How Business Measures How Business Measures Sustainability:Sustainability:

One Company’s Perspective One Company’s Perspective

How Business Measures How Business Measures Sustainability:Sustainability:

One Company’s Perspective One Company’s Perspective

Sandra Odendahl

Director, Corporate Environmental Affairs

Royal Bank of Canada

CSIN Conference

March 2010

OverviewOverview

I. About RBC

II. Why Measure?

III. Who Cares?

IV. Setting Priorities

V. Measuring Success

VI. How to Report

VII.What next?

I. About RBCI. About RBC

• Assets ~ $655 billion; Market capitalization ~ $77.6 billion.

• Approximately 80,000 employees in 50 countries

• Major operations in Canada, US, UK and the Caribbean

• Over 1700 branches and more than 4,800 ABMs globally

• Business areas:

– RBC Canadian Banking (~44% of revenue)

– RBC Capital Markets

– RBC Wealth Management

– RBC US and International Banking

– RBC Insurance

Largest Canadian bank, 5th largest bank in North America13th Largest Bank in the World

II. Why Measure?- Financial measurement and reporting

II. Why Measure?- Financial measurement and reporting

Financial performance measurement and reporting well-established

• Objective:

– “…to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions.”

• Users of financial statements:

– present and potential investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies and the general public.

• What users want:

– All user groups interested in the ability of an entity to generate cash and of the timing and certainty of those future cash flows.

From the IASB's Framework for the Preparation and Presentation of Financial Statements

II. Why Measure?- Sustainability measurement and reporting

II. Why Measure?- Sustainability measurement and reporting

Sustainability performance measurement and reporting less well-established

• Objectives:

– management, increased comparability and reduced costs of sustainability, brand and reputation enhancement, differentiation in the marketplace, protection from brand erosion resulting from the actions of suppliers or competitors, networking and communications, benchmarking tool, corporate governance tool and an avenue for long term dialogue with reporting organizations*

• Users of sustainability reports:

– Subset of present and potential investors, employees, lenders, customers, governments and their agencies and the general public.

• What users want:

– They all want something different!

* From the Global Reporting Initiative

II. Why measure?Why RBC measures & reportsII. Why measure?Why RBC measures & reports

• To inform stakeholders of progress

• To inform socially responsible investors

• To track progress toward goals

• To benchmark against other organisations

• To demonstrate commitment

• Federal requirement that all financial institutions produce an annual PAS

Formal CR Report since 2003

III. Who Cares? Indicators our stakeholders care about

III. Who Cares? Indicators our stakeholders care about

StakeholderIndicators of Interest

Economic Environmental Social Governance

Clients

Employees

Regulators

Shareholders

NGOs

Significant interest

Some interest

Little interest

8

IV. Setting PrioritiesOur Corporate Responsibility Vision

IV. Setting PrioritiesOur Corporate Responsibility Vision

Indicators Depend on Priorities

IV. Setting PrioritiesIntegrity: Governance and EthicsIV. Setting PrioritiesIntegrity: Governance and Ethics

Priorities

• Demonstrate sound corporate governance principles

• Provide clear disclosure of financial results, and disclose reliable performance data on key non-financial items

• Comply with all applicable laws and regulations in every country in which we operate

• Conduct business with honesty and integrity

In Financial Reports & Websites

Priorities• Provide strong return to

shareholders• Pay fair share of taxes• Create employment• Support small business

and economic development• Foster innovation and

entrepreneurship• Purchase goods and

services

IV. Setting Priorities

Economic Impact IV. Setting Priorities

Economic Impact

In Financial, CR Reports & Websites

Priorities• Maintain progressive

workplace programs and practices

• Respect diversity and promote inclusion

• Provide competitive compensation and total rewards, and enable growth through training and development opportunities

• Foster a culture of employee engagement

IV. Setting PrioritiesWorkplaceIV. Setting PrioritiesWorkplace

In CR Reports and Website

Priorities

• Provide donations with a lasting social impact

• Sponsor key community initiatives

• Enable employees to contribute

IV. Setting PrioritiesCommunitiesIV. Setting PrioritiesCommunities

In CR Reports and Website

IV. Setting PrioritiesEnvironment IV. Setting PrioritiesEnvironment

The RBC Environmental Blueprint sets priorities on environmental management

Priority Issues

Priority Activities

• Reduce our environmental footprint • Risk Management & Responsible Lending• Environmental products and services• Engage with Communities

