Transcript Document

Environmentally Sustainable
Business:
RBC’s Perspective
Sandra Odendahl
Director, Corporate Environmental Affairs
Royal Bank of Canada
Rotman School of Management
February 22, 2009
Overview
I. About RBC
II. Why Sustainability?
III. Integrating Sustainability into business
IV. Banking and the Environment
V. Sustainable Business at RBC
VI. What Next?
I. About RBC
• Assets ~ $655 billion; Market capitalization ~ $77.6 billion.
• Approximately 80,000 employees in 50 countries
• Major operations in Canada, US, UK and the Caribbean
• Over 1700 branches and more than 4,800 ABMs
• Business areas:
– RBC Canadian Banking (~44% of revenue)
– RBC Capital Markets
– RBC Wealth Management
– RBC US and International Banking
– RBC Insurance
Largest Canadian bank, 5th largest bank in North America
Largest Company on the TSX
II. Why Environmental Sustainability?
II. Why Environmental Sustainability?
What’s in it for Business
Challenging economic
conditions, heightened
competition, volatile
markets
Greater need for
breakthrough messaging
and clear differentiation;
reduce costs, innovate
Society’s priorities have
evolved – Baby-boomers
want balance of Wealth,
Wellness and World
Company must tap into
need for relevance,
authenticity, perspective –
clients and employees
Limited government
leadership and money
Expectation that major
companies will fill the void
Our sustainability strategies must reflect these new realities
III. Integrating Sustainability into Business
- Components
1.
Governance
–
Board of directors commitment
–
Executive support and leadership
–
Staff
–
Committees and/or champions
–
Policy
2.
Strategy
–
Priorities
–
Initiatives
–
Targets
–
Performance measures
3.
Execution
–
Results
The Challenge is Getting the Strategy Right…..
Integrating Sustainability into Business
Step 1: Who are you?
• Know how your business
works. Make sure you
are doing your core
business well
• All the CSR and
environmental programs
in the world won’t help if
you aren’t paying
attention to your core
business
• Sustainability includes
“financial sustainability”
Integrating Sustainability into Business
Step 2: Your Company & the Environment
Understand your
environmental
aspects.
Supply chain
(indirect impacts)
• Understand your inputs,
operations, and outputs
• Where does the natural
environment affect your
business?
• How does your
business affect the
natural environment?
Operations
Products/
Services
Waste: to air,
water, and land
Integrating Sustainability into Business
Step 3: Who Cares?
Understand your
stakeholders
Clients
Shareholders
Employees
• Who are they?
• Which ones do you
really care about?
• What do they
expect?
Community
Government &
Regulators
NGOs
Media
Competitors
Suppliers
Priority environmental issues for the firm
Integrating Sustainability into Business
Step 4: Make the Plan
For the priority issues:
• Key projects and
initiatives
• Targets
• Timelines
• How will you
measure success?
Who do you want to be?
Integrating Sustainability into Business
Step 5: Roll up your sleeves
• Resources, roles,
responsibilities, authorities
• Implementation
• Training
• Communication
• Documentation
• Report to executives
• Continuous improvement
A good framework:
- Environmental Management System
• Policy on the Environment
• Identify environmental aspects
• Identify legal and other requirements
• Objectives and targets
• Resources, roles, responsibilities, authorities
• Implementation
• Training
• Communication
• Documentation
• Report to executives
• Continuous improvement
IV. Banking and the Environment
Pop Quiz!
• Guess how many of the 9 Global Banks
on the CDP’s 2007 “Climate Disclosure
Leadership Index” were nationalised,
bailed out by taxpayers, or had net
losses in 2008?
Most Important thing: Do your core business well
Banking and the Environment
Understanding Our Environmental aspects
Operational
Footprint
Supply Chain
• Paper
• Electronics
• Office supplies
• Furniture
Operations
• Electricity use
• Paper use
• GHG emissions
Products &
Services
Responsible
Lending
• Business loans
• Commercial
mortgages
• Contaminated site
development
• Corporate lending
• Project finance
• Clean tech finance
• Investment banking
•
•
•
•
•
•
•
Emissions trading
Eco-mortgages
Equity Research
SRI funds
Green rewards
E-Statements
Green incentives
Banking and the Environment
Understanding Our Stakeholders
•
Climate change and our portfolio
– Financing CO2 intensive versus low CO2 sectors
•
Protecting the boreal forest and Indigenous people
– Lending
– Purchasing
– Operations
•
Social and environmental review in project finance and underwriting
•
Impacts of our Supply-chain (recycled/FSC paper, green power…)
•
Do we walk the talk in our daily operations (recycling, energy use..)
•
Environmentally-friendly banking options
•
Stakeholder relations
•
Transparency
•
Lower reputation, credit, operational, and legal risk
Service, Strength and Stability
Banking and the Environment
Our more “Vocal” Stakeholders
4 year ‘Global Finance
Campaign’
V. Sustainable Business at RBC
What?
Avoid
Legal
Liability
Reduce
Costs
Manage
Risks
Why?
