The Hamilton Community Foundation, represented by the Shareholder Association for Research & Education (“SHARE”), has submitted a shareholder proposal to be considered at the Bank of Nova Scotia’s (“Scotiabank”) 2025 annual general meeting of shareholders scheduled on April 8, 2025. This proxy alert provides supplementary information relevant to your review in voting on Proposal No. 1 requesting that Scotiabank conduct a Racial Equity Audit (“REA”). This alert also directly addresses the Board’s position.
As you review the proposal, we would like to draw your attention to the following:
- Racial equity audits are a powerful risk mitigation tool. They enable companies to assess both (1) the extent to which their practices create, perpetuate, and sustain inequities amongst employees, customers, stakeholders, and Indigenous rightsholders; and (2) how effectively a company’s own commitments and initiatives translate into measurable equity outcomes. Racial equity audits provide companies with key recommendations to address identified compliance deficiencies through the strengthening of policies, practices, and accountability mechanisms. By proactively identifying and addressing inequities, Scotiabank will be better positioned to manage reputational, legal and operational risks; fulfill its own racial equity commitments; and build long-term value for shareholders and stakeholders alike.
- Scotiabank is the only bank among Canada’s “Big Six” that has yet to commit to a racial equity audit. At present, Scotiabank is an outlier amongst leading banks, in its rejection of racial equity audits as an effective risk management tool to identify, mitigate and address potential and/or actual inequities stemming from the Bank’s employment and commercial practices, as particular to racially marginalized and Indigenous communities. Failing to identify, mitigate and address inequities may expose shareholders to reputational, legal and operational risks stemming from gaps in the bank’s risk mitigation practice.
- Scotiabank has not demonstrated how its current racial equity initiatives and practices fulfill the same objectives of a racial equity audit. The Proponent does not question the bank’s stated commitment to racial equity. However, it views the bank’s current approach to racial equity as insufficient to proactively identify and evaluate the full scope of related risks and to demonstrate the merit or effectiveness of its various initiatives.
The withdrawal terms proposed and discussed with Scotiabank were not overly prescriptive, and substantively the same as those accepted by all four other Canadian banks engaged by the Proponent in 2023.
When done in line with best practices and incorporating rightsholders and stakeholders’ feedback, an independent third-party racial equity audit can be a powerful risk mitigation tool for the board, management, and shareholders.
Specifically, a racial equity audit can help Scotiabank:
- Mitigate systemic discrimination risks;
- Strengthen compliance with U.S. civil rights and fair lending laws;
- uphold Canadian federal human rights legislation, the Truth and Reconciliation Commission’s Calls to Action, and the UNDRIP;
- Drive product and service innovation; and
- Expand market share by addressing barriers to financial access for underbanked Indigenous and racially marginalized populations.
Presently, Scotiabank is an outlier amongst Canadian big banks. Other major Canadian banks — namely BMO, RBC, NBC, and CIBC — have committed to conduct a racial equity audit as part of their broader efforts to improve financial inclusion and risk management practices. We are concerned that Scotiabank may fall behind its peers in adapting to emerging regulatory trends and shifting customer demographics.
By conducting a racial equity audit like its peers, Scotiabank may be better positioned to identify opportunities to improve engagement with underserved markets, potentially enhancing competitiveness within an increasingly diverse customer base. Aligning with industry best practices will help Scotiabank mitigate reputational, legal, and operational risks while supporting long-term shareholder value creation.
Conducting a racial equity audit is in the best interest of shareholders. For the company, it aligns with Scotiabank’s own commitment to “remove barriers to advancement, increase access to opportunities, and create a more inclusive world”.
For questions regarding the proposal, please contact:
Sarah Couturier-Tanoh, Director of Shareholder Advocacy at SHARE.
IMPORTANT NOTICE
This is not a solicitation of authority to vote your proxy. Please DO NOT send us your proxy card; SHARE is not able to vote your proxies, nor does this communication contemplate such an event.
The views expressed are those of the authors as of the date referenced and are subject to change at any time based on market or other conditions. These views are not intended to be a forecast of future events or a guarantee of future results. These views may not be relied upon as investment advice. The information provided in this material should not be considered a recommendation to buy or sell any of the securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the authors on an objective basis to illustrate views expressed in the commentary and do not represent all of the securities purchased, sold or recommended for advisory clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data. This piece is for informational purposes and should not be construed as a research report.
THIS IS NOT A PROXY SOLICITATION AND NO PROXY CARDS WILL BE ACCEPTED.
Please execute and return your proxy card according to Bank of Nova Scotia’s instructions.
