RBC Adds “Decarbonization Finance” Category for Hard-to-Abate Sectors to Sustainable Finance Framework

Royal Financial institution of Canada (RBC) introduced a collection of recent sustainable finance targets and initiatives, together with the institution of a brand new “decarbonization finance” class inside its Sustainable Finance Framework, aimed toward growing readability for purchasers on the eligibility of decarbonization actions, and to assist speed up capital deployment to emissions discount efforts in high-emitting, hard-to-abate sectors.

In line with RBC, the launch of the brand new class is meant to assist facilitate the allocation of capital to high-emitting and exhausting to abate sectors, equivalent to pure fuel, metal and cement, that can proceed to offer important merchandise, whereas recognizing the dangers of supporting actions in these areas that don’t make a significant contribution to purchasers’ transition plans.

The financial institution launched standards for actions to be eligible beneath the brand new class, together with the exercise being an eligible decarbonization exercise and the shopper having a sufficiently strong transition plan. In line with RBC, the eligibility standards can depend on an evaluation of the shopper’s transition plan beneath the financial institution’s sector-specific transition readiness framework, and received’t essentially require 1.5⁰C aligned emissions discount targets, as some sectors don’t but have a transparent path to attaining these targets.

In its framework, RBC mentioned:

“We consider this can be a pragmatic strategy that acknowledges the necessity to make pressing progress on decarbonization in the present day whereas the broader financial transformation required to realize net-zero continues to unfold.”

Along with the up to date framework, RBC additionally launched new targets to develop the financial institution’s total low-carbon power lending to $35 billion by 2030, and to triple its lending for renewable power throughout RBC Capital Markets and Business Banking by 2030, from its present base of $5.2 billion, in addition to to allocate $1 billion by 2030 to help the event and scaling of modern local weather options, aimed toward serving to purchasers to realize their very own local weather targets.

The brand new actions have been introduced alongside the discharge of RBC’s 2023 Local weather Report, outlining the financial institution’s progress in managing climate-related dangers and alternatives in keeping with its local weather technique. RBC set a objective in 2021 to mobilize $500 billion in sustainable finance by 2025. In line with the brand new local weather report, the financial institution elevated its cumulative sustainable finance facilitation by over $100 billion in 2022, reaching $394 billion in direction of its 2025 objective.

Jennifer Livingstone, Vice President, Local weather at RBC, mentioned:

“The actions we’re asserting in the present day will assist help our purchasers of their efforts to cut back emissions, contribute to bringing extra renewable power on-line and supply wanted capital to modern local weather options.”