BMO to begin racial equity audit this year

Bank of Montreal, which committed to a racial equity audit in November following engagement from shareholders, will begin that audit this year. Like Royal Bank of Canada, BMO will conduct the audit in two parts: the 2024 review will focus on employment equity, and a 2025 review will focus on the bank’s business practices, a spokesperson told Advisor.ca.

The results will be made public after the reviews are completed.

Since last year’s proxy season, all of the Big Six except Scotiabank have committed to racial equity audits in response to engagement from activist shareholders. TD’s audit was completed last year.

Further, all of the Big Six banks that signed a widely publicized commitment to increase the number of Black board members by 2025 have hit that goal.

In 2020, BMO, Bank of Nova Scotia, CIBC and National Bank of Canada signed the BlackNorth pledge, which requires signatories to commit to Black people holding at least 3.5% of board roles by 2025, among other goals.

Boards of the Big Six have 13 to 15 members, so adding one Black director satisfies the requirement.

With a year left to the goal’s deadline, the four signatories have reached their goal. BMO appointed a Black board member in August 2023, National Bank in April 2021 and Scotiabank in June 2022. CIBC has had a Black board member since 2017.

CIBC also achieved one of its racial-equity goals set in 2021, which was to have at least 4% of board-approved executive roles be held by members of the Black community by the end of 2023. Last year, the bank updated the goal, aiming for at least 5% by 2025.

Banks also have increased the number of Indigenous board members, with three banks nominating Indigenous directors this year, up from two last year. Further, Toronto-Dominion Bank is nominating two Indigenous directors, up from one last year.

The banks’ annual general meetings take place in April. Here’s a look at the board slates each institution proposed:

Bank of Montreal

Racial equity audit status: Committed to a racial equity audit in November following engagement from shareholders. The audit will begin this year and focus first on employment practices, and then business practices.

Board status, 2024:

• Six of 13 nominees are women (46%; goal of 33%)
• Two of 13 nominees identify as people of colour (15%; no goal)
  • One nominee identifies as Black (8%; 3.5% goal)
  • No nominees identified as Indigenous (no goal)

Bank of Nova Scotia

Racial equity audit status: No formal audit reported; no shareholder resolution requesting one in 2024.

Board status:

• Five of 14 nominees are women (36%; goal of 30%)
• Two of 14 nominees identify as people of colour (14%; no goal)
  • One nominee is Black (7%; goal 3.5%)
  • No nominees identified as Indigenous (no goal)

CIBC

Racial equity audit status: “CIBC has engaged an independent third party to undertake a two-phased racial equity assessment on our employment policies and commercial practices in 2024 and 2025,” the bank states in its 2023 sustainability report. “A final report, including recommendations and an action plan, will be included as part of our fiscal 2026 disclosures.”

Board status:

• Six of 13 nominees are women (46%; goal of 40%)
• Two of 13 nominees identify as people of colour (15%; no goal)
  • One nominee identifies as Black (8%; goal 3.5%)
  • One nominee identifies as Indigenous (8%; no goal)
• One of 13 nominees identifies as a member of the LGBTQ+ community (8%; no goal)

National Bank of Canada

Racial equity audit status: Audit work is underway related to the Principles of Responsible Banking, and the bank will collaborate with SHARE on further racial equity audit work.

Board status:

• Six of 13 nominees are women (46%; goal of 40%)
• One of 13 nominees is a visible minority (8%; no goal)
  • That nominee is Black (8%; goal 3.5%)
  • No nominees identified as Indigenous (no goal)

Royal Bank of Canada

Racial equity audit status: Committed to a racial equity audit in November following engagement from shareholders. The bank plans to complete a third-party racial equity audit of employment practices by the end of December 2024. Also by the end of 2024, the bank said it will scope out a third-party racial equity audit of its business practices, with the audit taking place in 2025.

Board status:

• Five of 13 nominees are women (38%; goal of 35%); the bank also appointed a woman to the board in February
• Four of 13 nominees identify as Black, Indigenous, people of colour and/or LGBTQ+ (31%; no goal)
  • One nominee identifies as Indigenous (8%; no goal)

Toronto-Dominion Bank

Racial equity audit status: 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. The bank’s audit was completed in 2023. The audit drew praise for its trailblazing, but the shareholder that requested the audit observed it had “key limitations” because it covered only employment practices and company culture, not commercial practices.

Board status:

• Seven of 15 nominees are women (47%; goal of 30%-40%)
• Ten of 15 nominees identify as a visible minority, Indigenous person, 2SLGBTQ+ or a person with a disability (67%; no goal)
  • Two nominees are Indigenous (13%; no goal)
  • One nominee is Black (7%; no goal)

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.