TD Bank 2014 Annual Report Download - page 102

TD BANK GROUP ANNUAL REPORT 2014 MANAGEMENT’S DISCUSSION AND ANALYSIS100
WHO MANAGES ENVIRONMENTAL RISK
The Executive Vice President, Community, Environment and Chief
Marketing Officer holds senior executive accountability for environ-
mental management. The Executive Vice President is supported by
the Chief Environment Officer who leads the Corporate Environmental
Affairs team. The Corporate Environmental Affairs team is responsible
for developing environmental strategy, setting environmental perfor-
mance standards and targets, and reporting on performance. There
is also an enterprise-wide Environmental Steering Committee (ESC)
composed of senior executives from TD’s main business segments and
corporate functions. The ESC is responsible for approving environmen-
tal strategy and performance standards, and communicating these
throughout the business. TD’s business segments are responsible for
implementing the environmental strategy and managing associated
risks within their units.
HOW TD MANAGES ENVIRONMENTAL RISK
TD manages environmental risks within the Environmental Management
System (EMS) which consist of three components: an Environmental
Policy, an Environmental Management Framework, and Environmental
Procedures and Processes. The Bank’s EMS is consistent with the ISO
14001 international standard, which represents industry best practice.
The Bank’s Environmental Policy reflects the global scope of its envi-
ronmental activities.
Within the Bank’s Environmental Management Framework, it has
identified a number of priority areas and has made voluntary commit-
ments relating to these.
The Bank’s environmental metrics, targets, and performance are
publicly reported within its annual Corporate Responsibility Report.
Performance is reported according to the Global Reporting Initiative
(GRI) and is independently assured.
TD applies its Environmental and Social Credit Risk Management
Procedures to credit and lending in the wholesale, commercial, and
retail businesses. These procedures include assessment of TD’s clients’
policies, procedures, and performance on material environmental 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 guide-
lines have been developed for environmentally-sensitive sectors. The
Bank has been a signatory to the Equator Principles since 2007 and
reports on Equator Principle projects within its annual Corporate
Responsibility Report.
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 opera-
tions. The Policy provides information on how TDAM is implementing
the UNPRI.
The Bank proactively monitors and assesses policy and legislative
developments, and maintains an ‘open door’ approach with environ-
mental and community organizations, industry associations, and
responsible investment organizations.
For more information on TD’s environmental policy, management
and performance, please refer to the Corporate Responsibility Report,
which is available at the Bank’s 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 the latter’s Risk and Audit Committees.
TD monitors the risk management process at TD Ameritrade through
management governance and protocols and also participates in
TD Ameritrade’s Board.
The terms of the Stockholders Agreement provide for certain infor-
mation sharing rights in favour of TD to the extent the Bank 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 the Bank and TD Ameritrade to coordinate necessary
intercompany information flow. The Bank has designated the Group
Head, Insurance, Credit Cards and Enterprise Strategy to have respon-
sibility for the TD Ameritrade investment, including regular meetings
with the TD Ameritrade Chief Executive Officer. 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. In addition, certain
functions including Internal Audit, Treasury, Finance, and Compliance
have relationship protocols that allow for access to and the sharing of
information on risk and control issues. TD has established a compliance
committee, pursuant to a U.S. federal supervisory letter, which
provides a holistic overview of key compliance issues and develop-
ments across all of the Bank’s businesses in the U.S. including, to the
extent applicable, TD Ameritrade. As with other material risk issues,
where required, material risk issues associated with TD Ameritrade are
reported up to TD’s Risk Committee.
Pursuant to the Stockholders Agreement in relation to the Bank’s
equity investment in TD Ameritrade, the Bank designated five of
twelve members of TD Ameritrade’s Board of Directors including the
Bank’s Group President and Chief Executive Officer, its former Group
President and Chief Executive Officer, two independent directors
of TD, and a former independent director of TD. 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 the Bank designates participate in a number
of TD Ameritrade Board committees, including chairing the Audit
Committee and the Human Resources and Compensation Committee,
as well as participating in the Risk Committee and Corporate
Governance Committee.