BURNABY, B.C. (COAST SALISH TERRITORIES) – Today, RBC (TSX: RY) shareholders voted 22% in favour of a proposal asking for the company to assess and mitigate the human rights and reputational risks involved in the financialization of housing.
The proposal was presented by the B.C. General Employees’ Union, an institutional investor in RBC.
In response to the AGM results, BCGEU President Stephanie Smith released the following statement:
“As a labour union, housing affordability is one of the most critical issues for our over 85,000 members. Over the past six years, we've been leaders on the issue of housing affordability through our Affordable BC campaign, and this is a continuation of that good work. As an investor, we are increasingly concerned about the looming human rights and reputational risks related to the financialization of housing. Today’s vote indicates RBC shareholders agree with us”.
The financialization of housing can occur when companies buy single family residences and convert them to rental stock. This relies heavily on bank financing, both through syndicated loan facilities and mortgages. The syndicated facilities require banks to collaborate on due diligence matters and other aspects of loan assessment and administration.
As reported by the Globe and Mail, a Canadian developer has already started importing this Wall Street business model into Canada – by purchasing hundreds of single-family homes in Ontario, for the purpose of renting them at a profit. This developer seeks a $1 billion Canadian residential real estate portfolio with 4,000 rental units, and eventually publicly listing this enterprise through an IPO.
“This Wall Street model is coming to Canada whether we like it or not. Today our shareholder proposal asked a simple question: Given the potential for adverse human rights impacts, does RBC have the human rights due diligence practices in place to adequately mitigate risk? We unfortunately don’t think so,” said Smith.
BCGEU filed the same proposal at BMO, but as a result of meaningful dialogue was able to withdraw after BMO acknowledged the potential for the financialization of housing in the single-family residential sector in Canada and committed to evaluating and enhancing its due diligence processes and training that will address human rights due diligence considerations.
Housing affordability is one of the biggest issues facing BCGEU members, and in addition to shareholder engagement on the financialization of housing the union is engaged in advocacy for stronger housing policies and has an rezoning application before the City of Burnaby to develop 292 units of housing, with at least 50% offered at below-market affordable rates, as part of a multi-use building that would also include a childcare facility and new office space for the union.
View the BCGEU shareholder proposal here: https://assets.nationbuilder.com/bcgeu/pages/896/attachments/original/1649262439/2022_final_RBC_shareholder_proposal.pdf?1649262439
View BCGEU's investor letter here: https://assets.nationbuilder.com/bcgeu/pages/896/attachments/original/1649262149/RBC_Investor_letter_-_Financialization_of_Housing_2022.pdf?1649262149
Read the Affordable BC Plan here: https://www.affordablebc.ca/
About BCGEU: BCGEU is one of the largest unions in British Columbia, with over 85,000 members in almost every community and economic sector in the province. 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.