Financing clean energy projects and green retrofits are the incremental steps paving the path to Vancity Community Investment Bank's (VCIB) net-zero aspiration, vice president Jennifer Hutcheon told Sustainable Biz Canada.

The Toronto-headquartered subsidiary of Vancouver City Savings Credit Union (Vancity) has supported Subterra Renewables and Noventa Energy Partners, electric vehicle infrastructure company 7Gen and deep energy retrofits in its commercial mortgage portfolio, according to its 2023 Climate Report.

Having committed to reaching net-zero across its operations, mortgages and loans by 2040, the bank works to ensure all of its investments are aligned with that target, Hutcheon said, and to make a social impact with its affordable housing focus.

“We’re working towards those targets alongside Vancity Group. That’s why it’s really important that every project that we do contributes to meeting those net-zero emissions targets.”

VCIB’s sustainable investments

Though small compared to its larger banking peers with less than $500 million across its lending portfolios, VCIB offers the unique prospect of a financial institution that does not lend for fossil fuel projects and whose net-zero goal is 10 years ahead of most Canadian banks, which have set 2050 as their deadline.

Vancity has increased its green assets to $435 million in 2023, up from $377 million in 2022 and $308 million in 2021.

A project’s potential to contribute to a net-zero economy is a key determining factor for whether it will be supported under its climate financing group, Hutcheon said. The majority of what it finances are small and mid-market renewable energy projects led by innovative companies attempting to scale up.

On the energy side, that includes a credit financing partnership for residential towers in Ontario for Subterra, a geothermal energy developer; Noventa’s wastewater energy transfer project in Toronto Western Hospital; and wind farms for the Six Nations of the Grand River Development Corporation.

Subterra’s growth since it was last supported by VCIB means its pipeline has also kept up, Hutcheson said. “Now, they’ve gotten to a certain size, they’re growing, and they’ve got a much bigger pipeline. So this pipeline when we looked at it was really just perfectly set up for us to be able to put into place a $30-million credit facility.”

Those financed clean energy projects generated 21,103 megawatt-hours of electricity, and avoided over 6,600 tonnes of carbon – equal to removing over 2,000 passenger vehicles from the road.

Reducing emissions in its building portfolio

In its real estate portfolio, VCIB financed approximately 12 million square feet of commercial real estate and business mortgages and over 25 million square feet of residential mortgages in 2023.

To address emissions from the buildings it supports, making retrofits affordable is an “ongoing area of development”, Hutcheon explained.

“This is more of an emerging space for us, especially in the areas of affordable housing . . . for many reasons, interest rates being one them, the cost to affordably implement these building retrofits has been a challenge for affordable housing providers.”

For example, a financing program for deep energy retrofits in its commercial mortgage portfolio was launched in 2023, offering benefits such as an extended mortgage amortization and a lower debt servicing ratio for clients that meet at least a 30 per cent greenhouse gas emissions reduction for the building.

Non-profits are a major partner for this endeavour. With the Aboriginal Housing Management Association, Vancity enabled the organization to improve the energy efficiency of 10 buildings. For the China Creek Housing Co-op, it funded a net-zero plan that includes installing heat pumps and solar energy.

Vancity’s climate targets for its buildings financing are:

• a 17 per cent reduction in absolute emissions for residential buildings by 2025 from a 2019 base year; and
• a 27 per cent reduction in absolute emissions for commercial service buildings by 2025 from 2019.

As of 2023, it notched a 21 per cent decrease in commercial buildings to 19,366 tonnes of carbon dioxide equivalent (tCO2e), but a 13 per cent increase in residential buildings to 38,868 tCO2e.

The rise in residential buildings as explained by Vancity was due to the growth in the portfolio pushed by acquisitions of single detached homes by individuals and families, and single attached homes by businesses.

To tackle the emissions from houses, Hutcheon pointed out VCIB has partnered with Halifax-based SwitchPACE CIC on Property Assessed Clean Energy financing. The program carries loans that provide the financing for homeowners to make retrofits such as heat pumps, solar panels, window upgrades and insulation.

Incremental progress

In 2023, greenhouse gas emissions from Vancity’s operations fell by a quarter from 2022 to 2,112 tCO2e. A combination of energy efficiency measures such as improving its HVAC controls, closing an underutilized office and fuel switching to heat pumps in its branches are responsible for the decline, the credit union said in the sustainability report.

But from its financed emissions including investments and loans, the Scope 3 emissions rose to 244,429 tCO2e, a 57 per cent leap from 2022. In an email exchange, a Vancity spokesperson said its data collection methodology changed year-over-year, which makes direct comparison challenging. For example, it added industrial buildings to its financed emissions calculations and launched a new investment fund in 2023.

“We will see progress,” Hutcheon anticipates, “but year over year it’s going to be incremental until we get a portfolio that has a significant size and scale.”