Shareholders will soon get a chance to vote on two proposals on racial equity at the Bank of Montreal (BMO) and Royal Bank of Canada (RBC). The proposals were jointly filed by BCGEU with Shareholder Association for Research and Education (SHARE) on behalf of the Atkinson Foundation.
This comes following announcements from both the Canadian Imperial Bank of Commerce (CIBC) and National Bank of Canada (NBC) who each 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.
After engagements with both bank, either BMO or RBC commitments on racial equity, and as such these proposals will instead go to vote at their 2023 Annual General Meetings. Despite the new precedents being set by TD and now CIBC and 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.
BCGEU President Stephanie Smith says:
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."
Colette Murphy, Chief Executive Officer at the Atkinson Foundation says:
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. 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.
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.
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.
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 network 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.
Supplementary Information regarding the Racial Equity Audit Proposal at RBC and BMO
BCGEU Headquarters is on the unceded and shared traditional territory of the xʷməθkʷəy̓əm (Musqueam), Skxwú7mesh (Squamish) & Səlí̓ lwətaʔ (Tsleil-Waututh) peoples.