Proactive engagement by Scotiabank

Heidi Monk

EIG has been very pleased with the responsiveness and willingness to engage by Scotiabank (see a summary of our engagement on climate change and diversity in 2021). This August Scotiabank took their engagement with EIG to a new level, by reaching out to us to offer to have a phone call where they could update us on recent progress. Two Senior Vice Presidents spent about 45 mins speaking with me on behalf of EIG: Julie Walsh, SVP, Corporate Secretary and Chief Corporate Governance Officer, Meigan Terry, SVP, Chief Communications and Social Impact Officer.

Climate change

Ms. Terry and Ms. Walsh began by sharing an update on the bank's work on financed emissions, which has progressed substantially since May 2021. They analysed their financed emissions and identified real estate, agriculture, power and gas and utilities as key sectors that they need to work on to reduce financed emissions. By the end of the calendar year Scotiabank intends on making a public announcement about their pathway to net zero for financed emissions by 2050. This will include timebound interim commitments. 

I responded that this was a priority for EIG and that we encourage setting the target of a 50% reduction in financed emissions by 2030. I also enquired about their approach to carbon intensive sectors like coal, oil and gas and asked whether they would consider divesting. 

Scotiabank shared their policy on coal, which explains that the bank does not and will not fund stand alone coal projects. However, it continues to invest in existing clients that have coal in their portfolio. Ms. Walsh explained that Scotiabank is leery about divesting from sectors of the economy as a whole (including oil and gas), arguing that in their absence less scrupulous investors can replace them, which has no global benefit. 

We also spoke about how they engage their clients on climate change, and they noted that Scotiabank discusses clients' net zero plans with them (including internationally). For instance, they plan on leading a conversation with the Canadian oil and gas sector on net zero plans in the end of August/early September 2021. 

Diversity

I took the opportunity to inquire about whether any changes had been made relating to diversity on the Board, and/or setting targets among different categories of employees (see this blog post for a deep dive into diversity targets).

Scotiabank responded that they have an aspirational commitment to gender parity for the Board (in addition to their firm target of 30% which they currently surpass 5/13). On other components of diversity, they mentioned that with a small number of people, it gets difficult to get too specific on targets, but that diversity is an important consideration when replacing Board members (see Corporate Governance policies, p4). They explained in addition that they bring their values for Boards (diversity, gender parity, term length) to the Boards in other countries where they work (Peru, Chile, Jamaica, etc.).  

Scotiabank mentioned an initiative to prepare women to become board members (not for Scotiabank specifically), as part of the Scotiabank women initiative. This initiative includes women from diverse backgrounds. I suggested considering expanding the program (or developing a similar one) for men of diverse backgrounds.

Scotiabank mentioned doing a number of ‘listening’ sessions with employees to hear what the issues were, and to identify what culture changes were important, in particular sections of the Bank. Scotiabank has diversity and inclusion training, and also mandatory training on (Indigenous) reconciliation. They are launching an Allyship program this year.

Ms. Walsh and Ms. Terry noted that sometimes their values cost them. LGTBQ+ campaigns in Jamaica, Mexico and Trinidad for instance resulted in some clients terminating their relationship with the Bank.

Conclusion

I am impressed by the time that Scotiabank has given EIG and I look forward to continuing the conversation with them. We will share their interim targets and the action pathways about financed emissions once we learn about them.  

You can find all the details of our recent Shareholder engagement on our website in English and French. On that page you will find links to a complete description of our engagement with Scotiabank on diversity (français : diversité) and climate change (français : changement climatique).