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
TORONTO, March 6, 2024 - RBC today 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) 1 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.2
"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.
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.
In addition to the 2023 Climate Report, RBC released two other reports today…
The 2023 Environmental, Social and Governance (ESG) Progress Report provides an overview of the bank's ESG focus areas, key performance indicators and highlights from 2023. The report is framed around the RBC Purpose Framework – Powering Ideas for People and PlanetTM. It sets out the three societal ambitions where RBC believes it can have a meaningful impact: accelerate the transition to a greener economy, equip people with the skills for a thriving future, and drive equitable prosperity in the communities in which we operate.
The 2023 Public Accountability Statement (PAS) outlines RBC's contribution to the economy and society in Canada – key measures supporting RBC's Purpose to help clients thrive and communities prosper.
"We are proud of the progress made in 2023 on the societal challenges impacting our business and our communities," said Andrea Barrack, senior vice president, Corporate Citizenship & ESG. "As an organization we are focused on how we can power ideas for people and the planet to accelerate the transition to a greener economy, equip people with skills for a thriving future and driving more equitable prosperity."
Caution Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation with respect to Royal Bank of Canada's (we, us or our) 2023 ESG Progress Report, 2023 Climate Report and 2023 Public Accountability Statement.
Forward-looking statements in this press release include, but are not limited to, statements relating to our economic, environmental (including climate), social and governance-related objectives, vision, ambitions, commitments, goals, metrics and targets, including our initial 2030 interim emissions reduction targets (interim targets) as well as our impacts, our ultimate goal of achieving net-zero in our lending by 2050, which includes (i) our goal to triple lending for renewable energy across RBC Capital Markets and Commercial Banking and to grow our overall low-carbon lending to $35 billion by 2030, and (ii) our goal to allocate $1 billionby 2030 to support the development and scaling of innovative climate solutions, our three societal ambitions under the RBC Purpose Framework - Powering Ideas for People and Planet, our commitment to facilitating $500 billion in sustainable finance by 2025 , including through accelerating capital deployment to emissions reduction efforts in high-emitting, hard-to-abate sectors with a new decarbonization finance category, to support our clients' ESG objectives and our approach and methodology for classifying, tracking and disclosing performance towards this commitment; our commitment to take actions to bring down emissions from the oil & gas sector over time; and our intention to take certain actions based on the results of RBC Capital Markets' assessment of its energy clients' transition plans;. The forward-looking information contained in this press release is presented for the purpose of assisting our stakeholders, including holders of our securities and financial analysts, in understanding our vision, ambitions, commitments, goals, metrics and targets, as well as our economic, environmental (including climate), social and governance-related impacts and objectives, including the ways we intend to address climate-related governance, strategy, risks, opportunities, metrics and targets, and may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "believe", "expect", "expectation", "aim", "achieve", "suggest", "seek", "foresee", "forecast", "schedule" "anticipate", "intend", "estimate", "commit", "goal", "plan", "strive", "objective", "target", "outlook", "timeline" and "project" and similar expressions of future or conditional verbs such as "will", "may", "should", "could", "can" or "would" or negative or grammatical variations thereof.
By their very nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature, which give rise to the possibility that our predictions, forecasts, projections, expectations or conclusions will not prove to be accurate, that our assumptions may not be correct, and that our environmental and social or other objectives, vision, ambitions, commitments, goals, metrics and targets and strategies to mitigate and adapt to climate-related risks and opportunities, and economic, environmental, social and governance-related impacts and objectives will not be achieved and that our actual results may differ materially from such predictions, forecasts, projections, expectations or conclusions. Moreover, many of the assumptions, standards, metrics and measurements used in preparing this press release continue to evolve and are based on assumptions believed to be reasonable at the time of preparation, but should not be considered guarantees.
We caution readers not to place undue reliance on these statements as a number of risk factors could cause our actual results to differ materially from the expectations expressed in such forward-looking statements.
These factors – many of which are beyond our control and the effects of which can be difficult to predict – include but are not limited to: the need for more and better climate data and standardization of climate-related measurement methodologies, climate-related conditions and weather events, the need for active and continuing participation and action of various stakeholders (including governmental and non-governmental organizations, other financial institutions, businesses and individuals), technological advancements, the evolution of consumer behaviour, evolving social views on ESG-related topics, varying decarbonization efforts across economies, the need for thoughtful climate policies around the world, the challenges of balancing emission reduction targets with an orderly and inclusive transition and geopolitical factors that impact global energy needs, our ability to gather, analyze and verify data, our ability to successfully implement various initiatives throughout the company under expected time frames, the risk that initiatives will not be completed within a specified period or at all or with the results or outcomes as originally expected or anticipated by RBC, the compliance of various third parties with our agreements, policies and procedures, and their commitments to us, financial market conditions, our business operations, our financial results, condition and objectives, the legal and regulatory environment, and regulatory compliance (which could lead us to being subject to various legal and regulatory proceedings, the potential outcome of which could include regulatory restrictions, penalties and fines), and cyber, strategic, reputation, competitive, legal and regulatory environment, model and systemic risks and other risks. Additional factors that could cause actual results to differ materially from the expectations in such forward-looking statements can be found in the risk sections of our Annual Report for the year ended October 31, 2023 and the Risk management section of our Quarterly Report for the three month period ended January 31, 2024.
We caution that the foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results. When relying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events, as well as the inherent uncertainty of forward-looking statements. Except as required by law, none of RBC nor its affiliates undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by us or on our behalf.
About RBC
Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 94,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada's biggest bank and one of the largest in the world, based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our more than 17 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com.
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