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