Policies
Risk measurement
Management and Mitigation
Reporting
Policies
RBC published its first Corporate Environmental Policy in 1991. The RBC Environmental Blueprint, published in 2007, includes a revised Corporate Environmental Policy, as well as:
- details regarding environmental issues that are important to our stakeholders and to RBC
- outlines our commitment to reducing our environmental footprint,
- outlines our commitment to responsible lending and investment, and
- outlines our commitment to the development of environmental products and services.
The foundation of RBC’s approach to responsible lending is our environmental credit risk policy suite, which covers a range of environmental risks and business activities. The purpose of this suite of policies is to help us identify and manage environmental risks in our lending activities, and to protect the interests of our clients and stakeholders. These policies are regularly reviewed to ensure compliance with legal and operational requirements, and to take into account evolving business activities. We have comprehensive environmental risk management policies for:
- Commercial Mortgages
- Business and Commercial Markets
- Agriculture lending
- Social and Environmental Review in Project Finance
- Public Sector lending
Policies require that certain transactions are reviewed by internal or third-party environmental specialists to ensure that we are appropriately identifying and addressing environmental risks. We also employ environmental questionnaires and checklists, where appropriate, to asses the risks.
Our Policy on Social and Environmental Review in Project Finance reflects our commitment to the Equator Principles (EPs). The EPs are voluntary guidelines that help financial institutions address the environmental and social risks associated with project finance.
Risk measurement
The magnitude of environmental risk associated with business activities is a function of several factors including:
- the industry sector,
- the type and size of the transaction,
- the ability of the borrower to manage environmental matters, and
- whether real property is taken as collateral.
Some environmental risks can be easily quantified while others are assessed on a qualitative basis. For example, in our lending activities, we may quantify the potential cost of cleaning up environmental contamination of properties used as security for loans, and the cost to an obligor of making operational changes that may be required to meet environmental regulatory requirements or satisfy other obligations. We are also increasingly interested in quantifying the potential cost of new environmental regulations, such as climate change regulation, to a particular sector or client.
Other environmental risks are assessed on a qualitative basis, for example, the exposure of a particular industry to the physical effects of climate change or water scarcity.
Management and Mitigation
RBC established an environmental risk management group in 1991 to provide provide risk mitigation services and credit approval support to the organisation. Today, global environmental risk management is overseen by the Corporate Environmental Affairs (CEA) Group with support from our business segments and Corporate Support units. The CEA Group is responsible for developing and implementing the environmental risk management system, including:
- identifying environmental risks in the organization;
- designing and supporting environmental risk policies, programs and initiatives;
- monitoring implementation; and
- leading communication and training.
The CEA Group also provides advisory services and support to business and functional units on the management of specific environmental risks in business transactions. Environmental consultants and other third-party experts are an important part of the environmental risk management process. The CEA Group pre-screens environmental consultants from across Canada and the US by evaluating their professional qualifications, experience and services. The group maintains a list of RBC Pre-Qualified Environmental Consultants which meet our criteria. More about consultants.
Reporting
The Board of Directors and senior management committees are periodically provided with reports and analysis on risks associated with environmental issues, as appropriate. Loan losses resulting from environmental issues are tracked and reported to senior management.
We report on our implementation of the EPs annually in our Corporate Responsibility Report and Public Accountability Statement (CRR & PAS) and on rbc.com. The CRR & PAS also provides information about our environmental policies, lending, emerging issues, stakeholder engagement, and environmental performance and initiatives.
