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Equitable Bank launches inaugural Sustainable Bond Framework

Proceeds will be used for assets like green buildings, affordable housing and essential services

A rendering of EQ Bank Tower in Toronto. (Courtesy Equitable Bank)
A rendering of EQ Bank Tower in Toronto. (Courtesy Equitable Bank)

Toronto-based Equitable Bank (EQ Bank) says it is increasing its focus on sustainability by launching a Sustainable Bond Framework (SBF) which paves the way for the issuance of green, social and sustainability bonds.

The proceeds of these issuances will finance or refinance green and social assets that meet EQ Bank's SBF eligibility criteria: green buildings, energy efficiency, social and affordable housing, and essential services access.

The March 14 announcement of the SBF bond program coincided with the release of EQ Bank's annual Public Accountability Statement (PAS) which summarizes its social responsibility initiatives.

These include:

  • $3.4 billion in affordable housing loans;
  • providing over 400,000 Canadians with EQ Bank's no-fee online banking digital platform; and
  • offering customers what it calls Canada's first fully digital First Home Savings Account.

EQ Bank's ESG commitment

Both the PAS and SBF contribute to EQ Bank's ESG goals, accelerating progress toward net-zero and offering streamlined digital banking services, its CEO says. 

". . . We believe we're serving Canadians well by bringing more competition and innovation to an important sector of the economy," Andrew Moor, EQ Bank president and CEO, said in a release.

"We recognize that our broader accountabilities have expanded in tandem with our growth into Canada's seventh largest bank, and we're committed to living up to these responsibilities. I'm particularly pleased with the constructive role we're playing in helping address the current housing shortage."

Extending EQ Bank's sustainable practices

With $119 billion in combined assets under management and administration as of Jan. 31, EQ Bank has positioned itself as a "Challenger Bank" with a mission to "drive change in Canadian banking to enrich people's live(s)."

The decision to enter the sustainable bond market enables it to expand lending operations with direct environmental and social impact.

"Our challenger mindset means that sustainability is inextricable from our core values, long-term objectives and strategic priorities," Moor added. "We take our societal responsibilities seriously and are committed to improving our country's communities and environment by financing critical projects that support sustainability."

Providing loans for affordable housing is a key pillar of the bank's lending strategy and is of particular importance to Canadians dealing with higher rents, higher inflation and a spike in mortgage rates that has more than doubled the average five-year fixed mortgage rate over the past two years.

Sandie Douville, Equitable Bank vice-president, IR and ESG Strategy. (Courtesy Equitable Bank)
Sandie Douville, Equitable Bank vice-president, IR and ESG Strategy. (Courtesy Equitable Bank)

"Housing in Canada is a complex issue, with rising costs and a lack of affordable options for many individuals and families," Sandie Douville, Equitable Bank vice-president, IR and ESG Strategy, said in comments to Sustainable Biz Canada.

"We are incredibly excited about our Sustainable Bond Framework (and) the ability to provide a service that is inclusive of all Canadians . . .  Equitable Bank intends to issue sustainability bonds with a focus on affordable housing, recognizing the challenges and importance of ensuring adequate and affordable housing for everyone in Canada."

EQ Bank says its SBF conforms to international best practices and was developed in close consultation with RBC Capital Markets, which acted as an advisory partner in structuring the sustainability program. 

Further, the framework is approved by Sustainalytics, a leading independent ESG research, ratings and analytics firm. According to EQ Bank, Sustainalytics deemed the bond program "credible and impactful" and within the parameters of the Sustainable Bond Guidelines established by the International Capital Markets Association in 2021.

EQ Bank equates sustainability with 'responsibility'

As more Canadians turn toward digital banking, EQ Bank has steadily expanded its presence in that growing segment while being recognized as the best bank in Canada on the Forbes 2023 list of the World's Best Banks, the third consecutive year it has earned that ranking.

EQ Bank believes this focus is consistent with attracting younger Canadians to its banking platform while reflecting its underlying corporate ESG values.

"We have a digital-only presence, and our business has grown significantly over the years. With an increase in size and scale, it means we have an increased responsibility to deliver to our customers, community, climate and challengers – the foundational pillars that our strategy is built on," Douville said. 

"We have termed our sustainability strategy as our 'Responsibility' strategy, as it better reflects our culture and attitude on accomplishing positive environmental, social and governance (ESG) outcomes across our foundational pillars."

The strategy appears to be working. EQ Bank recorded an 11.2 per cent growth in adjusted net income in 2023 for the fiscal year ending on Oct. 31, 2023, and 12 per cent year-over-year earnings growth for the latest fiscal quarter ending Jan. 31

"We have seen the ESG space evolve quickly in the past few years," Douville added. "We are early in our journey and have been intentional on the commitments we make to ensure they are meaningful, transparent and relevant to our business.

"Relative to our peers, we maintain a low operational footprint due to our branchless structure and cloud-based operating system."

EQ Bank's ongoing ESG journey

Since 2021, EQ Bank has been issuing annual reports on its ESG performance as means of providing transparency on its sustainable achievements. EQ says it was also the first Canadian Schedule 1 Bank to reveal its entire Scope 1, 2 and 3 greenhouse gas emissions, including financed emissions. 

"We have made strides in the creation of our climate strategy to guide our actions over the short, medium, and long term, and planned efforts on tackling important matters such as risk management and governance over climate risk," Douville said. 

"Living up to our challenger mindset means taking responsibility and highlighting our unique differences. The ESG space has been driven by the 'E' . . . We are in a unique position to drive change through a focus on the 'S' and we see this as an opportunity to support our customers, community and challengers."

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