Skyline of the financial district

The May 25 killing of George Floyd incited protests and renewed calls to address systemic anti-Black racism — the latest in a movement that officially coalesced as Black Lives Matter in 2013 and has been ongoing for decades.

Protesters are primarily focused on police brutality, but the financial world is not without culpability in furthering anti-Black racism.

For example, lenders in the U.S., and to a lesser extent Canada, practised “redlining” during the 20th century: denying mortgages to people in neighbourhoods where the majority of residents were Black people and minorities. Research shows the effects persist today.

In the last decade, U.S. banks and their lending subsidiaries have spent millions settling claims alleging they discriminated against Black and Hispanic clients.

On a more micro level, the U.S. divisions of two financial services firms each fired a high-ranking employee in the last two months after videos showed those employees engaging in actions widely regarded as racist.

Since May 25, several financial firms have released anti-racism statements and made financial commitments in support of Black communities. Investment Executive asked 20 banks, asset managers, insurers and advisory firms operating in Canada how they are addressing anti-Black racism, as well as what percentage of their employees and executives are Black.

Black representation

Of the 20 firms, only two — BlackRock Inc. and Royal Bank of Canada — shared their percentage of Black employees, and only for the U.S. workforce.

BlackRock reports that 3% of senior leaders (directors and above) and 5% of its U.S. workforce are Black, and that its goal is to “double representation of our Black senior leaders and increase overall representation by 30%” by 2024. RBC reports that Black people make up 5% of its U.S. workforce.

According to the U.S. Census Bureau, 13.4% of the U.S. population identifies as Black or African-American, with a further 2.8% as multiracial.

In Canada, federally regulated firms are required to report the representation levels of employees who self-identify as “Aboriginal peoples, members of visible minorities [VM] or persons with disabilities.” Nine of the 20 firms we spoke to are federally regulated, and six — the banks — report that data publicly. For 2019 (2018 for BMO and Scotiabank):

  • BMO reported 38.8% VM employees in Canada, with 34.2% in senior roles (as of Q2 2020; goal: 30%). Indigenous people made up 1.2% of its Canadian workforce.
  • CIBC reported 34% VM employees in Canada, with 18% in executive roles (goal: 22% by 2022). Indigenous people account for 1% of its Canadian workforce.
  • National Bank reported 23.8% VM employees in Canada.
  • RBC reported 37% VM employees in Canada, with 19% in executive roles (goal: 30%). Indigenous people accounted for 1.3% of its workforce (goal: 1.6%).
  • Scotiabank reported 24.1% VM employees in Canada, with 18.8% in senior roles. Indigenous people made up 0.9% of its workforce.
  • TD reported 38% VM employees in Canada, with 17.6% in vice-president roles or higher (goal: increase VM executives by 50% by 2025; double Black executives by 2022). Indigenous people constitute 1.5% of its workforce.

In 2018, Scotiabank used benchmarks of 30.5% VM representation and 2.3% Indigenous representation based on how these groups are represented in the overall workforce, while BMO used a 27% benchmark for VM representation.

According to the 2016 census, Black people make up 3.5% of Canada’s population.

Firms acknowledged benefits and challenges around collecting race and ethnicity data.

“We’d like to go down that path, but we’d like to do it respectfully,” says Janine Davies, chair of the inclusion council at Raymond James Ltd. and executive director of the Raymond James Canada Foundation. She says the firm plans to survey its employees on ethnicity by year-end.

David Gunn, country leader for Edward Jones Canada, says his firm is working toward more robust self-identification for its employees. “My long-term vision is that our financial advisors would reflect the communities we’re serving,” Gunn says. “To ensure we’re doing that, we will need a better measurement system.”

Dominic Cole-Morgan, senior vice-president at Scotiabank, said in a statement that the bank launched an updated employee diversity survey earlier this month to obtain “further data on the representation of specific employee groups, including Black people, Indigenous peoples and people of colour (BIPOC).”

A spokesperson for BMO confirmed that the bank will begin tracking the percentage of BIPOC employees “as part of setting new [five-year diversity] goals.”

Targets and financial commitments

The Canadian Council of Business Leaders Against Anti-Black Systemic Racism and its BlackNorth Initiative launched June 10 with the aim of increasing “the representation of Blacks in boardrooms and executive suites across Canada.” The council’s founder and chair is Wes Hall, executive chair and founder of Kingsdale Advisors; one of the co-chairs is Victor Dodig, president and CEO of CIBC.

The BlackNorth Initiative CEO pledge requires signatories to commit to Black people holding at least 3.5% of executive and board roles based in Canada by 2025 and to hiring at least 5% of its student workforce from the Black community.

Among the 20 firms Investment Executive contacted, BMO, CI Financial Corp., CIBC, Manulife Financial Corp., Scotiabank and Sun Life have agreed to sign the pledge. Scotiabank CEO Brian Porter and Mackenzie Investments CEO Barry McInerney are both on the board of directors for BlackNorth.

