Volume Nine, Number Two    April 2004    www.columbiajournal.ca

Shareholder Action Update: Civilizing the Banks

Perry Abbey

As Canadians we all love to hate the Banks. But as virtual proxies for the whole Canadian economy through their lending and underwriting activities, their business is a prime target for shareholder action.

The “Responsible Finance” campaign is now in its second year. While not very “sexy,” it is one of the most important initiatives social impact investors can undertake in Canada, and in year two it has begun to produce some surprising results.

While at least one bank (TD) continues to resist by refusing to circulate the Real Assets shareholder resolution this year, other banks are showing serious interest in its request for greater transparency around their policy and practice on environmental issues and risks related to their lending and underwriting. Senior board level commitments at CIBC led to the withdrawal of the proposal earlier this year, while over at the Bank of Montreal, management took the unprecedented step of recommending its shareholders vote FOR the resolution.

This resulted in a Canadian first for an environmental or social shareholder resolution, and a 91 per cent Yes vote. Of course, progress comes with actions, not resolutions, so we will be carefully monitoring the big five banks’ progress on these issues over the next year.

This aspect of the Responsible Finance campaign ties in directly with the Climate Change Campaign:

Munich Re, the world’s largest re-insurance company, estimates that direct climate change related losses (if we don’t get with Kyoto and more, soon) could reach $400 billion annually. Green house gas emitters could well face multi-billion dollar lawsuits, just as we have seen for years in the Tobacco and Asbestos industries. And although our campaign has targeted the oil patch in Canada (filing with PetroCanada and Nexen), many industries will be affected if we don’t get serious about climate change. Including tourism, agriculture, banking and insurance just to start the list.

Shareholders will get serious when they begin to understand the magnitude of risk to their shares’ value if nothing is done, and everything to gain, both in share value and quality of life on this planet, if we do make change. We look forward to shareholder response from PetroCan and Nexen later this spring.

HIV/Aids in Africa, glass ceiling issues in Canada, responsible water use, and human rights shareholder campaigns are all still very active, and I’ll report on some of them next issue. Remember, it is the platform of funds like the Real Assets Social Impact fund and their institutional pension funds that fuel these campaigns, so visit www.realassets.ca for more.

Perry Abbey is a portfolio manager at United Capital Securities, a Working Enterprises company. Helping individuals and organizations harmonize their money with their values and leverage capital for change. Real Assets is Canada’s first Investment Management firm solely focused on Social Investment, and is both a VanCity and a Working Enterprises company.