said Justine Hendricks, Chief Corporate Sustainability Officer at Export Development Canada. “Working with financial institutions like RBC gives Canadian businesses access to the support they need to transition to more environmentally-responsible practices while also promoting sustainable trade in Canada. As part of EDC’s commitment to achieve net-zero by 2050, we are helping Canadian companies by providing them with the tools they need to be part of that journey.”
See related article: RBC Releases 2030 Emissions Reduction Targets in Line with Climate Strategy
In addition to the RBC-EDC Sustainable Financing Guarantee, the bank also offers the following sustainable finance products:
This solution incentivizes and supports businesses in working towards their climate or social objectives by tying the terms of the finance agreement to their achievement of pre-determined sustainability targets.
Companies will set ambitious sustainability performance targets that relate to the borrower’s core sustainability and business strategy. Companies will be required to track and report progress towards these targets, as measured by predefined Key Performance Indicators, with adjustments in the loan’s interest rate made upon achievement of these targets.
RBC’s Green Loans offer financing to businesses for a broad range of green projects that are intended to achieve environmental benefits, including but not limited to initiatives that help clients reduce their emissions, address natural resources depletion, loss of biodiversity, and air, water and soil pollution.
RBC Sustainable Finance Framework
Criteria for transactions classified as eligible towards RBC’s commitment to provide $500 billion in sustainable financing by 2025 are contained in the bank’s Sustainable Finance Framework. Published in October 2022, the Framework outlines RBC’s approach and methodology for sustainable finance.
Corporate banking clients interested in learning more about RBC’s sustainable financing solutions should contact their RBC Relationship Manager to assess the solutions that work best for their business needs, and for more information about the eligibility criteria and application process.