Without a doubt, responsible investing these days is all the rage—in financial services, and in business more broadly.
From Ford and General Motor’s investments in electric vehicle production to Bed Bath & Beyond’s appointment of a chief diversity officer, companies in every sector are making significant environmental, social and governance (ESG) commitments. In fact, 60% of S&P 500 companies talked about ESG during their fourth quarter 2020 earnings calls, according to a report from RBC Capital Markets.
At RBC Wealth Management we have been talking about ESG a lot more lately, too. Investors’ desire to use their wealth to influence positive change in the world is growing and responsible investing can be an effective way for them to achieve that goal. Indeed, at the start of 2020, 1 in every 3 dollars in the U.S. were managed in responsibly invested assets and I am sure when those figures are updated later this year, that ratio will be even higher.
To help meet this demand, our firm has launched several new responsible investing products –on our platform as well as an ESG education and awareness campaign for our advisors and our clients. Our goal, simply stated, is to be a leader in responsible investing advice.
While our entry as a firm to the ESG investing space is fairly new, I am proud to say that our broader interest and commitment to the principles behind responsible investing are not. Our parent company, RBC and our wealth management division in the U.S. have a long history of environmental and community support and good governance practices.
In the late 1970s, RBC Wealth Management-U.S., which is headquartered in Minneapolis, stepped up to be one of 23 founding members of the Minnesota Keystone program, through which we donate at least 2 percent of our pre-tax earnings to charitable organizations. In 1991, RBC launched the first corporate environmental policy and followed that up in 2007 with the RBC Blue Water Project, a 10-year global commitment of $50 million to help protect the world’s most precious natural resource: fresh water. Most recently, in 2019, RBC unveiled an enterprise climate strategy called the RBC Climate Blueprint, aimed at accelerating clean economic growth through our strengths in finance, investment, risk management, innovation, economic research, and community investments.
We’ve long been a leader on the diversity front, too, which is why RBC is a standard holding in the Pax Ellevate Management’s Impax Global Women’s Leadership Index that selects holdings based, in large part, on gender diverse leadership. Today, 42% of RBC’s Board of Directors are women and 17% identify as BIPOC. This high percentage of women in leadership has also helped RBC earn a spot as a member of both the Refinitiv26 Diversity and Inclusion Index and the Bloomberg Gender-Equality Index. RBC has also been recognized for Best Overall Governance by Corporate Secretary Magazine and named to the Top 100 Global Companies for Gender Equality list by Equileap, the leading independent data provider on gender equality.
Despite this rich and real history of solid ESG practices and principles, we know there is more to do. That’s why I’m particularly proud to say that in 2021, we’ve built on those commitments.
In October, RBC pledged to join the global, industry-led Net-Zero Banking Alliance (NZBA). Among NZBA’s many goals is an effort to align lending portfolios around the world with net-zero emissions targets by 2050. RBC also committed to reduce emissions by 70% and source 100% of our electricity from renewable and non-emitting sources, both by 2025. We know that climate change is one of the most pressing issues of our age and I am proud that RBC, as one of the largest financial services companies in the world, is playing an active role in accelerating the transition to net zero society.
I am also proud that RBC Wealth Management has pledged to be a more active leader on social justice issues, lending our name and support to overcoming systemic racism and discrimination in the communities where we do business. We are currently working with various community organizations and nonprofits to figure out just how we do that. And we hope the investments we make serve to inspire others.