53 Responsible Financing
TD’s financing activities include loans, lines of credit, project and fixed-asset financing and investing. Our goal is to make balanced, informed and transparent financing decisions. We work with our clients and stakeholders to proactively mitigate environmental and related social risks in our financing activities.
TD is primarily a retail bank, with 88% of our financing based on personal and residential accounts. The remaining 12% relates to wholesale banking transactions undertaken by TD Securities and commercial lending focused on companies based in North America. Approximately 5% of our total financing involves clients operating in environmentally sensitive industries.
Credit Risk Management
One of TD’s Guiding Principles is to take only risks we understand and can manage. We apply this principle just as rigorously to environmental risk as to other types of risk.
TD has established policies, procedures and reporting mechanisms that provide a set of consistent standards for the identification of environmental and related social risks that are applied to all of our lending, credit, project finance and fixed-asset finance.
Policy Exclusions
TD does not finance transactions relating to the following: • Activities within World Heritage sites;
• Activities that would result in the degradation of protected critical natural habitats as designated according to World Conservation Union classification and International Financial Corporation standards;
• Activities that would involve the purchase of timber from illegal logging operations.
• Mountaintop-removal coal mining;
• Production or trade in any product or activity deemed illegal under host country laws or regulations (including those ratified under international conventions and agreements);
• Production or trade in wildlife or products regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES);
Be an Environmental Leader
• Deals that directly relate to the trade in or manufacturing of material for nuclear, chemical or biological weapons or for land mines or cluster bombs; or
• Lending deals that are directly related to the mining of “conflict” minerals.
Environmental and Social Risk Policy TD’s Environmental and Social Risk (ESR) Policy for Non-Retail Credit Business Lines is applied to general corporate purpose, project and fixed-asset financing. The ESR Policy is applied to 100% of our wholesale and commercial banking transactions.
+ TD’s Environmental and Social Credit Risk Process
TD’s financing activities are focused in North America and occur mainly through general corporate purpose lending. However, we have embedded key elements of the Equator Principles within the ESR Policy to ensure that they are applied to all forms of lending – not just project finance. This progressive and proactive step ensures that all transactions receive a consistent review, and we believe it reflects the direction toward which the Equator Principles should be evolving.
Additional sector-specific guidance has been developed for environmentally sensitive sectors. Through this guidance, TD assesses a client’s policies, processes and performance. The due diligence guidance is updated every three years. In 2012, sector-specific due diligence guidance existed for the following sectors: forestry, mining, power and utilities, thermal power generation, oil and gas extraction and oil and gas pipelines.
In 2012, 320 corporate lending transactions were reviewed under the ESR process. Of these transactions, 85% were subject to sector-specific due diligence involving a review of environmental policies, processes and performance.
Sector
Oil and gas extraction Power and utilities Mining
Oil and gas pipeline Forestry Other
Transactions by Sector (%) 41 24 13 9 5 7
100% 320
corporate lending transactions were
reviewed under the ESR process
TD 2012 Corporate Responsibility Report
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93