Separate from the pledge, BMO and RBC have committed to offering 40% of all summer/student opportunities to BIPOC candidates (starting in 2021 for RBC). On July 17, Manulife committed to hiring at least 25% BIPOC as part of its graduate program (and to increasing BIPOC representation in leadership roles by 30% by 2025; baseline figures were not shared).

Collectively, the Big Five banks donated $7.7 million to North American charities supporting Black communities, with some dollars part of existing initiatives. The Vanguard Group Inc. donated US$350,000 to historically Black colleges and universities.

Diversity initiatives

Most of the 20 institutions we contacted had already established diversity initiatives — not surprising given their size and reporting obligations.

Common initiatives included diversity committees and employee resource groups; training on unconscious bias and inclusive hiring, promoting and retention; and recruitment partnerships with relevant non-profits and post-secondary schools.

Brent Chamberlain, senior director of inclusion and diversity at CIBC, says the bank’s approach to diversity initiatives has evolved, leading to an upward trend in its diversity metrics from 2017 to 2019.

“Partners like Catalyst [a global nonprofit focused on advancing women in leadership] often say that increasing the number of women only took off after we realized we had to stop fixing the women; we had to fix the workplace,” he says. “That’s at the core of our strategy challenging systemic racism.”

Girish Ganesan, global head of diversity and inclusion at TD, says leadership accountability is a major factor in the bank’s strategy. “We look at our [diversity] metrics on a quarterly basis with senior leadership, so they know where the successes and opportunities are, and where we need to focus.”

TD’s diversity percentages increased from 2018 to 2019, and three of its five named executive officers, including CEO Bharat Masrani, are either women or visible minorities.

Crystal Hardie Langston, chief diversity officer at The Vanguard Group Inc., agrees that executive-level support is critical.

“Everyone expects the chief diversity officer to wave the flag,” she says. “But without the senior-most leadership team’s [support], this would be impossible to do, and frankly may not register as important.”

When Langston was promoted into her role in 2018, she says CEO Tim Buckley “was clear and imperative that nothing we do should be performative.”

Kathy Bock, principal and head of Vanguard Canada, says that staff have prominent role models: the firm’s chief investment officer and general counsel are both African-American, representing 16.7% of the named management team.

While Vanguard has internal targets for minority representation, it hasn’t yet communicated those targets publicly.

Recent events have prompted other institutions to enhance their initiatives. Manulife announced it would spend $3.5 million over two years to build “employment opportunities, training and community support in the workplace and the communities [it serves].”

Edward Jones released a four-part statement that includes a commitment to “equitable pay” and a “meaningful increase in diversity among our financial advisors and senior leadership.”

Gunn said his firm preferred to commit publicly without first deciding on metrics in order to hold itself accountable, noting that he hopes to have concrete objectives by 2021.

Changing the system

Executives pointed out that finding the best candidate and incorporating diversity into staffing practices are not mutually exclusive.

“There’s a clear correlation between diverse teams and their outperformance in their organizations,” Langston says. “Everyone’s better off when there are diverse teams in play. There is better decision-making, better outcomes for clients and benefits for the whole enterprise.”

Ganesan says there are still structural barriers to finding the best candidate. Systemic change is needed to level the playing field in terms of access to education, a network and professional opportunities. “Lived experience has never been looked at as a criteria for being able to do a job, but I think it’s about time that it is,” he says.

Chamberlain agrees.

“We as a country are only going to achieve greatness if we can tap into the potential of all our talent. If we are aware that there are groups facing barriers to entry, it’s our responsibility to investigate that,” he says. “It’s not about lowering the bar, it’s about widening the door. Inclusion is not a zero-sum game.”

Executives also acknowledged that eliminating systemic racism goes beyond improving staffing and representation.

“Anti-Black racism manifests itself in a number of forms,” Chamberlain says. “Bias also shows up in the education system [and] the broader world of finance.”

He says CIBC is working to understand “the needs of our Black clients and working to disrupt any bias that [may] exist in terms of client interactions.”

RBC stated in a July release that it will commit to lending $100 million over five years to Black entrepreneurs, and will establish a program to bring business experts and community leaders together “to share ideas and best practices to advance growth for Black-owned businesses.”

Langston says her next challenge is helping people take concrete actions toward eliminating systemic racism. She’s received several emails from Vanguard employees asking how they can move beyond awareness, and she replies with small yet powerful immediate actions: ask colleagues how they are feeling about recent events, listen “with the intent to understand and not to reply,” and interrupt bias in everyday conversations, which “could look like asking questions, or challenging a stereotype,” she says.

She knows real change requires a long-term commitment. “This work is more nebulous than selling a product or building a client solution — this is a mindset shift in a deep way,” she says.

“[We need] to ensure that education continues, and that it doesn’t just happen in the couple of months following the things that happened to Ahmaud [Arbery], Breonna [Taylor], George [Floyd] and countless others.”

This article was updated on July 17 with information released by Manulife and Sun Life after this piece was first published.

Read another article that addresses systemic racism in wealth management and an article that examines investing options that address racial justice.