In 2019, as Scotiabank began to look at ways to support some of its ESG priorities, the Bank decided to get its feet wet with a Green Bond offering. The bond held primarily clean transportation projects and green buildings to ensure it was as transparent as possible.

“We wanted to make sure it was done right and addressed any lingering investor reservations,” said Christy Bunker, SVP, Canadian Banking and Global Wealth Management Treasurer, Term Funding and Capital for Scotiabank.

"The company representing an asset in the portfolio could have the right ratio of men and women, for example, but then may not be advancing environmental considerations.

“We maintained a very healthy buffer of assets against the bond that we had issued so that if we had runoff in the portfolio, we were always fully funded against that bond,” Bunker said.

Having addressed transparency concerns at the start, the feedback on the Green Bond was positive, Bunker said.

Late last year, as interest in social assets and sustainability offerings rose, Scotiabank decided the time was right to migrate to a framework that was more aligned with the Bank’s environmental, social and corporate governance commitments.

The extra effort made initially with the Green Bond paid off — upon its closing in August, the US$1-billion, 3-year Sustainability Bond offering was the largest issued by a Canadian Financial or Corporate.

The new framework will support Scotiabank’s commitment to creating better communities “for every future.” Net proceeds will be used to finance or refinance eligible green and/or social assets, such as access to affordable housing, essential services and basic infrastructure, and diversity and inclusion initiatives, that meet the Scotiabank Sustainable Bond Framework Eligibility Criteria.

A portion will be used to help advance businesses owned and/or led by women through The Scotiabank Women Initiative™, a program that breaks down economic barriers through unbiased access to capital, specialized education, and holistic advisory services and mentorship.


This bond is a strong proof point of the value that we offer to our clients, our business and the market” 

— Loretta Marcoccia, EVP and Chief Operating Officer, Global Banking and Markets at Scotiabank

“When we were designing The Scotiabank Women Initiative™ in Global Banking and Markets, we met with clients and came together as a team to determine the greatest opportunities,” said Loretta Marcoccia, EVP and Chief Operating Officer, Global Banking and Markets at Scotiabank. It was during those first discussions that we raised the idea of a Sustainability Bond that’s proceeds would be used to fund women-led business initiatives. This bond is a strong proof point of the value that we offer to our clients, our business and the market.”

The Sustainability Bond portfolio is still heavily weighted in green assets, Bunker acknowledged. She said while it is hard to predict what the ratio between environmental and social will be in the coming years, the social portion should increase as details of loan structure and reporting metrics are worked out.

And, unlike the Green Bond framework, which was solely for issuances facilitated by Treasury Group in Canada, the Sustainability Bond framework reserves a small component of non-Canadian assets for LATAM subsidiaries, Bunker said. The caveat, Bunker noted, is that any assets matched to proceeds must originate in the same country as the bond. For example, if Chile issues a bond to the market, they can only tag assets originated in Chile.

Bunker said that because the Sustainability Bond is largely being sold to asset managers who have clients that specifically want to invest in assets that advance ESG initiatives, there is a lot of rigour around the program.

That includes a second-party opinion from Sustainalytics, a subsidiary of Morningstar that evaluates whether issuers are complying with their own framework, as well as with the principles of green, sustainable and social bonds, while ensuring the portfolio is keeping up with the needs of investors.

“When we developed our sustainability bond framework, what Sustainalytics was asking us to adhere to was a lot more rigorous than what we had to do a few years earlier for the Green Bond framework, because the market has evolved and what investors are looking for has evolved,” Bunker said.

“The rigour investors are asking for gets tighter every year. The fact that the top of the house is responsible for the framework and they delegate that authority to Treasury gives investors a lot of confidence.”

The bond also will undergo an annual assessment from Scotiabank’s auditor, KPMG.

As well, Scotiabank included three Diversity and Inclusion (D&I) focused dealer firms as active co-managers — R. Seelaus, Ramirez and Siebert Shank Williams — who collectively brought over US$100 million in orders.

Bunker noted that the eligible asset categories under the Bank’s framework are aligned with what its Canadian peers have in their frameworks.

More importantly, they reflect what Scotiabank wants to advance in terms of ESG priorities, she said. “It’s more than just what we think we can originate; it’s the priorities we’ve set for ourselves that we want to advance, so there’s a lot of alignment between our climate change priorities and the Bank’s sustainability priorities.”