TD gives few details about carbon shift while continuing to finance billions in fossil fuels
(March 1, 2023) Shareholders will be asked to vote on a resolution at TD bank regarding its net zero transition plan in the lead up to its AGM on April 20. The resolution was filed by Investors for Paris Compliance (i4PC) and Vancity Investment Management (VCIM).
The resolution asks for greater disclosure about how the bank will meet its net zero by 2050 target. To date, the bank has adopted intensity-based interim emission reduction targets for 2030 that don’t guarantee progress towards its absolute 2050 target, and disclosed vague process-based measures to meet its targets that leave investors in the dark about how it will actually change its practices.
“TD faces huge transition risk and shareholders need to see the bank taking clear, concrete actions to address this,” said Matt Price, Director of Corporate Engagement with I4PC. “The bank has done a pretty good job of measuring and disclosing its financed emissions, and now we need to hear more about what it will do to tackle them.”
TD ranks as the 11th largest financier of fossil fuels among global banks, at over US$141 billion since the Paris Agreement. One study estimates TD’s financed emissions – including its asset management – at 447 million tonnes. For context, Canada’s entire emissions in 2021 are estimated at 691 million tonnes. This is the highest of any Canadian bank, meaning that TD has further to go than its peers and therefore must take stronger and more rapid action to reach net zero.
In November I4PC issued a report card assessing the net zero progress of the six largest Canadian banks that gave TD good marks for its financed emissions measurement and disclosure, but lower marks for its transition plan.
Canada’s bank regulator, the Office of the Superintendent of Financial Institutions will soon finalize climate risk guidance for federally-regulated financial institutions which will require them to have climate transition plans.
For more information contact Matt Price, Director of Corporate Engagement, Investors for Paris Compliance at 250-709-0171 or matt [at] investors4paris [dot] com
Here is the resolution as submitted:
Resolved: Shareholders request that TD disclose a transition plan that describes how it intends to align its financing activities with its 2030 sectoral emissions reduction targets, including the specific measures and policies to be implemented, reductions to be achieved by such planned measures and policies, and timelines for implementation and associated emission reductions.
In 2022 TD released an updated Climate Action Plan in response to its commitment to achieve net zero financed emissions by 2050.
While TD’s updated Plan provides more clarity on the measurement of financed emissions, its intensity-based 2030 targets don’t align with the absolute 2050 target TD has committed to and the Plan lacks clarity as to the specific measures and policies that TD will implement to achieve progress.
For example, TD discusses the existence of its “Climate Target Operating Model” with “sequences and actions,” but does not disclose what those are. Similarly, TD says that it continues to embed climate risk into its enterprise risk framework, but does not disclose whether and how this is related to meeting its targets.
TD says that it is making good progress towards its $100 billion “low carbon” lending, financing, and asset management target, but it‘s unclear whether and how this relates to its emission reduction targets as TD does not systematically quantify and disclose the impact of this activity on emissions.
TD’s need for a credible transition plan is acute considering the bank is particularly exposed to transition risk. A recent study concluded that TD has the highest financed emissions – at 447 million tonnes CO2 equivalent – of any Canadian bank.
TD is yet to adopt any policy to phase down its exposure to fossil fuels, including in its updated 2022 coal policy. On the contrary, it is still involved with financing fossil fuel expansion projects such as the Trans Mountain pipeline and Coastal GasLink project.
This uncertainty about whether and how TD will meet its climate targets represents a material business risk given the shifting regulatory environment. The Office of the Superintendent of Financial Institutions is developing climate risk management guidance that will require TD to have a Climate Transition Plan to manage “increasing physical risks from climate change, and the transition towards a low-GHG economy.”
Similarly, the Glasgow Financial Alliance for Net Zero, of which TD is a member, recommends that financial institutions have a transition plan that contains “a set of goals, actions, and accountability mechanisms to align an organization’s business activities with a pathway to net-zero.” TD is yet to meet this bar.
TD’s peers disclose greater specificity regarding how they will reach net zero, including ììabsolute 2030 targets (BMO, Citi, Wells Fargo), fossil fuel financing reductions (Lloyds, BNP Paribas, ING, Societe General), and public disclosure regarding client net zero evaluation and progress (Credit Suisse, ANZ Group). This proposal is consistent with one filed and withdrawn by MÉDAC last year.
To address uncertainty and increase transparency, we urge shareholders to vote FOR this proposal.