Sustainably Successful Together - Rabobank Investor Presentation Sustainable Funding Framework
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Sustainably
Successful Together
Rabobank
Investor Presentation
Sustainable Funding Framework
Utrecht, September 2020
A strategy centralised around supporting a sustainable society
Growing a Better World Together through our dual strategy
Growing a better world together
Banking for the Netherlands Banking for Food
Excellent customer Meaningful Rock-solid Empowered
focus cooperative Bank employees
Customer satisfaction Rabobank front-runner Sound capital & Our employees feel
benefitting from focus in sustainable liquidity position empowered to
on digitalization and initiatives and represent Rabobank
Diversified loan
launch of innovative financing and are inspired by our
portfolio with focus on
products As a cooperative bank the Netherlands mission
Optimized domestic we have a strong focus Focus on people
Continued focus on
operating model on major societal development and
our core: divestment
improving commercial transformations recruitment of
program completed
effectiveness Cooperative strategic important
contribution to target groups
Focus on digital
services to meet support local initiatives Diversity is top priority
demands of customers and visible in senior
with a strong management
performing digital positions
platform
Sustainability is in our DNA
Rabobank has been a pioneer and strives to continual improvements in its sustainability efforts
• Rabobank’s first • Founding • Rabobank • Rabobank and • Green bond of • Sustainalytics ESG
annual member of the offices 100% EIB launch the year award risk rating #1
sustainability Equator climate neutral unique Impact of • PCAF 2019 report to
report principles loan fund for environmental assess carbon
• Rabobank starts (presently 95+ Dutch SMEs finance footprint
calculating CO2 members) • Oekom Prime • One of the first banks
status to sign the UN
• Member board Principles for
of directors – Responsible Banking
global reporting
initiative (GRI)
• Co-author of the
social bond
guidance
published by
ICMA
1998 1999 2003 2004 2007 2014 2015 2016 2017 2018 2019 2020
• Rabobank • 10% CO2 reduction per FTE
green compared to 2013
structurer of • € 80mn investment in AGRI3 by
several first Rabobank and Ministry of
green issuances
• Rabobank • First green CP Foreign Affairs
initiator of food, issuer ever • H2 2020: Climate impact report
• Founding agri and • Green depot Dutch portfolio
member green forestry climate for home- • Rabobank voted most
bond principles bond initiative owners sustainable bank in NL
(presently 300+ standards • Rabobank, FMO (Sustainable Brand Index)
members) • Rabobank top 5 and IDH • Rabobank joins Nasdaq Sustainable
• Client photo wind energy launched the Bond Network
• Rabobank mandatory in financier AGRI3 fund • Rabobank acted as Sustainability
issues first • Sustainability credit approval worldwide • Co-author of Coordinator for international
‘Groenbank’ assessment process (Bloomberg) the circular agricultural commodity trader
green bond obligatory in • Rabobank • Introduction of economy • Rabobank participates in DNB
to retail credit partner climate Green finance anthology on Climate RiskCO2
clients processes bond Initiative mortgage guidelines
Rabobank is in the highest ESG class seen among banks
#1
Sustainalytics ESG Risk Rating Commercial
Bank for
Sustainability
#2
Financial /
ISS ESG Corporate Rating 2ndout of 284 (segment Financials/ Commercial Commercial
Bank for
Banks & Capital Markets) Sustainability
39
Sustainability integrated in credit approval process
Client engagement process Main developments
• Active client engagement aimed at improving their
sustainability performance and to engage with clients on
relevant climate change actions and support them with
1. Sustainability
knowledge, a network and (financial) services
Policy compliance
check
• Assessment of sustainability performance of potential
and current business clients integrated in credit
approval and monitoring processes
5. Follow-up: Action 2. Sustainability
plan analysis • Sustainability performance of clients with an exposure >
EUR 1mln is measured in a Client Photo
• 27% of Wholesale clients and 11% of Local Rabobank
clients received highest rating
3. Preliminary
4. Client
sustainability • Target for 2020 is a client photo for 100% of our
engagement
category Wholesale and Dutch clients
• We are in the process of improving our rating
methodology for Dutch rural and for most of our
Dutch SME clients the new improved methodology is
implemented
Our sustainability efforts in numbers
Sustainable products & services
• Sustainable financing amounted to EUR 49bn in H1 2020
• Sustainable products & services (2019):
• assets under management EUR 6.4bn
• sustainable funding EUR 5.3bn
• sustainable transactions for clients EUR 6.7bn
• Sustainable asset management (to become) the new standard:
