Toronto-Dominion (TD) is primarily a retail bank with operations in Canada and the U.S. In addition to retail banking, TD offers services in insurance, wealth management, and wholesale banking.
Impacts and Opportunities for Banks
Environmental, Social, and Governance (ESG) Risk Analysis
Banks that offer lending services have significant exposure to the indirect environmental risks associated with their financing activities. In an effort to analyze and attempt to minimize these risks, banks should have strong environmental and social policies and assessment tools. Banks involved in project finance should also participate in industry initiatives such as the Equator Principles.
TD Bank has embedded the Equator Principles within its Environmental and Social Risk Policy to ensure they are applied to all forms of wholesale and commercial banking transactions, not just project finance. Additional sector-specific guidance has been developed for environmentally sensitive sectors. For example, TD will not finance transactions relating to activities within World Heritage sites, activities involving the purchase of timber from illegal logging operations, or mountaintop removal coal mining.
According to a 2012 Global Sustainable Investment Alliance report, at least $13.6 trillion worth of professionally managed assets incorporate ESG concerns into investment selection and management .
TD Asset Management (TDAM) incorporates ESG criteria into its investment research and engages companies about industry best-practice initiatives. TDAM is the only asset manager of a major Canadian financial institution to be a signatory to the UN Principles for Responsible Investing.
Green Product Offerings
Banks can encourage environmental stewardship through their products and services. For instance, banks can offer green mortgages with better rates or terms to buyers with energy efficient homes. Green credit cards can be used to support local charities and green checking accounts may reward customers with higher rates for personal behaviors that reduce individual impacts.
TD Bank offers a range of green products. For instance, in 2010 the company launched an innovative financing program for the development of small-scale renewable projects by home and business owners, farmers, and building contractors. TD also offers insurance discounts for customers owning hybrid or electric vehicles.
Areas for Improvement
Improved Governance Practices: We encourage TD Bank to disclose specific, quantifiable, performance target objectives for its CEO and adopt full majority director election standards so as not to limit the ability of shareholders to hold board members accountable in uncontested elections.
 Global Sustainable Investment Alliance. “2012 Global Sustainable Investment Review.” January 2013. Accessed March 12, 2014. http://gsiareview2012.gsi-alliance.org/pubData/source/Global%20Sustainable%20Investement%20Alliance.pdf
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 9/29/15 and may not reflect current opinions or subsequent events.