Increases ability to finance solutions to address climate change and social inequity
Export Development Canada (EDC) has released a new, third-party reviewed Sustainable Bond Framework to enable greater support for initiatives that create a more equitable and sustainable world. Now, in addition to green bonds, EDC will issue sustainable, social and transition bonds.
“EDC has a role to play in financing the projects and companies working to catalyze the actions required to address climate change and systemic social inequity,” said Ken Kember, EDC’s Senior Vice-President and Chief Financial Officer. “These bonds are important tools for raising the capital needed to support those transactions.”
EDC has been issuing green bonds since 2014 and was the first Canadian financial organization to do so. Funds raised by those green bonds have financed nearly 30 transactions worth more than $2 billion in a range of sectors, each contributing to environmental protection or the mitigation of climate change.
Green bonds remain an important part of the new framework, and EDC has intensified its focus on climate change by adding transition proceeds—which have never before been included in a bond framework by a financial institution in North America. These bonds are targeted specifically to facilitate the transition to a low-carbon economy.
“Transition bonds have the potential to help address climate change by providing loans related to activities that significantly reduce greenhouse gas emissions,” said Justine Hendricks, EDC’s Senior Vice-President and Chief Corporate Sustainability Officer. “Given the increasing urgency and impact of climate change and in line with our commitment to net zero emissions by 2050, we felt it was critical to define and include transition bonds in our framework and encourage others to do the same.”
The framework’s other significant new category is the social category, which aims to enable a more equitable society. These bonds can support affordable infrastructure, access to health and nutrition, and equity-seeking businesses—those led or majority owned by women, Indigenous peoples, people from Black and other racialized communities, persons with disabilities, and members of the LGBTQ2+ community.
“We recognize the need to think beyond environmental and social issues as two separate things. They are inextricably linked and the transition to a low carbon economy must also look to address social inequities to support people, jobs and local communities. Adding social bonds to our framework gives us another tool in the toolbox when it comes to this incredibly important challenge,” said Hendricks.
The new Sustainable Bond Framework is a key element of EDC’s environmental, social and governance (ESG) strategy, which embeds sustainable and responsible business into everything that EDC does, and of EDC’s 2030 Corporate Strategy, which aims to make Canada and the world better through trade.
The framework was developed in alignment with current best practices and in close consultation with advisory partners, BMO Financial Group and RBC Capital Markets. EDC also obtained an independent second-party opinion from Sustainalytics, which is published on EDC’s website.
BMO Financial Group
"We’re proud of our work with Export Development Canada to build a Sustainable Bond Framework to help them reach their own ESG objectives, as well as ensure Canadian companies are competitive in a world that is facing rapid climate change and the impacts that come with it,” said Jonathan Hackett, Head, Sustainable Finance and Co-Head, Energy Transition Group, BMO Financial Group. “Partnering with clients like EDC to break ground as they’re doing with the incorporation of transition proceeds into their framework is a demonstration of how we live our purpose to Boldly Grow the Good in Business and Life.”
RBC Capital Markets
"RBC Capital Markets is proud to work with Export Development Canada to help bring this timely and important Sustainable Bond Framework to life. EDC was the first Canadian financial institutions to issue green bonds, and is now among the first to include transition financing in its framework. RBC is committed to providing the advice and solutions needed to advance the sustainable debt market in support of a more inclusive, sustainable future,” said Sarah Thompson, Managing Director, Sustainable Finance, RBC Capital Markets.
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EDC’s Sustainable Bond Framework
