Ahead of the upcoming annual meetings, SHARE and BC General Employee Union (BCGEU) recommend shareholders to vote FOR the shareholder Proposal No. 3 at Royal Bank of Canada (RBC) and Proposal No. 3 at Bank of Montreal (BMO).
Prior to making a vote decision, we encourage shareholders to read our Proxy Alert which provides some background information regarding the role of Canadian banks in addressing the racial wealth gap and the risks that corporate failure to address systemic racism represent to investors. The Proxy Alert also addresses the objections raised by RBC and BMO in their respective proxy circulars.
The proposals specifically ask both banks to oversee and publish a third-party racial equity audit analysing their adverse impacts on non-white stakeholders and communities of colour. In other words, the proponents ask RBC and BMO to initiate an independent assessment of their employment and business practices to identify where the banks activities may contribute to perpetuating the racial wealth gap and what can be done to mitigate the negative impacts on communities of colour and Indigenous people.
In the aftermath of George Floyd’s murder, U.S. and Canadian companies made commitments towards racial justice and pledged to become vectors of change. Three years later, several analysis suggest that corporate actions have had limited impacts on historically marginalized communities and sometimes even accused of having adverse consequences on these same communities.
As public scrutiny on corporate commitments and efforts to rectify racial inequities continues to grow, companies are further exposed to legal, reputational, operational and regulatory risks. Furthermore, the economic cost of systemic racial inequalities exposes universal asset owners to lower returns across portfolios. In these circumstances, companies and investors increasingly see racial equity audit as an effective process to assess corporate racial justice efforts.
Racial equity audits are increasingly used by U.S. companies and are beginning to be adopted by Canadian companies, including banks. These audits usually serve two main purposes:
- Mitigating the company-specific risks associated with corporate action – or lack thereof – to address systemic racism and supporting universal asset owners’ ability to manage the systemic risk of inequalities across their portfolios;
- Evaluating the effectiveness of the racial equity policies, measures and initiatives as well as the merit of related investments.
Racial equity audits are increasingly seen as critical to racial progress and Canadian companies are showing growing interest in adopting them to inform their racial equity strategies. For instance, Canadian Imperial Bank of Commerce and the National Bank of Canada recently announced they will commission a third-party racial equity audit covering their employment and business practices. Toronto-Dominion Bank made a similar commitment in 2022.
Considering the risks and opportunities that such audits represent for Canadian banks and their stakeholders, it is crucial for RBC and BMO to demonstrate a higher level of commitment to racial justice by commissioning independent third-party racial equity audits.
Therefore, we urge shareholders to read our Proxy Alert and vote FOR Proposal No. 3 in RBC 2023 Proxy Circular (page 105) and Proposal No. 3 in BMO 2023 Proxy Circular (page 98)
For questions regarding both proposals, please contact: Sarah Couturier-Tanoh, Associate Director of Corporate Engagement at SHARE, at firstname.lastname@example.org.
This is not a solicitation of authority to vote your proxy. Please DO NOT send us your proxy card; SHARE and BCGEU are 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 BMO and RBC’s instructions.