• as of June 2020 the ‘Basic’ asset management service fully consists of sustainable funds
• in the second half of this year both ‘Active’ and ‘Exclusive’ asset management services will follow
Sustainability rating Sustainability rating Dutch Energy label mortgage
Wholesale clients SME clients portfolio (Dec 2019)
5% 9% 11%
1%
27% 24%
A
61% 15%
B A A label
67% C B B label
D+ 80% C Other
Our contribution to the UN SDGs
• EUR 108bn lending in the • Rabobank frontrunner in • Co-author of the circular • Several products & services
Food & Agri sector financing sustainable energy economy finance guidelines to stimulate sustainable
• Actively partnering with local generation • Rabobank is main financier housing
cooperative banks in • EUR 4.2bn (H1 2020) of of the Dutch economy • GreenHome tool for
developing countries investments in project • 300 clients assisted through customer insights in
finance for sustainable our Circular Business Desk sustainability measures to
energy generation improve homes
• Launch BPD housing fund to
develop 15,000 sustainable
private sector rental houses
Growing a better world together
• EUR 48bn in sustainable • Contribution and • AGRI3 EUR 1bn fund • Deltaplan Biodiversity
finance in H1 2020; EUR commitment to the Dutch together with partners to conservation
9.8bn of this to businesses Climate Agreement boost sustainable land use • WWF Rabo partnership for
with a meaningful • Committed to mandatory • Actively involved in international projects around
sustainability label reporting on climate impact developing the Dutch sustainable food production
• Several sustainability-linked of our portfolio Biodiversity Monitor for • Member/co-chair of the
products and services • Clients’ sustainability arable farming Climate Smart Agriculture
through subsidiaries performance integrated in Working Group of the
• Actively involved in Food credit approval process WBCSD
waste reduction initiatives
Rabobank Sustainable Funding Framework
A Sustainable Funding Framework with ‘thematic Sub-Frameworks’
Several types of sustainable financial instruments to be issued under the same Framework
1 Financial instruments might include: bonds, loans, derivatives, commercial paper, certificates of deposit
etc.
Sustainable instruments can be issued in different flavours
2 •
•
Each issuance will occur under one thematic Sub-Framework
No mix of Use of Proceeds categories in one instrument
Four Sub-Frameworks
Renewable Sustainable Real Healthcare and Covid-19 Crisis
Energy Estate Care Facilities Support for SMEsSub-Framework I Renewable energy Use of Proceeds: • Solar energy projects • Onshore and offshore wind energy projects ICMA Green Bond Principles & LMA/APLMA/LSTA Green Loan Principles category : Renewable Energy Sustainable Development Goal (SDG) contribution: SDG 7: ‘Clean and Affordable Energy’ and SDG 13: ‘Climate Action’ EU Environmental Objective: Climate change mitigation Impact reporting • Estimated installed capacity in gigawatt (GW) • Indicative volume of carbon emissions avoided • Standard Equator Principles reporting • Case studies
Green Sub-Framework alignment with the EU Green Bond Standard
✓
EU Environmental Objectives
Sub-Framework I on renewable energy has a direct impact on the EU Environmental Objectives of
Climate Mitigation
No significant harm
✓
Adverse risks on all loans and projects financed under the Framework (and by Rabobank in general) are
monitored via:
• Sustainable Policy Framework
• Client sustainability assessments
Social Safeguards
Social safeguards on all loans and projects financed under the Framework (and by Rabobank in
✓
general) are secured through human rights and labour standards that include alignment with:
• Eight core conventions of the International Labour Organization (ILO) as set forth in its
Declaration on Fundamental Principles and Rights at Work
• UN Declaration of Human Rights
• UN Guiding Principles on Business and Human Rights
✓
EU Taxonomy
• Sub-Framework I on renewable energy aligns with the EU Taxonomy under NACE codes D.35.1.1
(Production of Electricity from Solar PV ) and D.35.1.1 (Production of Electricity from Wind Power )Sub-Framework II
Green Real Estate
Use of Proceeds:
Mortgage loans for real estate used for commercial
purposes in the Netherlands that received an Energy
Performance Certificate (EPC) label A or higher
ICMA Green Bond Principles & LMA/APLMA/LSTA
Green Loan Principles category :
Green real estate
Sustainable Development Goal (SDG) contribution:
SDG 11:‘Sustainable Cities and Communities’
EU Environmental Objective:
Climate change mitigation
Impact reporting
• CO2 emissions avoided compared to average energy
labels in the Netherlands
• CO2 emissions avoided compared to theoretical original
built quality of buildings
• Case studiesSub-Framework III
Healthcare and Care Facilities
Use of Proceeds:
• Loans provided to physical and
mental healthcare services (e.g.
