The landlord of one of RBC’s flagship buildings in Toronto is collaborating with the bank to achieve net-zero greenhouse gas emissions at the office site by 2040.1 The partnership with Cadillac Fairview marks a first for RBC and is a step toward the bank’s larger ambition to accelerate the transition to a greener economy.
“Many people assume that if our name is on the top of a building, we own and control it,” says Jon Douglas, Director of Global Sustainability in RBC’s corporate real estate division. “But we lease most of the space in our 2,200 locations around the world. And, as a result, we have well over 500 landlords that, over time, we’ll need to work with to achieve our targets.”
As part of RBC’s climate ambitions, the bank aims to reduce greenhouse gas emissions from its global operations by 70 per cent by 20252 compared to the baseline year of 2018. Jon points out that the bulk of these “operational emissions” can be attributed to a buildings’ heating and cooling systems.
“Landlords are a significant stakeholder in our journey to create a future we all want,” says RBC’s Director of Global Sustainability.
The time required to engage with landlords on plans to upgrade and retrofit their buildings can be lengthy, and negotiations complex. To this end, in 2024, RBC is formalizing an outreach program to understand its landlords’ climate targets and look for ways where both parties can work together in achieving mutually desirable environmental sustainability goals.
Cadillac Fairview is one of Canada’s preeminent owners, developers, and managers of commercial properties and Cadillac Fairview was excited, when approached by RBC to extend their lease at RBC Centre, to have a client that was like minded in their desire to reduce the carbon footprint of the property. Alignment of owners and occupants is an important factor in the pursuit of a reduced carbon footprint.
While it is not unusual for landlords and tenants to discuss ways to reduce energy costs, the Cadillac Fairview negotiation was the first time Jon was aware of a lease renewal negotiation that included greenhouse gas emissions reductions. “It’s uncharted territory,” says Jon. “Our hope is RBC’s partnership with a leading commercial real estate firm will inspire more meaningful progress toward a net-zero future.”
He went on to say: “Many of our large landlords – who oversee most of the bank’s office space – have climate commitments. That’s why our landlord initiative is really about fostering mutually beneficial relationships. Which is why we focus on performance-based agreements, where we land on achieving net zero by a certain date.”
The retail side of RBC’s real estate portfolio – which represents 1,200 of the over 2,200 locations around the world – requires a more prescriptive approach. Jon explains: “Just like in your own home, if you have a furnace that’s running on natural gas, you may want to switch to a heat pump to access a renewable energy source. But you’re probably going to do it when your furnace is up for renewal. That’s exactly what we’re asking of our retail landlords because these building assets are generally standardized systems.”
Jon went on to say: “And, in some buildings where the windows are old, we might suggest replacing them at the same time as the heating and cooling system. Because if we can make the building more energy efficient, there may not be a need to spend as much capital on keeping it a proper temperature.”
Whether office or retail space, Jon recognizes the value of the bank’s size and scale in helping to develop productive relationships with its landlords. “When we need more space, a key consideration is: does the building move us towards our emissions targets? There is no doubt our landlords are a significant stakeholder in our journey to create a lower-emission future.”
In the meantime, RBC continues to look for ways in which it can reduce greenhouse gas emissions in its operations through long-term renewable energy purchase power agreements and renewable energy certificates, which are issued when one megawatt-hour of electricity is generated and delivered to the electricity grid from a renewable energy source. In 2023, the bank’s ongoing shift to renewable energy sources led to a 67 per cent reduction in its market-based greenhouse gas emissions for its global operations compared to its 2018 baseline. Additionally, the bank shifted to buying 100 per cent of its total global electricity consumption from renewable sources.
Jon concludes: “Our operational emissions are much smaller than the emissions we finance through client loans, but reducing them is no less important. They show our clients, colleagues and communities how important it is for everyone to get their house in order to help create a greener economy.”
1 In order to achieve net-zero greenhouse gas emissions at the office site by 2040, various approaches will be required, including installing low-emissions technology and the use of renewable energy certificates.
2 Inclusive of our global operations, Scope 1, 2 (market-based) and 3 (business travel) reported GHG emissions, using a baseline of 2018. See RBC’s 2023 Climate Report for more details on “market-based” emissions.
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