Toronto, ON – Friday, March 3, 2023
Earlier this week, Canadian Imperial Bank of Commerce (CIBC) and National Bank of Canada (NBC), announced that they will conduct and disclose the results of third-party racial equity audits. They join TD Bank, which made a similar announcement in April 2022.
CIBC and NBC’s announcements come on the heels of shareholder proposals filed by investor stewardship and responsible investing organization, SHARE (Shareholder Association for Research and Education). In addition to these proposals, SHARE also filed racial equity audit resolutions at Bank of Montreal (BMO) and Royal Bank of Canada (RBC). However, neither BMO or RBC have made commitments, and these proposals will instead go to vote at their 2023 Annual General Meetings. Despite the new precedence set by CIBC, NBC and TD Bank, both BMO and RBC have recommended shareholders vote against the proposals.
A racial equity audit is an independent analysis of a company’s business practices intended to identify and remediate potential and actual disparate outcomes for Indigenous people and communities of colour. The audit evaluates the merits of a company’s efforts, policies and practices to tackle systemic racism in light of its racial justice commitment.
SHARE filed on behalf of the Atkinson Foundation at NBC, BMO and RBC and the IBVM Foundation of Canada at CIBC. The proposals at BMO and RBC were co-filed by BCGEU, a long-term shareholder.
“The Atkinson Foundation is dedicated to social and economic justice. We believe financial institutions must play a positive role in helping people build inter-generational wealth and grow their businesses,” said Colette Murphy, Chief Executive Officer at the Atkinson Foundation. “Historically and persistently, banks have exacerbated the racial wealth gap, through overt policies, and unconscious bias. CIBC and NBC are taking an important step in committing to audits, which will help surface these issues and identify solutions that we can act on immediately together.”
Financial institutions play a key role in furthering racial equity in society, as they provide both businesses and individuals with access to essential economic opportunities.
Research has indicated that, when compared to their white counterparts, people of colour and Indigenous people are more likely to be denied loans, to be recommended products that were not properly serve their interests, or not offered crucial products at all such as overdraft protection and balance protection insurance.
By failing to provide equitable opportunities to people of colour and Indigenous people, banks have long perpetuated unequal wealth distribution.
The decision by both BMO and RBC to forego conducting racial equity audits is particularly disappointing in light of their peers’ recent commitments.
According to Sarah Couturier-Tanoh, Associate Director of Corporate Engagement at SHARE “When a company publicly commits to fighting racial injustice, it is expected that such a statement is backed up with concrete actions and measurable outcomes. Failure to do so is not only a missed opportunity to rectify racial inequities but also exposes institutional investors to meaningful reputational, legal and regulatory risks.”
BCGEU President Stephanie Smith commented,. “RBC and BMO’s refusal to commit to these audits puts them at a disadvantage in a world where diversity, equity, and inclusion are increasingly important to customers, employees, workers, and investors. TD, NBC and CIBC may be the first Canadian banks to engage in this work, but they most certainly will not be the last. We intend to keep pushing banks and financial institutions on this critical issue.”
The resolutions at RBC and BMO will be the first shareholder proposals on racial equity audits to go to a vote at Canadian companies. Recently, numerous Canadian banks have faced controversy about the racial equity impacts of policies, products and practices, including the recent US$ 31 million settlement between the US Department of Justice and City National, an RBC subsidiary in the U.S., over allegations of redlining practices in majority-Black and Hispanic neighborhoods in California, signaling that SHARE’s proposals are timely and critical.
ABOUT ATKINSON FOUNDATION
The Atkinson Foundation is a Canadian charitable foundation committed to social and economic justice. Our highest priority is strengthening movements for decent work and a fair economy. We collaborate with community organizers, policy innovators and investors to challenge income, wealth and democratic inequality. Learn more about us here.
The B.C. General Employees’ Union represents over 85,000 workers in almost every community and economic sector in British Columbia. Under BCGEU’s capital stewardship strategy, the union has submitted shareholder proposals at some of Canada’s largest companies on topics like human rights, racial equity, and executive compensation. The union’s strategy has succeeded in achieving strong commitments on ESG issues.
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