medical hospitals, psychiatric and
substance abuse facilities)
• Loans provided to care centers (e.g.
community care facilities for the
elderly or people with disabilities)
ICMA Social Bond Principles:
Access to essential services (health and
healthcare) Impact reporting
• Estimated number of people who received care services
Target Population: • Distribution of real estate energy labels of facilities
Vulnerable groups and people with • Average absenteeism under employees
disabilities • % of facilities using renewable energy, are involved in circular
economy solutions, have a monitored energy management
Sustainable Development Goal and carbon emission reduction plan, have a sustainable
(SDG) purchase and waste plan and a vitality plan for employees, is
affiliated with initiatives and certifications e.g. ‘Green Deal
contribution:
Duurzame Zorg’ , the ‘Milieuthermometer Zorg’ or ISO 26000
SDG 3:‘Good Health and Well-Being’
• Case studiesSub-Framework IV
Covid-19 Crisis Support for SMEs
Use of Proceeds:
• Loans provided to Dutch SMEs
• Existing loans to SMEs with an extended
redemption period offered by Rabobank
ICMA Social Bond Principles:
• Employment generation through the potential
effect of SME financing
• Access to essential services: financing and
financial services
Target Population:
SME owners and employees and vulnerable groups
Impact reporting
Sustainable Development Goal (SDG) • Employee evolution
contribution: • Revenue evolution
SDG 1: ‘No Poverty’ and ’SDG 8: ‘Decent Work and • Distribution of real estate energy labels of SMEs
Economic Growth’ • Percentage of SMEs using renewable energy
• Percentage of SMEs that with specific external
sustainability certificationsFramework core components: Management of Proceeds and Reporting
Management of Proceeds
• Balanced by a matching amount of loans to eligible projects on a portfolio basis
• Healthy buffer of assets over liabilities of at least 130%
• The balance of unallocated proceeds are held and/or invested at Rabobank’s own discretion,
in its liquidity portfolio
Reporting
• Every 6 months, Rabobank will report on the volumes of outstanding sustainable financial
instruments outstanding on its website
• A Sustainable Funding Report will be published annually with allocation and impact
reporting per Sub-Framework
• Reporting will occur on portfolio level
• Reporting on a transaction will occur until full allocation of the proceeds
• The Sustainable Finance Funding Report will be audited by an external auditor and be
published on Rabobank’s website
• Allocation reporting is tailored per Sub-Framework, but intends to include for all Sub-
Frameworks:
– Percentage allocated
– Percentage new finance vs. refinance
– Number of eligible projects provided with finance
– Alignment with specific Sustainable Finance Guidelines
• Impact reporting is tailored per Sub-Framework (see slides on Sub-Frameworks for details)Managing the do no significant harm principles in our loans
Rabobank core values
Respect Sustainability Integrity Professionalism
Sustainability Policy Framework
Basis of sustainability standards for business relationships,
and for providing financial products and services:
● Core Policies on ESG topics
● Theme policies on material, thematic topics
● Sector policies on specific industries and supply chains
Periodic Sustainability
Assessments
Sustainability Matrix applicable to GAIA Next assessment applicable to
Dutch retail clients with loan >1m wholesale clients with loan >1m
• Tailored for 40 different sectors • Alignment with the Sustainability Policy
• Alignment with the Sustainability Policy Framework
Framework • Data collection on client’s sustainability
• Data collection on client’s sustainable opportunities and risks
business conductManaging the Social Safeguards to be respected by our clients
Rabobank prevents and mitigates adverse impacts on human rights from
its activities and associated relationships, but also contributes positively
to human rights wherever it can
Rabobank upholds:
The United Nations Declaration of Human Rights
The United Nations Guiding Principles on Business and Human Rights
Eight core conventions of the International Labour Organization as set forth in its Declaration on
Fundamental Principles and Rights at Work
Rabobank describes own commitments and its expectations towards clients in the
Sustainability Policy Framework:
• Core policy on human rights including:
– Requirement to uphold the UN Declaration of Human Rights, and related international legislation
and the standards as described in the ILO Declaration on Fundamental Principles and Rights at
Work;
– Transparency requirements
• Core policy on labour standards including:
– Requirement to uphold internationally recognized labour standards, including those described in
the IFC Performance Standard 2 on Labour and Working Conditions and
– Transparency requirements
