TD Bank Group has released its first racial equity audit, which finds the bank has taken significant steps toward promoting diversity and inclusion but could do more on aspects such as consistency and measurement.
TD was the first of the Big Six banks, and among the first companies in Canada, to agree to conduct an audit following pressure from shareholders.
Such audits look to assess company policies and programs through a racial equity lens and try to identify opportunities where organizations can enhance efforts to be more equitable and inclusive.
The report, which was completed by Covington LLP and Weir Foulds LLP, found that TD has numerous initiatives and programs in place on diversity and inclusion and “committed leadership” across the bank. However, the bank could improve in areas such as communication around opportunities, standardizing its interview process, tracking of demographics and consistency in implementation.
The report also recommended that TD “continue to make progress toward its public commitments to increase representation of diverse individuals at the [vice-president and higher] level of the Bank. In addition, TD should continue its focus on diversifying the racial and ethnic composition of its senior leadership team and board of directors.”
The bank said in an internal letter on the results that it has a longstanding commitment to diversity and inclusion but recognizes it has more work to do.
It said it will incorporate the recommendations into its human resources plans and sees opportunities to apply the insights to its customer service practices.
“This audit is a real feat,” said Emma Pullman, head of shareholder engagement and ESG with the BC General Employees’ Union (BCGEU), which filed the shareholder proposal with TD requesting the audit.
“They’ve definitely paved the way and I’m very happy about that,” she told Investment Executive.
However, as the audit only covered TD’s employment practices and company culture, it “has some key limitations that leave us, as a long-term investor, concerned,” Pullman said. “We have not yet seen a commitment to conduct any assessment of products and services, so … TD does not yet have a complete picture of the racial equity impacts of its entire business.”
Pullman said the BCGEU would like to see TD share more information about the data underlying the existing audit, as well as commit to an audit of its business practices like its competitors have done. The BCGEU sent a letter to TD on Dec. 1 outlining these and other concerns, and Pullman hopes their conversation will continue.
However, she said the organization is prepared to file a shareholder resolution for a business-practices audit if necessary.
“When TD agreed to this audit 20 months ago, they were a trailblazer,” Pullman said. But now, “TD’s competitors have subsequently agreed to more comprehensive audits than TD did.”
CIBC, National Bank, Royal Bank of Canada and Bank of Montreal all agreed this year to launch racial equity audits in response to shareholder engagement. National Bank’s audit is being conducted in alignment with the Principles of Responsible Banking, while CIBC and RBC have stated they will audit both employment and business practices.
A BMO spokesperson confirmed Monday that it will update shareholders on its audit plans in 2024.
Bank of Nova Scotia has not committed to an audit and no shareholder resolution has asked it to.
Pullman, who has analyzed racial equity audits of organizations such as Citigroup, State Street, Starbucks, Meta Platforms Inc. and Airbnb, said TD’s racial equity audit did a good job of enumerating the bank’s policies and practices, but didn’t provide as much information as to effectiveness.
“The questions posed by TD do not elicit enough information on the efficacy of TD’s programs and we believe this should be addressed in future audits or assessment,” the BCGEU stated in its Dec. 1 letter.
“The fact might be that a lot of [their] initiatives are very effective, but I would say that this report doesn’t allow us to understand that fully,” Pullman said. If TD releases more of the data underlying the audit, “that would give us greater understanding and confidence in the results.”
Earlier this year, TD reported that it had doubled the number of Black employees at the vice-president level or higher between mid-2020 and Dec. 31, 2022, meeting a goal the bank set following the racial reckoning of 2020. TD did not share the current or former number of Black executives.
Following the murder of George Floyd in May 2020, several financial institutions made pledges related to racial justice. TD had the earliest public deadline for improved Black representation, having announced in 2020 that it would double its representation of Black executives by the end of 2022 and increase minority executive representation across the bank by 50% by 2025.