Environmental, social and governance (ESG) has taken on more urgent relevance during the pandemic. Kim Parlee speaks with Andrea Barrack, Global Head of Sustainability and Corporate Citizenship, TD Bank, about TD’s all-in, bank-wide approach to ESG. See report td.com/esg
- The words environmental, social, and governance, also known as ESG, has taken on a much more urgent relevance during the pandemic. There's been a growing awareness about the systemic risks that we all collectively face as a society, such as our rapidly changing climate, social inequalities, and really our unwillingness to keep the status quo. Joining me today is Andrea Barrack. She's Global Head of Sustainability and Corporate Citizenship at TD. And she's here to talk to us about all the ESG initiatives that she's been up to. And she's been busy.
Andrea, I want to start off just maybe at a high level, can you talk to me a bit about how ESG factors into the workings of the bank? Because it's a big place.
- Yeah, sure. Thanks, Kim, for the question. You know, TD prides itself on being a purpose-driven bank, and we recognize we have a role to contribute positively to environmental and social issues that are in our communities, and also globally. Our ESG strategy is an all-in bank effort to serve our stakeholders. Shareholders for sure, but also our customers, employees, and the broader public sphere.
And so it influences how we run the bank, the types of products and funds we might offer to our customers, the advice and financing we'd deliver to clients, and the daily work needed to build a diverse and more inclusive workplace and society, the way we approach risk management. And so it's that, and then it's also our operations, things like our real estate footprint and our supply chain. And I would say it's really about how we execute our vision to try to be the better bank.
- There's a lot to unpack there, and I am going to. But before we get there, I've also noted that you have just put out three big reports, because I know I've had a chance to take a look at them, that talk to ESG and talk about how you create this values-driven business that you were just talking about. So maybe you could just tell me a bit more what you mean by that.
- Sure. We actually consider it a suite of publications that try to provide clear examples about how our purpose drives our accountability to do what's right for today, and also for the long term. And we're committed to driving value for our customers, colleagues, and communities in ways that accelerate positive equitable change and contribute to making the world around us a better place. And so our ESG report focuses on our ESG performance and how we embed that across our business. We also have a TD Ready Commitment report, highlighting the progress and impact TD has achieved through the corporate citizenship platform, focusing on things like we've talked about before-- financial health, social inclusion, equitable health outcomes and the environment.
And the two reports kind of tell the same story of impact and purpose, but the difference is they tell it to different audiences, and they tell it in a slightly different way. And so the ESG report is designed with the interests of investors in mind, all those best practices in terms of standardization, benchmarking, to help investors compare and assess our ESG performance against others, whereas the TD Ready Commitment report, it's written more for the general public, our colleagues, our customers, people in the community. And we have a stronger emphasis on community and employee stories.
And the third thing that actually you read a lot about in the paper, I'm sure, is the report that helps us update on the task force on climate-related financial disclosures. And we call it the 2020 Managing Climate-Related Risks and Opportunities report. And it really shares how, at TD, we're continuing to embed climate-related considerations into our business as part of our broader commitment to environmental transparency and accountability.
- How do you prioritize, given the breadth of what you just talked about?
- Yeah. Well, you know, strategy is all about choices, and I would say that's definitely true for ESG, as well. Focusing on fewer things that matter more is going to help us make more meaningful change. So each year, we do a materiality assessment that uses internal and external data points to help us understand what issues are most relevant to the business we are in and the geography in which we operate. So as a bank operating in a North American context, we have a different list, perhaps, than a consumer goods company that's operating overseas. And so for TD, we prioritize issues that both impact our business and that we can have an impact on, although I will say we do monitor and report on a much broader range of ESG issues because we know there's many things that our stakeholders care about.
- Let's delve into them into a little more detail because there's so many interesting things that are happening. And if we take apart the E and the S and the G, let's start with the E and the environmental. We've got a big commitment, I know, to the Global Climate Action Plan. Tell me a bit about some of the things we're doing around that.
- Sure. And as I said, I mean, climate change is an urgent environmental and business challenge. And so I think TD has taken decisive action through this ambitious climate action plan to directly contribute to a more sustainable and prosperous future. And it's actually building on strong progress and leadership that TD has had, reinforcing our commitment to deliver growth for sure, but also protect the planet. And in this, we align to global commitments on climate change. And we recognize that we do have an important role to play, but we have a role in partnership with our clients, who are also setting their own climate targets.
And so through these efforts, we set a net zero target for 2050. And we want to lead in the low-carbon economy by supporting our clients through their own transitions to a net zero future, offering our investors ESG-focused products that meet their values-driven and financial goals, identifying new growth industries and segments and addressing their financing needs. And we know part of this puzzle is figuring out what's the innovation and science that's going to unlock the solutions we need to solve this problem. So there's a whole package of things that we're doing together, but certainly setting that target helps us internally to really focus and organize our efforts and our ambition.
- It gets expressed through lots of different ways, whether it's, I know, through vendors and selection and investments. And we're going to talk more about that in upcoming series that we're going to have later on, but let's talk about the S part now of ESG, the social. What is TD doing in that bucket, so to speak?
- Yeah, so I mean, I would say inclusive growth is really the only path to sustained prosperity for us. And we saw in 2020 the global pandemic, the disproportionate impacts of that pandemic on vulnerable groups and women. And coupled with rising awareness and acceptance of anti-Black racism and its negative consequences on all of us, it really brought home the critical importance of financial and economic inclusion for our employees, our customers, and in broader society.
And we recognize we need to provide equitable access to financial products, services, and information for all of our customer groups in order to drive those more inclusive economic outcomes, but we also have a role as an employer. We employ 90,000 people, so how do we eliminate the obstacles that are holding people back from the progression that they might be entitled to. We have to recognize systemic racism and its devastating impacts really as something that we need to pay attention to, as well. And so we look at it from an employer perspective and say, you know, we want to drive to do better.
- The last piece is governance. And it's one I don't think the mainstream media kind of grabs on to as much, and I think it's so important. So tell me about, you know, again, what you're supporting and pushing on on the G side of the ESG.
- Yeah, I would say governance really underpins all of ESG. If you don't have that as your platform, it's hard to go much further with the S and the E. And so we've recognized that we want to build a culture of accountability and transparency because that's going to accelerate the product. So we have our most senior leadership and our board really engaged in this topic, and ensuring appropriate accountability and oversight. And then how does that cascade down into the organization? And so we're aligning our ESG framework and embedding the principles across the enterprise.
Part of that's by measuring and delivering on outcomes through enhanced reporting and disclosure. Transparency is key in this. We want to communicate our progress and our challenges. I mean, we're all on a journey here, and we're not perfect. But we want to be as upfront about that as possible. And then figuring out how do we actually tie incentives and rewards, and to motivate change and entrench accountability in our organization. And we were quite proud that, this year, we actually tied ESG factors to our senior executive compensation. And that's just one way in which we're starting to embed ESG in our governance.
- Well, it's great to get the over with-- excuse me, overview with you, Andrea. And thanks so much for telling us about it.
- No, thanks for the invitation.