– Diversity expectationsDisclaimer This presentation (the “Presentation”) is prepared by Coöperatieve Rabobank U.A. (“Rabobank”) incorporated under the laws of the Netherlands. The liability of its members is excluded. Rabobank is among others regulated by De Nederlandsche Bank N.V. and by the Netherlands Authority for the Financial Markets, as well as the European Central Bank. This Presentation is solely for information purposes and on the basis of the acceptance of this disclaimer. Neither the Presentation nor any of its contents, in whole or in part, directly or indirectly, may be used for any other purpose without the prior written consent of Rabobank. This Presentation is only directed at Eligible Counterparties and Professional Clients, as defined in the Markets in Financial Instruments Directive 2014/65/EU (“MiFID”) (the “Recipient”). It is not directed at Retail Clients (as defined in MiFID). The content of this Presentation reflects prevailing market conditions and Rabobank’s judgment as on the date of this Presentation, all of which may be subject to change. The information and opinions contained in this Presentation have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied is made as to their accuracy, completeness or correctness. The information contained in this Presentation is published for the assistance of the Recipient, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgment by any Recipient nor will any information in this Presentation (including, but not limited to, Statistical Information (as defined below) and forward- looking statements) be subject to updating. Rabobank has further relied upon and assumed, without independent verification, the accuracy and completeness of all information made available to it. To the extent permitted by law, Rabobank excludes any liability howsoever arising from the contents of this Presentation or for the consequences of any actions taken in reliance on this Presentation or the content herein. Each Recipient is advised to seek independent professional advice as to the suitability of any products and to their tax, accounting, legal or regulatory implications. Members of the Rabobank Group trade on their own account and may from time to time hold or act in securities issued by a client, or may act as advisers, brokers or bankers to a client or any of its affiliates. This Presentation contains certain tables and other statistical analyses (the "Statistical Information"). Numerous assumptions have been used in preparing the Statistical Information, which may or may not be reflected in this Presentation or may or may not be suitable for the circumstances of any particular Recipient. As such, no assurance can be given as to the Statistical Information's accuracy, appropriateness or completeness in any particular context, or as to whether the Statistical Information and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Statistical Information should not be construed as either projections or predictions. This Presentation may include "forward-looking statements". Such statements contain the words "anticipate", "believe", “could”, “intend", "estimate", "expect", "will", "may", "project", "plan“, the negative of such terms and words of similar meaning. All statements included in this Presentation other than statements of historical facts, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding present and future business strategies and the relevant future business environment. The information and opinions contained in this Presentation are wholly indicative, for discussion purposes only and are subject to change without notice at any time. No rights may be derived from any potential offers, transactions, commercial ideas contained in this Presentation. This Presentation does not constitute an offer, commitment or invitation and does not constitute investment advice and is not intended for the use by persons as an offer of securities subject to the Netherlands Financial Supervision Act. This Presentation shall not form the basis of or be relied upon in connection with any contract or commitment whatsoever. © Rabobank, Croeselaan 18, 3521 CB Utrecht, The Netherlands, www.rabobank.com/ir, Chamber of Commerce number 30046259. Investing Rabobank and the other parts of Rabobank Group that are designated as investment firms are registered as such with the Netherlands Authority for the Financial Markets. The aforementioned investment firms are licensed by the Netherlands Authority for the Financial Markets under the Financial Supervision Act. If you invest funds that you have borrowed, you run the risk of incurring a debt as well as losing the invested amounts. This Presentation does not constitute an offering document. The information herein is neither an advertisement nor does it comprise a prospectus for the purpose of EU Directive 2003/71/EC (as amended from time to time). The information herein has not been reviewed or approved by any rating agency, government entity, regulatory body or listing authority and does not constitute listing particulars in compliance with the regulations or rules of any stock exchange. Nothing in this Presentation should be construed as legal, tax, accounting, regulatory or investment advice and the Recipient is advised to consult its own independent professional advisers in relation to investment in one of the products mentioned. The information contained herein does not purport to be complete and your decision to invest in one of the products mentioned should solely be based on the applicable prospectus or information memorandum including the risk factors, costs, terms and conditions and underlying values. The applicable prospectus or information memorandum is available with Rabobank or on www.rabobank.com/ir. The value of your investment can fluctuate. Past performance offers no guarantee for future results.
Telephone +31 30 712 2401 E-mail IR@rabobank.com Website www.rabobank.com/IR Bloomberg RABO NA
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