Shareholders
Donate
Sell New
Products
& Services
Stakeholders
Integrate
Into
Strategy
Why the Environment Matters to RBC
……and what we have to do
• Risk Management:
– Manage risk in lending & Investment
– Manage environmental risks in our own operations (real estate and
purchasing)
• Return
– Develop environmentally-friendly Products and Services
– Improve efficiency in operations
– Engage employees to secure loyalty and retention
• Reputation
– Differentiate ourselves
– Demonstrate thought leadership
– Transparency in Reporting and Communications
– Philanthropy
Sustainable Business at RBC
Sustainability Leader
Sustainable Business at RBC
Environmental Strategy
Vision:
•
To be the leader among Canadian financial institutions and top tier
among US peers in identifying, managing, and championing
environmental issues, helping make RBC the first choice for clients,
shareholders, and employees.
Objectives:
•
Risks managed
•
Drive returns
•
Protect and enhance reputation
Implementation:
•
Corporate Environmental Affairs (CEA) is responsible for leading RBC
in responding to environmental issues that give rise to risk, impact
returns, or may affect reputation
•
CEA Team comprises 4 professionals: Director, Senior Manager
Environmental Risk, Senior Manager Environmental Initiatives,
Manager Environmental Solutions
Sustainable Business at RBC
Our Key Stakeholders
•
Shareholders - made resolutions in 2005, 2006, 2007, and 2008 to
Canadian banks on climate change, biodiversity, and linking executive
compensation to sustainability performance
•
Clients and the General Public are requesting CSR info. 40% of
Canadians are “Strong Environmentalist Buyers” – Likely to pay more
for “green”,
•
91.3% of RBC employees said it was Very Important to work for a
company with a strong record of corporate social responsibility.
Environmental and CSR initiatives are having a direct impact on firms'
attractiveness to potential new recruits and are a determining factor in
employee retention and engagement rates (UK-based Research,
2007).
•
Analysts & Regulators, including Dow Jones Sustainability Index,
Jantzi Research, Carbon Disclosure Project, Desjardins Environment
Fund, Securities Regulators, PAS, etc are demanding transparency
•
Environmental activists, like Forest Ethics; Rainforest Action
Network; and Bank Track want banks to be responsible for who they
lend to
Sustainable Business at RBC
RBC’s Environmental Blueprint
• RBC has a solid track record of environmental management,
starting with first Policy on Environment and Environmental Risk
Manager in 1992
• Environmental Blueprint is a summary of RBC’s medium and
longer term aspirations and commitments
• Publicly released in October 2007 following review and support
from the enterprise
• Includes:
– Updated corporate environmental policy
– Priority environmental issues
– Priority activities
– Stakeholder engagement, philanthropy, governance and reporting
Sustainable Business at RBC
RBC’s Environmental Blueprint
Priority issues
Climate Change
Forests/Biodiversity
Priority Activities
i.
Reduce our environmental footprint
ii. Risk Management & Responsible Lending
iii. Environmental products and services
Water
Sustainable Business at RBC
i. Reduce our Environmental Footprint
• Energy use and GHG emissions
– Green IT initiative
– Lighting Retrofits
– HVAC upgrades
• Green purchasing standards
– Are we buying from responsible companies?
– Green Energy
– Forest Stewardship Council (FSC) certified
– Energy Star
• Paper and water use
– Default duplexing
– Electronic statements
– Tap water preferres
• Waste management (electronic waste? VTB preference?)
Sustainable Business at RBC
ii. Risk Mgmt and Responsible Lending
Environmental risk is the risk of loss to financial, operational or
reputational value resulting from the impact of environmental
issues.
• Environmental Review at the Sector level
• Environmental Review at the Borrower level
– Borrower’s ability to manage environmental matters is discussed
and considered in Borrower assessment and risk rating, where
appropriate
• Environmental review at the transaction Level
– Procedures depend on size and type of transaction
– If real property involved, Phase I ESA is typical starting point
– Client questionnaire to determine management of on-going issues
– Equator principles for project finance
Sustainable Business at RBC
iii. Offering “Green” Products and Services
•
Energy Saver mortgages and loans
– Subsidised energy audit, ecoefficient renovation advice, line of
credit
•
Retail SRI Mutual Funds
•
Financing energy efficacy retrofits
– Solar rooftops
•
GHG emissions trading, brokerage
•
Renewable energy
– Project finance
– Small renewables
•
Renewable power investment
banking
•
LEED certified affordable Housing
There must be a Business Case
VI. What Next for Business and
Environmental Sustainability?
•
Streamlining
– Focus on what makes sense for your company
•
Eco-efficiency first
– Is there a business case?
– Can it save money?
•
Implications of a price on carbon
•
Green Procurement
– Supply chain matters
•
Consumers weary of greenwash
– Walk the talk
•
Making use of committed volunteers
– Employees who care will be urged to contribute
•
There is no finish line
– Constantly evolving area
Thank You!
Questions?
[email protected]
www.rbc.com/environment