TORONTO | Nov. 8, 2023 – More than six months after large pluralities of shareholders at both Royal Bank of Canada (RBC) and Bank of Montreal (BMO) voted in favour of proposals calling on the banks to undertake Racial Equity Audits, there has been no public disclosure from either company confirming whether they intend to act on this expectation.
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 commitments. Proposals for such audits have become common in the United States over the past two years, but the proposals filed at BMO and RBC’s annual general meetings in the spring of 2023 were the first of their kind to make it onto the ballot at Canadian companies.
The original proposals asked the banks to commission third-party racial equity audits covering their employment and business practices, including the impacts their products and services may have on people of colour and Indigenous people. At the RBC AGM, 42 per cent of shareholders voted in favour of the proposal, while 37 per cent of BMO shareholders did so – sizeable interests among both groups. Shareholder proposals are considered to be advisory in nature and a majority vote is not binding, but proxy advisors encourage issuers to take proposals seriously, particularly where there is strong support.
Despite this support, neither bank has confirmed its intention to conduct the audit. As a result, SHARE – the Shareholder Association for Research and Education – is refiling the same proposal for consideration at the 2024 RBC AGM. The proposal will be filed by SHARE on behalf of the Atkinson Foundation, the Hamilton Community Foundation, the United Church of Canada, and the Pension Fund of the United Church of Canada. The BC General Employees Union (BCGEU) and the Greater Manchester Pension Fund will also file the same proposal.
On Oct. 4, SHARE sent a letter to the board of RBC on behalf of its clients and a group of investors with $2 trillion in assets under management, stating that “as proponents and supporters of the proposal and long-term investors in RBC, we are committed to our company’s continued long-term success. We, therefore, out of concern for the Bank’s future and our own interests as investors, request that RBC conduct a third-party racial equity audit.”
Similar expectations from SHARE and the BCGEU were communicated to the Board of Directors at BMO.
Sarah Couturier-Tanoh, SHARE’s Associate Director of Corporate Engagement and Advocacy, said it is “staggering” that the two banks are reluctant to review the merits of their investments given how much shareholder money is in the balance.
“Both RBC and BMO have made commitments to advancing racial equity by investing in initiatives aimed at increasing financial inclusion and by making strategic philanthropic donations. However, to date, neither bank has been willing to undertake a comprehensive assessment of the risks and impacts of their business practices on people of colour and Indigenous Peoples,” said Couturier-Tanoh.
“Considering the outstanding support received by the proposals, shareholders expect RBC and BMO boards to show an appropriate degree of responsiveness by committing to conduct racial equity audits. By doing so, both banks have the opportunity to provide shareholders clear assurance that their actions are aligned with their stated commitments and effectively advance racial equity for their employees, customers and the communities in which they operate.”
BCGEU president Stephanie Smith said the time for action is now.
“In 2023, RBC shareholders made it clear that systemic racism is a threat to both societal values and company value. Our ask was simple, but is crucial for a bank that claims to be committed to racial equity,” Smith said.
“Today, we return with the same imperative for racial equity, but with an even stronger resolve.”
At the time of the 2023 votes, two Canadian banks had already committed to conduct racial equity audits covering a review of both their workplace and business activities: Canadian Imperial Bank of Commerce and National Bank of Canada.
For more information contact:
Director, Education and Advisory Services, SHARE
SHARE is an award-winning non-profit organization dedicated to mobilizing investor leadership for a sustainable, inclusive and productive economy. We do this by supporting our investor networks and amplifying their voices to improve corporate sustainability practices and implement better rules and regulations that govern capital markets. For more information on SHARE, visit www.share.ca
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.