Climate Opportunities

In addition to the risks identified that may potentially impact the Company, Regions actively works to identify climate-related opportunities. This includes supporting our customers by providing sustainable investing and financing opportunities related to their transition to a more sustainable future. We have seen growth in our sustainable lending areas over the past few years and have developed a Sustainable Finance definition and measurement methodology, which we are piloting and monitoring. We expect to share that information in the future, as well as evaluate the development of a sustainable finance goal.

As a financial institution, we understand the role that we play in the transition to a lower-carbon economy. For that reason, we provide sustainable lending and investment products and services that can benefit our customers and our climate, and we only expect our work in this area to grow in the future. As part of our bank’s strategic focus, we intend to develop more climate competent bankers to ensure we can support and enable our customers through increasing the number of our sustainable financing offerings.

As previously mentioned, Regions is currently developing an enterprise program to define and measure sustainable finance activities within the Company, including products, offerings, and other business activities that support the environment and climate transition, as well as community development and inclusive growth. We engaged with customer and community partner-facing stakeholders across all our lines of business and various support units to develop a definition for Sustainable Finance that we are socializing internally within the first half of 2022. These conversations have uncovered ways we are already meeting the needs of our customers with interest in sustainable investments and lending, an area of interest that appears to be growing. As a part of this program, we have also engaged in the assessment of various methodologies and measurement processes to better inform next steps for Regions’ sustainable finance reporting.

For example, Regions directly supports the development and implementation of clean energy solutions through multiple avenues, including our Solar Tax Equity Finance Team, ENRG, and solar lending through our recent EnerBank acquisition.

Solar Tax Equity Finance Team

The Regions Solar Tax Equity Finance Team provides lease financing for utility scale and commercial photovoltaic (PV) solar projects across the U.S. Since completing its first transaction in 2016, the team has funded 70 different projects, in excess of $1.5 billion. In 2021, the Solar Tax Equity Finance Team provided $216.5 million in funding for PV solar projects located across the country. The aggregate capacity of the farms in the portfolio exceeds 900 Megawatts dc, which in 2021 generated 1,163 Gigawatt hours.

Energy and Natural Resources Group

Regions supports the development and implementation of clean energy solutions through our ENRG, which specializes in tailored financing products and services for solar/renewable energy products. In 2021, ENRG committed or closed over $627 million in ESG-related financings, including:

• $383 million of sustainability-linked corporate financings.
• $164 million in solar project financings.
• $50 million of renewable natural gas construction facilities. These projects capture landfill methane emissions and convert them to a cleaner-burning type of natural gas.
• $30 million in renewable corporate credit facilities.

ENRG also served as a co-manager in $1.43 billion senior notes offerings supporting clean water/wastewater infrastructure and sustainability notes.

EnerBank Solar

Regions’ acquisition of EnerBank in October 2021 created a significant opportunity to capture additional solar and energy efficient financing options for consumers nationwide. Utilizing industry leading point-of-sale capabilities, EnerBank financed nearly $740 million in consumer home improvement projects for energy efficient projects in 2021. Projects ranged from energy efficient HVAC systems, solar panel installations, and new window and door installations that provide homeowners improved efficiencies.

Other products and offerings from Regions that support our customers and provide benefits to the environment include ESG-focused investment offerings and sustainable timber management activities.

Responsible Asset Management

Regions’ Asset Management business group, or RAM, provides individuals and institutions with products and services that help them manage and grow their assets. The team is working to meet growing investor demands for ESG investing and helping Regions expand the solutions we can offer to grow relationships and meet client needs.

Asset Management developed a firm-wide ESG/socially responsible investing (ESG/SRI) philosophy in late 2020. In November of 2020, Regions Investment Management launched sustainable equity and fixed income models, and at year-end 2021, had $54.3 million in assets tied to them. The Investment Research Group (IRG) launched a sustainable model in February of 2021 populated by third-party mutual funds and exchange traded funds (ETFs), and that model had $11.4 million in assets as of year-end 2021. Also of note, the IRG’s list of actively managed recommended funds available for client investment that the team classifies as Impact, Sustainable, or Responsible continues to grow. At year-end 2021, it stood at 43 funds, up from just four some 18 months earlier, as the implementation of RAM’s firm-wide ESG/SRI philosophy led us to reclassify some recommended funds as Responsible or Sustainable.

Growth in ESG/SRI assets over recent years highlights our commitment to providing ESG-related, socially responsible, and impact-focused investment opportunities as well as growing customer interest in these product sets.

Sustainable Forestry Management

The NRRE Department consists of 41 natural resource professionals who are charged with the responsibility of prudently managing hard assets owned by our banking and trust clients. Eighteen of these professionals are registered foresters responsible for the sustainable management of our clients’ timberland located across Regions’ footprint. Regions manages every acre of timberland in accordance with State Best Management Practices (BMPs) for Forestry. Regions’ forestry management efforts and State BMPs are implemented in efforts to improve water quality, carbon sequestration and wildlife habitat.

In addition to BMP management, a portion of the timberland acres managed by Regions’ foresters are certified under the Sustainable Forestry Initiative (SFI) 2022 Forestry Management Standard or the American Tree Farm 2021 Standard of Sustainability Certification (ATFC) Standard. Both third-party certification systems promote sustainable forestry practices aimed at protecting water quality, biodiversity, wildlife habitat, species at risk, and forests with exceptional conservation value.

Regions’ foresters take pride in and are committed to the sustainable forestry management of our clients’ timberland assets. Additionally, the NRRE Department is currently exploring carbon capture credit opportunities.