Andrea Barrack is Global Head, Sustainability and Corporate Citizenship at TD Bank Group. GlobeScan CEO Chris Coulter spoke with Andrea about the state of relations between business and society and how TD Bank Group will be managing this through The Ready Commitment.
How do you see the state of relations between business and society?
Given my role, I am thinking about this question constantly and listening to stakeholders in order to better understand their expectations. There is definitely an increased expectation from the broader community and the public that business and society have a reciprocal relationship and responsibilities to one another. On one hand, we are hearing a lot about a growing mistrust in institutions and business. On the other hand, there is also an increased desire by many companies to demonstrate greater social and environmental responsibility and it is critical that they pay attention to the importance of trust and accountability.
I think when it comes to responding to these growing expectations, the overarching principle is probably a focus on the long game, balancing the needs of today with aspirations for the future. There are so many inputs into how companies make decisions that can affect society. We need to recognize that when we have this multiplicity and diversity of stakeholders that we’re serving, like customers, governments, communities, and other businesses, this question of responsibility is complex. Finding the best path forward that maximizes your positive impact on society and minimizes the risk to your business is very complicated. It is not something that is easy to call from the sidelines.
Are we in the midst of trying to establish a new social contract in society?
I think there is a lot of talk about this subject. There are definitely changes in our assumptions of what constitutes good or decent employment, how much companies should help their employees to have financial security, and whether employees can expect to have a long-term relationship with companies.
We’re very concerned here at TD about the future of work and how people navigate through the massive changes that are currently underway. For example, let’s take automation and technological changes – it is really displacing mid-career workers in a significant way. I would say a lot of folks focus on younger people but I think mid-career workers are actually the most vulnerable. They’re least likely to be able to adapt to the changing conditions and it is more difficult for them to go back to school and learn a new skill. They often have significant financial responsibilities and dependents to worry about on top of that. We know there’s still prejudice about hiring older people. The social contract I think for us is: what’s the relationship between business, the public, and government to help solve this? How do we take care of these people in a way that preserves their dignity and isn’t seen as a handout? Most people want to contribute and work, so how do we make sure that people have the ability to feel like they’re contributing to their communities and society? Part of this could be advocating for future-focused public policy, such as experimenting with new approaches like universal basic income. Part of this is working to find ways to grow more inclusive economies.
What is your sense of the role of financial institutions in that transition?
There are multiple roles that we play as a bank. I would say that our primary impact is on our 25 million customers that we serve every day. How do we interact with our customers in a way that allows them to feel like they’re more confident about their finances and that they can make the best decisions for themselves? And how can we make sure they have the products and services to meet their needs as they change over time in a way that’s fair and builds trust?
We did a piece of research last year on income volatility and it shows a growing percentage of people who rely more on the gig economy or are self-employed. So we really need to rethink how we offer our services to these people to help them deal with the volatility that they will have in their incomes. Can financial services help to even out the highs and lows of income? I don’t know if we’ve necessarily found the solution yet, but these are the kinds of things we’re thinking about as people’s work and incomes change.
We know a lot of young people now aren’t able to afford home ownership, but traditionally in North America, that was how you became financially stable. You’d have a house and a mortgage, and this was an important investment and a rite of passage. So the question is how do we help people to become more financially stable? This speaks to our role and responsibility in that shift. Tens of thousands of employees rely on us for good jobs, and we take this very seriously. As a major employer, what is our ability to do that? That is where we’re also concerned about the shifting nature of work. How are we making sure that our employees are ready for the shift that is happening within the financial services industry? How do we help prepare them?
Is this all part of TD’s Ready Commitment?
The Ready Commitment came out of a lot of the things that we’ve just been talking about. We wanted to take a longer-term view about how we could, as an institution, have a positive influence on society in a certain time frame. We picked 2030 because it tied in with the United Nations Sustainable Development Goals, and also because we felt that 12 years was a decent amount of time to be able to actually effect change and be able to measure it. It’s not so long that we can’t imagine being there, but it is not so short that we can’t afford to take bets on things that will have impact over the longer term. We did quite a bit of research to look at the trends that were happening and future projections. Externally, we looked at the kinds of things people were worried about and explored broader societal trends. Internally, we surveyed our employees to understand the things they really cared about.
