Banks face rising shareholder pressure through climate resolutions as AGMs loom

TORONTO –

It was solely after his flight landed in Toronto final 12 months that Wet’suwet’en hereditary chief Na’Moks realized that Royal Bank of Canada had cancelled its in-person annual normal assembly with lower than a day’s discover.

The financial institution cited COVID-19 as the rationale it moved the occasion completely on-line, however these assembled to protest the financial institution’s local weather document had been left questioning if there was extra to it and Na’Moks says he was insulted that executives weren’t keen to face him.

Undeterred, he’s attempting once more this 12 months. Na’Moks will head to Saskatoon for the financial institution’s April 5 assembly, the place he plans to share his considerations about its fossil gas funding and encourage the assembled shareholders to help a decision associated to respecting Indigenous rights.

“Dave McKay, he’s the CEO, but he has to listen to the people that do business with him,” mentioned Na’Moks.

The decision he is pushing, put forth by the B.C. General Employees’ Union with the help of the Union of British Columbia Indian Chiefs, is only one of many Canada’s huge banks face as local weather activists more and more look to shareholder proposals to shift company coverage.

“They’re a really important tool for investors to catalyze change,” mentioned Catherine McCall, government director of the Canadian Coalition for Good Governance, which represents the pursuits of institutional traders.

“They can introduce issues to management and the board that are important, and they can signal how important they are to investors.”

RBC confronted its first climate-related shareholder proposal in 2018, whereas this 12 months it has 5 going to a vote. There are additionally three resolutions at Toronto-Dominion Bank going to a vote, two at Bank of Nova Scotia, and one every at Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada as activists more and more concentrate on banks as key intermediaries within the local weather battle.

“They’re invested everywhere, and they lend everywhere,” mentioned Jennifer Story, affiliate director of local weather advocacy on the Shareholder Association for Research & Education (Share).

“So they have a phenomenal ability to accelerate change on behalf of corporate issuers in Canada and elsewhere, if they choose to leverage it.”

Share, on behalf of its institutional shoppers, has put ahead a decision for Scotiabank’s April 4 AGM in search of extra element on how the financial institution might be assessing the transition plans of its high-emission shoppers.

Scotiabank mentioned in its proxy round response that the proposal was “overly onerous, prescriptive, and not aligned with industry practice,” and that it was shocked to see it filed because it was in ongoing engagement about it.

It was solely after talks stalled that Share determined to raise the problem with a shareholder proposal, mentioned Story.

“In essence the dialogue broke down, and we were disappointed in the lack of progress over almost a year and decided that this was the best route to take.”

Those pushing resolutions emphasize that it is not a lot a few easy go or fail on these votes (they’re non-binding even when they go), however extra about permitting them to have interaction with different shareholders, a strategy to talk and create dialogue across the points.

“There are ripple effects that go on throughout the year after the dust has settled at the AGM, that’s not the end point,” mentioned Matt Price, director of company engagement at Investors for Paris Compliance, which filed a decision at TD pushing for extra particulars on the way it will obtain its 2030 financed emissions targets.

The proposals do additionally give the choice for main shareholders to make a press release, with even small percentages of help representing billions of {dollars} of investments, mentioned Richard Brooks at Stand.earth.

“The resolutions are meant to send a message to management,” mentioned Brooks, head of the group’s local weather finance program, which submitted a proposal calling for RBC to set a deadline for when it can cease funding new fossil gas developments.

The message is getting louder, he mentioned, as greater shareholders step into the fray.

The Public Sector Pension Investment Board, which has $231 billion in belongings beneath administration, mentioned on March 22 that it could be utilizing its voting energy to advertise company practices that handle local weather change, and that it is able to vote in opposition to administrators when boards fail to organize.

And this 12 months RBC additionally faces a proposal about setting absolute emission discount targets from the New York City Comptroller, which oversees the town’s US$242 billion portfolio of pension funds.

“Absent a concrete plan to reduce absolute emissions in the real world in the near term, any net zero-plan rings hollow,” mentioned Comptroller Brad Lander in a press release saying the proposal, whereas noting that BMO and quite a few worldwide banks have already set exhausting targets on emission reductions.

RBC mentioned in its response, recommending shareholders vote in opposition to it, that whereas it acknowledges the significance of decreasing absolute emissions, solely intensity-based ones are “appropriate at this point in the bank’s transition journey.”

As with its response to Stand.earth’s proposal, RBC went on to notice the necessity to proceed to have interaction with shoppers in excessive emitting sectors, slightly than merely decreasing emissions by chopping off their funding, as a part of an orderly transition.

“This is why RBC’s goal to achieve net-zero in our lending by 2050 is intended to balance the needs of people and planet.”

For Na’Moks, the financial institution’s speak is little greater than greenwashing.

“It really bothers me when you read their statements of ‘by 2050, we’ll do this’. You know how much damage is going to happen to this planet by 2050 if they continue the way they are?” he mentioned.

“Things have to happen now. We’ve had decades to prepare, and make sure we’re not in the climate crisis we’re in, and it was all about money and they kept moving forward.”

He’ll be in search of allies inside RBC traders for the decision on how the financial institution assesses how effectively shoppers have carried out free, prior and knowledgeable consent of Indigenous peoples, in addition to on local weather motion.

“Money talks; that’s the world right, that is their world,” mentioned Na’Moks. “It will be the shareholders and those who do business with RBC that will make the difference. That’s how it operates. So they just need to listen.”

This report by The Canadian Press was first revealed April 2, 2023.