The Shareholder Association for Research and Education (SHARE) says that a decision by BMO and RBC to forego racial equity audits until a vote at their 2023 annual general meetings is disappointing.

“When a company publicly commits to fighting racial injustice, it is expected that such a statement is backed up with concrete actions and measurable outcomes. Failure to do so is not only a missed opportunity to rectify racial inequities but also exposes institutional investors to meaningful reputational, legal, and regulatory risks,” Sarah Couturier-Tanoh, associate director of corporate engagement at SHARE, said in a statement.

A racial equity audit is an independent analysis of a company's business practices. Once complete, improvements can be made and processes can be implemented to tackle issues.

The news comes as CIBC and NBC announced plans to conduct and disclose third-party racial equity audits last week. TD previously announced a racial equity audit in April 2022.

“Despite the new precedent set by CIBC, NBC, and TD Bank, both BMO and RBC have recommended shareholders vote against the proposals,” the statement reads.

The statement also follows a $US31 million settlement between the U.S. Department of Justice and City National, an RBC subsidiary in the U.S., in January over allegations of redlining practices in majority-Black and Latinx communities in California.

SHARE works to achieve equitable opportunities for people of colour and Indigenous people who need access to capital and resources. And while the other Canadian banks have committed to racial equity audits in the past, the group says BMO and RBC have been slow to act.

The shareholder proposal with the two banks was filed on behalf of the Atkinson Foundation with the B.C. General Employees' Union (BCGEU), a long-term shareholder.

“RBC and BMO's refusal to commit to these audits puts them at a disadvantage in a world where diversity, equity, and inclusion are increasingly important to customers, employees, workers, and investors. TD, NBC, and CIBC may be the first Canadian banks to engage in this work, but they most certainly will not be the last. We intend to keep pushing banks and financial institutions on this critical issue,” BCGEU president Stephanie Smith said in a statement.

The Atkinson Foundation is a charitable organization that is committed to social and economic justice. Meanwhile, BCGEU represents more than 85,000 workers in B.C. and submits, at times, shareholder proposals on topics like human rights, racial equity, ESG, and executive compensation.