Making “meaningful progress” with intentional steps is how EQB Inc. (EQB-T) is approaching sustainability, vice-president of environmental, social and governance strategy Leslie Shaw explained to Sustainable Biz Canada.

The Toronto-based bank is early in its sustainability journey, she acknowledged, and does not have a net-zero target like most of its peers. But it is working to be “very intentional about making sure that we are aligning our actions to what we feel will be impactful long-term rather than chasing a popular trend,” Shaw said.

Those include steps such as launching a Sustainable Bond Framework in 2024 used to raise $735 million and bolstering the sustainability of its office buildings. The latter is highlighted this week as EQB staff are being moved into EQ Bank Tower, its new headquarters at 25 Ontario St. in Toronto. EQB intends to achieve LEED certifications for the flagship building.

Operating solely in Canada with $132 billion in assets under management and administration as of Jan. 31, EQB gears its banking toward lending to commercial real estate, and mortgages for single-family homes and multiresidential housing. It has a wholly owned subsidiary Equitable Bank, a digital consumer bank, making it branchless.

Where EQB trailblazed in sustainability

“Our interest in sustainability really comes down to our belief that we do have an important leadership role to play in the industry,” Shaw said, “showing in particular how digital banks can contribute positively to the Canadian environment and the well-being of Canadians.”

As proof of its initiative, she provided examples such as EQB being the first Canadian Schedule I bank to disclose its indirect greenhouse gas emissions portfolio that includes its financed emissions; and EQB avoiding lending to high-emitting sectors such as fossil fuel extraction.

The bank offsets the pollution from its natural gas use, escaped refrigerant gases and purchased electricity by buying carbon credits in projects such as the Darkwoods Forest Conservation Project. In 2024, it removed just under 1,000 tonnes of carbon equivalent, balancing out its Scope 1 and 2 emissions and making it carbon neutral.

But EQB’s operational greenhouse emissions, which include some value chain emissions called Scope 3, more than doubled from 2023 to 2024. The category went up from 17,654 tonnes of carbon dioxide equivalent to 39,087 tonnes, caused largely caused by the move of its headquarters.

EQB’s buildings

As its offices are the source of its operational emissions, EQB has addressed the sustainability of its leased buildings with renovations or moving into buildings where environmental factors are a top priority, Shaw said.

For its new Toronto head office, the bank is pursuing several LEED certifications such as Core and Shell, Interior Design, Operations and Maintenance, plus the WELL Building Standards. The base building has achieved LEED Gold for Core and Shell.

The plan is to achieve the LEED Operations and Maintenance certification after a year of operations, Shaw said, which considers operational practices and measured performance of the tenant space across elements such as air quality, energy consumption, waste diversion and  commuting patterns.

To promote sustainability outside of direct building operations, the EQ Bank Tower is made accessible to public transit users and is designed for hybrid work — decisions aimed at reducing travel emissions.

To further cut back on travel emissions, local suppliers are prioritized for employee lunches. EQB also removed beef options from its lunch menus nationwide, Shaw said. Beef production is a much larger source of greenhouse gas emissions compared to other meats and food sources.

EQB earned LEED certifications for its office in Vancouver and two former head offices in Toronto.

Being 'intentional and thoughtful' about its financing

While its operational emissions increased, EQB’s financed emissions fell. Responsible for 95 per cent of EQB’s total greenhouse gas pollution in 2024, the emissions from its financing of mortgages, vehicles and business loans fell by nine per cent compared to 2023. 

It was driven primarily by a 40 per cent decrease in its vehicle lending, led by the decision to diversify the portfolio across asset classes, which included higher-emitting asset classes in 2023, according to the latest EQB sustainability report. Certain business loans also matured, which reduced exposure to emission-intensive industries.

In 2024, EQB issued its first social-covered bond under its Sustainable Bond Framework. Over 1,400 borrowers tapped into the bond to secure affordable housing built with the best sustainability practices.

Shaw said EQB is looking at opportunities to scale up its impact in the space and will look at green bond issuances. The proceeds from green bonds could go to funding high-efficiency residential buildings and commercial developments, she explained.

Another sustainable financing opportunity for EQB is through ACM Advisors, an investment fund manager specializing in pooled Canadian commercial mortgage funds. Having acquired a 75 per cent stake in the Toronto-based company in 2023, EQB will be providing the seed funding to help ACM deploy capital to social- and climate-focused opportunities, Shaw explained. An example is funding LEED-certified or climate-forward buildings.

The Social and Climate Fund is expected to launch later this year.

Though carbon emissions increased in some categories, Shaw pointed to a six per cent reduction overall when excluding ACM-managed client invested emissions, even as EQB grew across its lending and number of customers.

“We will continue to be intentional and thoughtful about the businesses and industries to which we lend,” Shaw said about its efforts to tackle its financed emissions, such as continuing to choose low-emitting industries.