Catalyzing the transition to a low-carbon economy will require more than just innovation — capital is required to bring meaningful solutions to scale. Banks have an important role to play, providing investors and businesses alike with the tools necessary to incentivize and drive change. Following in the recent footsteps of ING and Triodos, Barclays and TD Bank have developed new financial products designed to support the development of a more sustainable economy.
Recognizing the need to support companies of all sizes and across a breadth of sectors to fulfill their sustainability ambitions, Barclays Corporate Banking has launched a suite of specially tailored green finance products with the intention of helping its clients fund more sustainability projects in the UK and around the world.
The move comes in response to growing demand for financial support for sustainability initiatives as businesses come to acknowledge the numerous commercial benefits of helping deliver the goals of the Paris Climate Agreement. In addition to safeguarding against increasing costs, diminished revenue potential and regulatory requirements, supporting low-carbon solutions can help businesses prevent reputational risk and bolster their environmental credentials.
The new products proposed by Barclays include:
- Green Loans, targeting larger clients who need loans of more than £3 million across the UK
- International Green Loans, helping international clients invest in sustainability projects around the world
- Green Asset Finance, allowing clients to access more flexible ways of financing assets that support sustainability initiatives
- Green Innovation Finance, backed by the European Investment Fund, aimed at providing funding for SME clients
- Green Deposits, allowing Barclays’ largest clients to earmark funds they deposit against Barclays’ investments in Green Bonds
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“Barclays, like so many of our clients, recognizes that addressing environmental challenges is not only a necessity, but a compelling economic opportunity. We already have an established presence in the green bond market as a successful lead arranger, investor and now issuer, so we are delighted to be able to build on our expertise by launching new, innovative green products to help meet the booming demand for green finance from a broader cross-section of our clients. We’re excited to be at the forefront of something so game-changing,” said Rhian-Mari Thomas, Chair of Barclays Green Banking Council.
To guarantee the integrity of this drive to support sustainability activities, Barclays worked with Sustainalytics to develop a Green Product Framework. The bank will use the Framework to identify appropriate projects that will have a positive environmental impact and will therefore qualify for support through one of the new products.
“We’re seeing a step-change in how businesses approach sustainable investment. For too long, green projects have been viewed as an added extra, but what we’re increasingly hearing from our clients is a shift in mindset, with sustainability becoming more central to their overall investment strategy,” said Karl Nolson, Head of Barclays’ Global Lending Group.
“We share that view at Barclays and know that unless sustainability is at the heart of how companies conduct their operations, they will fall behind. As always, we want to help our clients stay ahead in an evolving world, which is why we’re proud to be the first major UK bank to devise a range of products targeted exclusively at funding green Corporate Banking investment activity, that will help promote growth now and contribute towards a better, greener, future for all.”
“The number of new green finance products is surging globally given positive drivers such as market regulations and increased client demand to create more sustainable product and services. Green Product Frameworks, such as Barclays’, offer assurance and transparency to the market that financing is being directed towards environmentally impactful activities that align with best practices,” said Bob Mann, President of Sustainalytics.
Meanwhile, TD Bank Group has announced a set initiatives to advance the low-carbon economy of the future, including the commitment of CAD$100 billion to low-carbon lending, financing, asset management and other programs by 2030.
“Our economy is changing and TD intends to fully participate,” said Bharat Masrani, Group President and CEO of TD Bank Group. “The initiatives outlined today build on our heritage of environmental and financial leadership to further advance a sustainable and prosperous future, where communities thrive economically and environmentally for both the short and long-term.”
To support its $100 billion target, TD has outlined a number of low-carbon initiatives it plans to roll out over the next decade, which include collaborating with companies, ventures and projects driving innovation and contributing to carbon emissions reduction, energy-efficient housing and urban green space enhancement. The bank also plans to invest in and conduct research to foster understanding and dialogue about key sustainability issues; plant one million new trees in communities across North America; and enhance focus on successful green bonds strategy to support projects that provide both economic growth and environmental benefits.
“TD is demonstrating the crucial role that financial institutions can — and should — play in supporting economic prosperity and transformational technology. We are determined to identify and advance initiatives with positive impact for society and our economies,” said Norie Campbell, Group Head of Customer & Colleague Experience at TD Bank Group.
TD was among the first in the banking industry to recognize climate change as an economic and environmental megatrend. This understanding has served as the foundation for the bank’s expanding focus on low-carbon initiatives.