Climate Change Forests/Biodiversity Water

V. Measuring Environmental Success V. Measuring Environmental Success

• Meaningful indicators

– Snapshot - Summary indicators

– Progress Report – Qualitative

– Data

• High standards for data quality

• Broad data coverage

• Targets

• Benchmarking

V. Measuring Environmental SuccessMeaningful Indicators - Summaries V. Measuring Environmental SuccessMeaningful Indicators - Summaries

IndicatorIndicator 20092009 20082008 20072007

Office paper use (kilograms/FTE)

CO2e emissions from energy use (t/m2)

CO2e emissions from employee travel (t/FTE)

Transactions assessed under Equator Principles

Vital Statistics

The Snapshot

V. Measuring Environmental SuccessMeaningful Indicators - Progress V. Measuring Environmental SuccessMeaningful Indicators - Progress

2009 Commitment2009 Commitment StatusStatus 2009 Progress2009 Progress

1 Launch and promote Employee Environmental Stewardship Guidelines

Launched on Earth Day 2009 to all of our employees globally

4 Purchase green power for 20 new branches in Alberta and Ontario

Purchased clean, renewable green power for 27 new branches

Conduct training in environmental risk mgmt across business units

Renewable energy workshop

Training in Atlantic

9 Research and report on water-related risks and opportunities

Conducted research on agencies responsible for water protection in Alberta

Blueprint Report Card

The Progress Report

V. Measuring Environmental SuccessMeaningful Indicators - Data V. Measuring Environmental SuccessMeaningful Indicators - Data

Operational FootprintEnergy • Fuel (MWh)

• Purchased electricity (MWh)• Green power purchased (MWh)

Canada, US and Britain1700 branches and 100 offices

Paper • Office Paper (tonnes)• Marketing and Direct mail• Paper Use per FTE• % sustainably sourced

Canada and USA

Travel • Air, rail, auto (km)• Travel per FTE

Canada, US, Britain, Partial Caribbean

GHG emissions

• Fuel• Purchased Electricity• Employee travel

Canada, US and Britain

The Details (for Data Junkies)

V. Measuring Environmental SuccessMeaningful Indicators - Data V. Measuring Environmental SuccessMeaningful Indicators - Data

E-statement conversions (millions)

Related paper savings (tonnes)

CO2 trading volumes (Mt)

Assets under management for SRI funds

Lending to clean energy ($ millions)

Responsible Lending

Transactions requiring environmental risk review

Transactions screened under equator principles

Portfolio reviews completed

Policies launched or updated

Green Products and Services

V. Measuring Environmental SuccessMeaningful Indicators - DataV. Measuring Environmental SuccessMeaningful Indicators - Data

Community Engagement

Donations to Environmental causes

• Corporate Donations• Blue Water project• Employee Donations

Website hits • RBCnet and RBC.com/envrionment

Formal Stakeholder meetings • Groups consulted and subject

Brand / Image • Ipsos ASI - RBC Brand Monitor• Employee satisfaction survey• Angus Reid CSRI

Competitor benchmarking • Shareholder resolutions• Scores on DJSI• Scores on CDP

VI. How to ReportVI. How to Report

• RBC.com/environment

• RBC.com/responsibility

– Customised PDF generator

• Annual CR Report and PAS

– Online only

• CR Review

– Brief printed brochure

– For consumers, general public and employees

• Ad hoc “sustainability surveys”

– We avoid them, and direct people to our website

• Quarterly reports to shareholders, Annual Report and Management Proxy Circular

Websites, print documents, surveys, financial reports

VII. What next?VII. What next?

• Shift away from hardcopy reporting to electronic disclosure

– RBC CR Report (full) only available online

– RBC report generator for customized reporting

• Manage increased volume of client, staff and public inquiries on sensitive environmental and social topics

• Establish criteria to screen surveys and requests for more detailed information

• More rigorous assessment of which sustainability indicators are financially material

– Hint: not that many

It Takes a Lot of Reporting to be Considered a Sustainability LeaderIt Takes a Lot of Reporting to be Considered a Sustainability Leader

Thank You!

Questions?

sandra.odendahl@rbc.com

www.rbc.com/environment