Corporate Governance Awards 2016: Best overall governance (international) - RBC
‘We see good governance as a business imperative,’ says Karen McCarthy, director of investor relations at RBC. ‘It impacts performance and delivers long-term value to shareholders. It’s the tone at the top, driven through all levels of the organization to make it part of our culture.’
RBC is one of the world’s largest banks and its leading governance practices have been widely recognized. Its headquarters are in Canada but it has common shares listed on the Toronto Stock Exchange (TSX), the NYSE and the Swiss Exchange.
The board ensures the company operates in accordance with all applicable laws and corporate governance regulations, including those of the TSX, the Canadian Securities Administrators, the NYSE and the SEC. The bank does not have to comply with most of the governance standards of the NYSE, but it benchmarks its policies and procedures against these and other international standards.
The firm’s commitment to good governance is longstanding: in 2011 it became the first Canadian bank to appoint a non-executive board chair, separating the positions of board chair and CEO. It followed this in 2015 with the separation of the roles of non-executive board chair and governance committee chair. It has also adopted a tenure limit of eight years for the board chair, with a review after five years to ensure an orderly succession.
One governance topic RBC has taken a significant lead on is diversity. In January 2014 it became the first major Canadian bank to appoint a woman as chair of the board. The bank was also one of the first signatories of the Catalyst Accord, which aims to have a minimum of 25 percent female board representation in Canada by 2017, and The 30% Club, which formed in Canada last year with similar goals.
‘We have made diversity a priority for innovation, growth and success,’ McCarthy says. ‘We really see a benefit to our bottom line. Our CEO and board have made it a priority for as long as I’ve been here. Having that buy-in from senior management is imperative for change.’
To make the selection and assessment of board members even more objective, RBC’s governance committee works with two external advisers: one designs and reports on board member assessments and one studies board effectiveness.
‘While we often focus on North America, it is great to bring someone in who can benchmark us against other countries and industries,’ McCarthy says.
She is also an adviser, which she says is an acknowledgement of the governance role being elevated beyond that of a traditional corporate secretary: ‘You have to build trust with management and the board to be someone who goes beyond the processes and becomes a strategic adviser on regulation and governance.’