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TD Rebuttal

In response to a shareholder proposal filed by Vancity Investment Management (VCIM) and Investors for Paris Compliance, TD issued an opposition statement in its proxy circular (p. 87). This is our response to TD’s opposition statement.


Overall, TD’s response misses the point. It says the company has a net zero transition plan, which is true, in part. But the current plan is not credible as it lacks specificity and relies on building blocks – such as intensity-based targets – that do not add up to the bank’s own 2050 net zero target. TD’s response adds no further specificity nor does it commit the bank to doing so.

If the bank is to convince investors that it is on track to address its large documented transition risk, greater disclosure about how TD intends to meet its net zero goal is needed.

Specific Claims

TD Claim: “The proposal is overly prescriptive in that it purports to dictate how the bank should conduct its business.”

Response: The proposal calls for greater disclosure; it does not prescribe that disclosure. “Overly prescriptive” is a cliché response that does not apply here.

TD Claim: The proposal “calls for certainty which is not achievable in light of macro uncertainties and the time frame for the bank’s climate goals.”

Response: The proposal does not call for certainty. It calls for TD to articulate specific actions and to outline mechanisms that will hold the bank accountable for achieving these actions.

TD Claim: “The board of directors rejects the proposal’s assertions that the bank lacks a “credible transition plan” and is not in compliance with its GFANZ obligations. In fact, the bank has publicly disclosed a Climate Action Plan that outlines transition activities and is in compliance with its GFANZ obligations.”

Response: The proposal notes that GFANZ defines a transition plan as a “set of goals, actions, and accountability mechanisms to align an organization’s business activities with a pathway to net-zero.” (Emphasis added).

TD’s response states that it outlines transition activities, but again does not specify what these are, which is the underlying point. TD cites its interim emissions reduction targets, but as we address below, these do not add up to the absolute emissions reductions required by TD’s own net zero commitment, and thus do not constitute a plan to achieve them.

Investors are lacking clarity regarding TD’s proposed climate transition actions, since the bank relies mainly on vague references to processes (e.g. TD will “engage with clients”, “assess climate risks,” or “invest sustainably.”) There are also no proposed accountability mechanisms (e.g. engagement escalation policies and timelines, fossil fuel phase-out policies and restrictions on fossil fuel expansion projects, or emissions metrics associated with sustainable finance goals). 

TD Claim: “In the short-term, under an absolute emissions metric, the bank’s analysis showed that the lever to drastically reduce emissions is divestment, which the bank does not believe is an effective way to drive emissions reductions in the real economy; would prevent the bank from supporting responsible activity by clients as part of their transition plans; and would be inconsistent with the bank’s purpose.”

Response: This claim is revealing since it implies that “the bank’s analysis” shows TD’s interim intensity targets do not add up to the absolute financed emissions reductions required by its net zero commitment.

The bank had a choice regarding its 2030 targets, which are supposed to be mathematical building blocks towards its absolute 2050 target. The 2030 targets should reduce financed emissions in proportion to and on a timeline consistent with its 2050 goal.

If the bank’s analysis shows that setting proportionate absolute 2030 targets is “drastic,” then it should disclose this information as a material risk and articulate a credible pathway forwards where the mathematics still works. For example, the bank could have set lower absolute 2030 targets, promising larger 2040 targets to compensate such that it would still be on track for its absolute 2050 target.

Instead, TD set intensity targets for 2030 that allow the bank’s financed emissions to not drop, and even to grow. This creates the need for more drastic emissions cuts later if it is to meet its absolute net zero target. That puts the bank at greater transition risk, but investors are not told this because TD has not disclosed “the bank’s analysis” and its math to 2050.

Setting absolute targets does not preclude the bank from working with responsible clients on their transition, since responsible clients will set targets at least as stringent as TD’s own. TD has also yet to articulate what a credible client transition plan is, again leaving investors guessing as to how the bank is doing this work.

TD Claim: “An intensity-based interim metric…allows the bank to monitor progress with a meaningful, comparable metric.”

Response: We encourage the bank to continue to report its intensity-based emissions along with its absolute emissions. These metrics are complementary. This is a different issue to targets.

TD Claim: “The board of directors rejects the proposal’s call for the bank to adopt a “policy to phase down its exposure to fossil fuels.” This is a call for the bank to withdraw from involvement with the fossil fuel industry and to do so in a manner which ignores the bank’s purpose and the social and economic considerations which must be taken into account in managing the transition to a low carbon economy in a manner which is practicable, just and orderly and consistent with the bank’s purpose.”

Response: If TD is to reach net zero, then it must phase down its exposure to fossil fuels. This is simple emissions arithmetic. The question is over what timeline this happens, but it must happen, and to date TD has made no policy in this regard. TD fails to respond to the fact that it is still engaged in financing fossil fuel expansion, which is the opposite direction to net zero. The proposal says nothing about ignoring a just and orderly transition – indeed, we encourage this. TD’s purpose is to “enrich the lives of our customers, communities and colleagues,” not to support fossil fuels.

TD Claim: “The proposal refers to anticipated regulatory guidance from OSFI with regard to the management of the risks of climate change. The bank is in regular communication with OSFI and the Bank of Canada with regard to the development of such guidance and believes that it is, and will continue to be, able to meet regulatory expectations in this regard.”

Response: Part of the OSFI guidance is for banks to measure and disclose their financed emissions, including scope 3, as TD already has a good head start on doing. The implication is that the regulator expects these financed emissions to fall, and to date TD has yet to articulate whether and how it will achieve that, which is the point of the proposal.

CompanyTDDateMarch 16, 2023TypeRebuttalCo-FilerVancity Investment ManagementShare

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