RBC Capital Markets, the corporate and investment banking arm of Royal Bank of Canada (TSX: RY) says it has joined the second wave of international banks that have signed onto the Green Bond Principles.
As disclosed Monday 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.
In addition to the four founding banks that served as a drafting committee for the Principles — Bank of America Merrill Lynch, Citi, Crédit Agricole CIB, and JPMorgan Chase & Co. — and the nine initial supporters, including BNP Paribas, Daiwa Capital Markets America Inc., Deutsche Bank, Goldman Sachs, HSBC, Mizuho Securities, Morgan Stanley, Rabobank, and SEB — the following 12 banks have also expressed their support of the Principles: Barclays, BMO Financial Group, Credit Suisse AG, DNB, DZ BANK AG, ING, Lloyds Bank, Mitsubishi UFJ Securities, Nomura, RBC Capital Markets, Santander Global Banking & Markets, and Société Générale.
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 US$24.2 billion, with 2013 issuance alone comprising US$11.8 billion and Q1 2014 yielding record issuance of US$9 billion.
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.
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 $100 billion 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. “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.”