TD Bank 2012 Annual Report Download - page 85

TD BANK GROUP ANNUAL REPORT 2012 MANAGEMENT’S DISCUSSION AND ANALYSIS 83
Within our Environmental Management Framework, we have identi-
fied a number of priority areas and have made voluntary commitments
relating to these.
Our environmental performance is publicly reported within our annual
Corporate Responsibility Report. Performance is reported according
to the Global Reporting Initiative (GRI) and is independently assured.
TD’s global operations maintained carbon neutral status in 2012
and we made a voluntary commitment to reduce our carbon emissions
by 1 tonne/employee by 2015. In 2012, TD made a voluntary commit-
ment to reduce our North American paper usage by 20% by 2015
(relative to a 2010 baseline).
During 2012, TD applied our Environmental and Social Credit Risk
Management Procedures to credit and lending in the wholesale,
commercial and retail businesses. These procedures include assessment
of our clients’ policies, procedures and performance on material envi-
ronmental and related social issues, such as climate risk, biodiversity,
water risk, stakeholder engagement and free, prior and informed
consent of Aboriginal peoples. Within Wholesale Banking, sector-
specific guidelines have been developed for environmentally-sensitive
sectors. TD has been a signatory to the Equator Principles since 2007
and reports on Equator Principle projects within our annual Corporate
Responsibility Report.
TD Asset Management (TDAM) is a signatory to the United Nations
Principles for Responsible Investment (UNPRI). Under the UNPRI,
investors commit to incorporate environmental and social issues into
investment analysis and decision-making. TDAM applies its Sustainable
Investing Policy across its operations. The Policy provides information
on how TDAM is implementing the UNPRI.
We proactively monitor and assess policy and legislative develop-
ments, and maintain an ‘open door’ approach with environmental
and community organizations, industry associations and responsible
investment organizations.
For more information on our environmental policy, management and
performance, please refer to our Corporate Responsibility Report, which
is available at our website: http://www.td.com/corporateresponsibility/.
TD Ameritrade
HOW RISK IS MANAGED AT TD AMERITRADE
TD Ameritrade’s management is primarily responsible for managing
risk at TD Ameritrade under the oversight of TD Ameritrade’s Board,
particularly through its Risk Committee and Audit Committee of the
Board. TD monitors the risk management process at TD Ameritrade
through its participation in TD Ameritrade’s board and management
governance and protocols.
Five of the twelve TD Ameritrade directors are designated by TD,
including TD’s CEO, Head of Direct Investing and two independent
directors of TD, pursuant to the terms of a Stockholders Agreement
among TD, TD Ameritrade and certain other stockholders. TD
Ameritrade’s bylaws, which state that the Chief Executive Officer’s
appointment requires approval of two-thirds of the Board, ensure the
selection of TD Ameritrade’s Chief Executive Officer attains the broad
support of the TD Ameritrade Board which currently would require the
approval of at least one director designated by TD. The Stockholders
Agreement stipulates that the Board committees of TD Ameritrade must
include at least two TD designated directors, subject to TD’s percentage
ownership in TD Ameritrade and certain other limited exceptions.
Currently, the directors we designate participate in a number of
TD Ameritrade Board committees, including chairing the Audit
Committee and the HR and Compensation Committee and participating
in the Risk Committee and Corporate Governance Committee.
The terms of the Stockholders Agreement provide for certain infor-
mation sharing rights in favour of TD to the extent TD requires such
information from TD Ameritrade to appropriately manage and evaluate
its investment and to comply with its legal and regulatory obligations.
Accordingly, management processes and protocols are aligned between
TD and TD Ameritrade to coordinate necessary intercompany informa-
tion flow. In addition to regular communication at the Chief Executive
Officer level, regular operating reviews with TD Ameritrade permit
TD to examine and discuss TD Ameritrade’s operating results and key
risks. As well, certain functions such as Internal Audit, Finance and
Compliance, have relationship protocols that allow for the sharing
of information on risk and control issues. Risk issues are reported
up to TD’s Risk Committee as required.
ACCOUNTING STANDARDS AND POLICIES
Critical Accounting Estimates
The Bank’s accounting policies are essential to understanding its results
of operations and financial condition. A summary of the Bank’s signifi-
cant accounting policies is presented in the Notes to the Consolidated
Financial Statements. Some of the Bank’s policies require subjective,
complex judgments and estimates as they relate to matters that are
inherently uncertain. Changes in these judgments or estimates could have
a significant impact on the Bank’s Consolidated Financial Statements.
The Bank has established procedures to ensure that accounting policies
are applied consistently and that the processes for changing methodol-
ogies are well controlled and occur in an appropriate and systematic
manner. In addition, the Bank’s critical accounting policies are reviewed
with the Audit Committee on a periodic basis. Critical accounting
policies that require management’s judgment and estimates include
accounting for impairments of financial assets, the determination of
fair value of financial instruments, accounting for derecognition, the
valuation of goodwill and other intangibles, accounting for employee
benefits, accounting for income taxes, accounting for provisions, account-
ing
for insurance, and the consolidation of special purpose entities.
ACCOUNTING POLICIES AND ESTIMATES
The Bank’s Consolidated Financial Statements have been prepared in
accordance with IFRS. For details of the Bank’s accounting policies under
IFRS, see Note 2 to the Bank’s Consolidated Financial Statements.
Accounting Judgments, Estimates and Assumptions
The estimates used in the Bank’s accounting policies are essential to
understanding its results of operations and financial condition. Some
of the Bank’s policies require subjective, complex judgments and
estimates as they relate to matters that are inherently uncertain.
Changes in these judgments or estimates could have a significant
impact on the Bank’s Consolidated Financial Statements. The Bank has
established procedures to ensure that accounting policies are applied
consistently and that the processes for changing methodologies for
determining estimates are well controlled and occur in an appropriate
and systematic manner.