GLOBE-Net, February 13, 2012 - in what
some have described as the first major move by a Canadian financial
institution in the area of impact or social financing, RBC has
committed $20 million to a new social and environmental initiative
aimed at facilitating solutions to social and environmental
problems.
"Impact finance describes a range of financial vehicles and
services that use private capital to finance solutions to social
and environmental challenges while generating financial return, and
is expected to help drive the next wave of innovation and
productivity growth in the global economy," said RBC in statement
released last month.
What Impact financing means in practical terms is that in some
instances investors are willing to accept a slightly lower
financial return in exchange for social or environmental benefits
(though, some financial instruments in this space can actually
outperform other alternatives)
The RBC initiative is comprised of:
- A new $10 million capital fund - the RBC Impact Fund - to help
finance projects by organizations and entrepreneurs tackling social
and environmental challenges. Priority areas will include projects
promoting environmental sustainability and water resource
management, and providing employment opportunities for youth and
newcomers to Canada; and
- A $10 million investment by the RBC Foundation of its own
assets into Socially Responsible Investment (SRI) funds.
"We've been waiting for the right moment to launch a program of
this nature, and the moment is now," said Gordon M. Nixon,
president and CEO, RBC. "We are confident that our initial
investment of $10 million in the RBC Impact Fund will not only
spark entrepreneurship and innovation in Canada, but also catalyze
similar investments from others in the business community."
"We are also proud to put our money where our values are by
investing an additional $10 million of our own funds through the
RBC Foundation in socially and environmentally screened funds," he
added.
This is the first such initiative announced by a major Canadian
financial institution in the field of Socially Responsible
Investing, which includes a range of relatively new concepts and
instruments, such as social impact bonds issued to private
investors to fund projects with a social aim, where the return to
investors is tied to the success of the project and comes from the
money the project saves the government.
Canada is just beginning to play in the social finance space, an
area where a number of well-known European investment bankers have
been working for more than a decade. Governments are beginning to
see the benefits of having capital markets financing initiatives
normally funded by governments, non-profits, or charitable
organizations.
High-profile proponents of the concept in Canada include former
Prime Minister Paul Martin and Stanley Hartt, the chairman of
Macquarie Capital Markets Canada.
RBC has had a history of innovation in the field of Socially
Responsible Investing. In 2007, RBC launched the RBC Jantzi Funds
suite of products and in 2008, the PH&N Community Values Fund,
became part of the RBC Global Asset Management suite of funds.
Both offerings provide investors with socially and
environmentally screened investment opportunities, allowing them to
help sustain the planet and support communities, while generating
strong returns on their investments.
"RBC's initiative will provide an exciting opportunity to
support ventures that have a positive impact on people, planet, and
profit," said Ilse Treurnicht, CEO of MaRS and chair of the
Canadian Task Force on Social Finance. "This announcement is an
important watershed moment for impact finance in Canada. RBC's
commitment is both innovative and forward-thinking."
MaRS recently launched a Centre for Impact Investing to support
the development of the social finance marketplace in Canada.
In the next few months, RBC will assemble an advisory panel to
assist an internal group in developing criteria for the RBC Impact
Fund (including types of organizations eligible for funding, terms
of funding, geographical limitations, etc.), an appropriate
governance structure, and processes. More detailed information on
the eligibility criteria and application process for the Fund will
be communicated in the coming months.
RBC is recognized among the world's financial, social and
environmental leaders. It is listed in the 2011-2012 Dow Jones
Sustainability World Index, the Global 100 Most Sustainable
Corporations, the DJSI North American Index, and is listed on the
Jantzi Social Index, the FTSE4Good Index, and the Canadian Carbon
Disclosure Project Leadership Index.
Banks are increasingly incorporating social and environmental
factors in their screening of corporate clients, and the reasons
for these actions and the implications for businesses can vary
widely depending on the financial institution. Screening for
environmental and social risks for project finance is reasonably
developed. But as more banks enact new policies and procedures that
require evaluation of a client's environmental, social and
governance performance before advancing corporate loans, questions
are being raised as to how these policiesare being
implemented and the implications for the broader business
community. At GLOBE 2012 on March
14-16 in Vancouver a distinquished panel of financial
experts will address these issues.
Confirmed Participants:
Toby Heaps, Co-founder &
President, Corporate Knights Inc.,
Canada (Moderator)
Paul Clements-Hunt, Head, United
Nations Environment Programme Finance Initiative (UNEP-FI),
Switzerland,
Arnaud Cohen Stuart, Manager of
Business Ethics, ING Groep, the Netherlands, and
Sandra Odendahl, Director, Corporate
Environmental Affairs, Royal Bank of Canada
RBC is a major sponsor of GLOBE 2012