TORONTO, April 14, 2014 - RBC Capital Markets, the corporate and investment banking arm of Royal Bank of Canada (TSX: RY; NYSE: RY), is pleased to join the second wave of international banks that have signed onto the Green Bond Principles. As disclosed today in a release issued by The International Capital Market Association (ICMA), who will provide administrative and governance duties over the Green Bond Principles, 25 banks have announced their support of these principles to date which strive to provide voluntary guidelines for the process and development of green bonds.
This news follows RBC Capital Markets’ inaugural Green Bond Conference which was held in Toronto on April 2, 2014, and brought together corporate and institutional investors along with a panel of international issuers and other experts. The conference was developed as part of RBC’s dedication to developing sustainability initiatives, and to the green bond market both in Canada and globally. The global green bond market has seen rapid growth since the first issuance of a green bond in 2007. Between 2007-2013, total green bond issuance sits at $24.2B, with 2013 issuance alone comprising $11.8B and Q1 2014 yielding record issuance of $9B.
Speaking at the conference, Paul Belanger, a managing director in Debt Capital Markets at RBC Capital Markets, said: “Evidence of climate change continues to dominate global headlines. The green bond market provides the perfect opportunity for socially responsible investors to participate in projects that promote environmental sustainability. We are pleased to have assembled a world class panel of green bond issuers and other experts, with institutional investors seeking to learn more about this growing debt product.”
Green bonds have emerged as a popular instrument for supra-nationals, development banks and governments to unlock private capital for a variety of sustainable projects. The Ontario government has announced its intention to launch its first green bond in 2014 as a strategy to finance environmentally-friendly infrastructure projects throughout the province. Many panellists at the RBC conference agreed that the increasing appeal of green bonds lies in the ability to support sustainability projects while maintaining the risk/reward characteristics of traditional fixed income products.
Commenting on the state of the green bond market, Altaf Nanji, head of Canadian Credit Research at RBC Capital Markets, said: “Beyond the very near term, green bond issuance could be adopted by various corporate sectors, with the instrument being particularly well suited for Real Estate (including Pension Fund), Power Generation and Utility sectors. For context, Canadian dollar issuers in these sectors have general obligation bonds of approximately CAD$100B outstanding.”
“Endorsing the Green Bond Principles is RBC’s latest commitment to embedding sustainability into our core business activities” said Sandra Odendahl, director of Corporate Sustainability at RBC. “We have been incorporating environmental considerations into financing since we added environmental credit risk management to our lending policies in 1991. Since then, we’ve broadened and deepened our environmental programs, and have been recognized as a corporate leader in environmental sustainability. As the market for green bonds grows, RBC will continue to explore how financial products can be used to drive positive social and environmental impact.”It is clear that capital will be required in order to complete sustainability initiatives around the world. RBC looks forward to being an active participant as more socially-responsible investors partake in the growing green bond market.
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