Ethics & Sustainability Case:

“Green Enough?”

COMM 105 Sec-105

Student Number: 43860

October 23rd, 2023

Issues
Following the Triple Bottom Line framework, issues from environmental, social, and
economic aspects are considered respectively (Milne, T., Raynard, M., 2023). The first issue
to be considered is whether the environmental impacts WFLNG poses align with RBC’s
sustainable values. Many processes used by WFLNG are highly controversial despite their
end goal of being environmentally sustainable. Secondly, impacts on Indigenous communities
should be examined and weighed against their economic benefits. The location and operations
of WFLNG could potentially affect the land, water, and ecosystems that hold cultural and
traditional significance for the Squamish and Tsleil-Waututh Nation. This could disrupt their
way of life and cultural heritage. Lastly, WFLNG’s long-term equilibrium of supply and
demand should be considered. Although the LNG industry recovered faster than the oil
industry after the pandemic, lingering uncertainties about its long-term viability persist. RBC
must ensure this project’s long-term feasibility and financial stability before making a
decision.

Analysis
Alternative #1: Release the sustainability bond
The first alternative possesses various strengths for RBC. Firstly, RBC is creating shared
value by financing a sustainable project like WFLNG which aligns with RBC's commitment
to environmental responsibility and demonstrates support for cleaner energy alternatives
(Rawcliffe., 2023). Natural gas significantly lowers carbon emissions, with 50% less carbon
dioxide per million thermal units than coal and nearly 1/3 less than gasoline (Coal VS.
Natural Gas, 2023). If successful, this project could replace some of the coal used for energy
in Asia, positively impacting the environment. RBC has encountered criticisms for supporting
fossil fuel production in the past, and investing in LNG could improve RBC’s brand image
and reputation as they consider various stakeholders’ interests. Another noteworthy advantage
is the economic benefits for Indigenous communities. The Squamish Nation could collect 300
million Canadian dollars in revenue from property taxes alone during the project. (Economic
Impacts, 2023).This substantial income can improve the quality of life and livelihoods of
people in an area that isn’t as prosperous. Promoting Indigenous community prosperity and
inclusion aligns with RBC’s commitments. Economically, the LNG project could position
Canada at the forefront of the global natural gas market, offering a solid foundation for future
developments. According to Professor Werner Antweiler, the demand for LNG in Canada
will likely increase due to its environmental advantages over other available oils in the current
market. While issuing the sustainability bond presents a strategic opportunity for RBC to
showcase its commitment to sustainable finance and diversify its investment portfolio, it
comes with risks. Despite Woodfibre’s promise to achieve net-zero emissions by 2027,
certain processes may contradict their sustainability values. For instance, the gas liquefaction
process, involving hydraulic fracturing, emits methane, which is detrimental to the
environment. The negative impacts caused by WFLNG represent environmental externalities
which are unintended side effects of economic activities that harm the surrounding
environment without directly affecting the entity (Milne, T., Raynard, M., 2023). In this case,
the environment bears the intermediary costs of harmful chemicals and greenhouse gas
emissions, which do not directly impact Woodfibre’s finances. Additionally, Ernie George, a
Nation member, has concerns about the potential impact of LNG construction on their
historical site. However, WFLNG is willing to collaborate with Indigenous regulators to
minimize the damage. For instance, they have abandoned cheaper water cooling systems in
response to environmental requirements and adopted air cooling pipelines, demonstrating a
commitment to reconciliation through action.

Alternative #2: Do not release the sustainability bond

RBC has an alternative option, which is not issuing the bond to WFLNG. This choice can
reduce the risks of RBC being held responsible for any environmental harm caused by
WFLNG. Extracting natural gas involves injecting a significant amount of water and
chemicals into the rock to create fractures. This procedure substantially threatens surface
water and groundwater resources, which are essential for our environment. If these
environmental concerns are not addressed, it becomes challenging for RBC to align with its
sustainable values and support this project. Additionally, the BC Liberals have offered
WFLNG electricity rates below cost, potentially leading to extra expenses for BC Hydro
customers. According to the stakeholder theory, RBC should consider the interests of all its
stakeholders before making a decision (Freeman, D., 2020). Issuing the bond to WFLNG may
upset external stakeholders like taxpayers and environmental activists. Another advantage of
refraining from issuing the bond is reducing financial risk. The industry faces challenges due
to the pandemic and oil price shock, which have led to oversupply and low prices, putting up
to 8% of global LNG demand at risk (Economic Impacts, 2023). If the long-term success of
this project is not guaranteed, RBC’s credibility with its investors could suffer, ultimately
resulting in financial losses for the bank as an issuer. On the other hand, not issuing the bond
may cause RBC to lose a crucial investment opportunity to boost its profits and reputation
among the general public. Professor Werner Antweiler has pointed out that the demand for
LNG has remained stable during the pandemic and is steadily increasing, contradicting the
earlier assumption of LNG’s demand being at risk. Moreover, WFLNG’s success and
commitment to sustainability may be compromised without the financial support from RBC’s
sustainability bond. Nevertheless, RBC’s choice of not issuing the bond for WFLNG’s
sustainable project may raise concerns about its values and environmental commitment,
leaving stakeholders questioning if the bank is adapting to a more sustainable financial
landscape.

Recommendation
Based on the above analysis, RBC should issue a sustainability bond to fund the WFLNG
project. The funds from RBC can be directed towards the environmental issues identified
during the involvement of the project. Collaboration with Indigenous regulators can further
ensure the preservation of important historic sites while offering the Indigenous community
economic benefits and employment opportunities. To mitigate the uncertain LNG demand
after issuing the bond, RBC can diversify its investments and ensure that WFLNG maintains
flexibility in response to different market changes. By issuing the sustainability bond, RBC
can demonstrate its dedication to supporting environmentally-conscious initiatives, expand its
presence in the sustainable finance sector, solidify its dedication to Indigenous inclusion, and
reinforce its commitment to environmental conservation.
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 References

Coal VS. Natural Gas, (2023). https://blogs.ubc.ca/greenenough/economic-impacts/

Economic Impacts, (2023). https://blogs.ubc.ca/greenenough/economic-impacts/

Freeman, D., (2020). Class 7 Prep - [Finding Purpose and Managing Stakeholders:

The New Story of Business]. Canvas@UBC. https://canvas.ubc.ca/

Milne, T., & Raynard, M., (2023). Class 10 Asynchronous Content [Intro to

Sustainability and Business]. Canvas@UBC. https://canvas.ubc.ca/

Rawcliffe, W., (2023). Class 10- Sustainable Business [Creating Shared Value (CSV)].

Canvas@UBC. https://canvas.ubc.ca/