We learned that first of all, there is this shifting economy, along with significant anticipated changes in what work will be like because of technology and automation. There are significant demographic shifts, increasing urbanization, growing migration. We see a growing inequality within and among nations. We also see that there is a great deal of anxiety around economic and environmental changes that are taking place. We found that people are quite anxious about being left behind. People are asking, “What’s my place in all of this change? Does the future include me?” If they’re not worried for themselves, they’re certainly worried for their kids.
One of the most interesting pieces of data that we have came from some polling in the US and Canada on some of the issues we were looking at, and the one that stuck with me was that one in three people feel like they’re isolated from their communities. We know that this feeling of isolation has all kinds of implications on health, on finances, on the political landscape, on the economy, and on public safety. So how do we then figure out how to foster more integration so that more people feel like they can connect and belong, especially in the face of things like automation?
The Ready Commitment is broad in its aspirations. We talk about opening doors to a more inclusive and sustainable future. But as a financial institution, it was really trying to figure out the things that we can reasonably influence that over time will help to create the more inclusive and sustainable future that we seek.
What are the areas of focus for The Ready Commitment?
We focused on four interconnected drivers of change.
The first is financial security. As a bank, it makes sense that we focus on peoples’ financial security because we would not exist as a business if we didn’t have a strong middle class. We are predominantly a retail bank, and so we are really concerned about shared prosperity and shared economic gains because rising income inequality is not good for our overall long-term prospects as a business, nor is it good for society. So this is why financial security is really important.
Second, having a healthy and vibrant environment is something we know is of great concern to society including climate change, green spaces, and nature. Looking at both the macro- and micro-environmental issues is part of The Ready Commitment.
The third driver of change is health. There is a strong link between finances and health, and it has an important impact on people’s ability to feel financially confident about the future. This means we are interested in preventative care and early detection, prioritizing adolescent health, and prioritizing AI research in health technology that can improve access to care. We are trying to invest in those things now so that we will have a healthier population by 2030.
Finally, connected communities is a critical priority for us to help combat the increasing feelings of isolation, to help communities better integrate newcomers, ensure seniors feel like they have places to go, and reduce bullying and anxiety amongst teenagers who are increasingly depressed and anxious. Building social infrastructure and connections for people in communities is fundamental – we know that the more people you have in your social network, the higher your net worth. So there’s a clear part of our business success in the long term here, where helping people to be more connected leads to more financial security.
How are you managing all this going forward to 2030?
We’ve picked nine of the sustainable development goals that we think we can influence over time and are trying to track how we make the link between the things that we do locally, which is predominantly where our work is, to those global goals. How does this result in being more purposeful? We also hope that this is going to be motivating for our employees because they do a lot of volunteering and want to contribute to their communities as well. It is really saying, “if you do this here in your local community, you are actually influencing these things in the global agenda,” which I think people are excited to be a part of. So that’s our view of the external environment and the things that we’re looking to change.
Internally, we look at how we increase trust with our stakeholders and create more value for the company. We do believe that we’re a purpose-driven organization, so we want to make sure that the things that we’re doing help to support that and help to demonstrate that. We don’t believe philanthropy only happens on the side of our business. We want to create shared value and are focused on mechanisms that we can use to measure how we are doing that; how we’re integrating business with social good for something that matters.
Our work in green bonds is an easy example of this. At TD, our insurance business is one of our biggest partners in sustainability and the environment right now, because they’re like the canary in the coal mine for climate change issues. They are helping us to make change, including offering discounts on insurance for electric vehicles and other ways to nudge people toward making better choices that are in line with sustainability.
We are really trying to figure out how we work with our business partners to be able to see how we not only use our philanthropy, our thought leadership, and our human capital, but how we can use our business more for social good and how to measure it. This is an exciting journey but there is still a lot of work to do between now and 2030!