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What is an ESG Market-Linked GIC?


Published January 17, 2022 • 2 Min Read

Unlike other investment products, GICs protect your principal despite market fluctuations, so you can’t lose your initial investment. Market-linked ESG GICs are built for investors looking for the benefits of GICs, who also want their investments to help make a difference in the world.

What exactly is the “ESG” part of a GIC product?

ESG GICs have exposure to global companies that are committed to environmental, social and governance (ESG) factors. E stands for Environmental: climate or water issues (i.e., a company’s climate plan/ how they offset carbon emissions); S stands for Social: diversity within corporations/ organizations and industries; and G stands for Governance or even how company executives are compensated. There are now more options than ever before to invest responsibly. Climate leaders in Europe have seen a huge increase in ESG investing – and Canada is following closely behind.

What does market-linked mean?

Instead of getting a return based on a fixed or variable rate, market-linked GICs are tied to the performance of a stock market index or basket of stocks. That means investors benefit from strong market performance. And – if markets fall, the initial investment amount is still protected, just like with traditional GICs.

Investing with a greater purpose.

An ESG market-linked GIC offers the security of a traditional GIC, the higher return potential of the stock market and the ability to invest with purpose. An ESG market-linked GIC helps you stay close to your values. At RBC, you’ll find the RBC ESG Market-Linked GIC. It’s linked to a global index of environmentally and socially responsible organizations, all of which meet specific ESG standards. Companies that are included in the index must show positive ESG metrics, low carbon impact and strong financial health. Find out more.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

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