Royal Bank of Canada (RY) Earnings Call Transcript & Summary

Good morning, and welcome to the 2021 RBC Annual Meeting of Common Shareholders. [Foreign Language] Hello. I am Aaron Martyniw. I identify as Anishinaabe, average First Nation band member, which is a community north of Winnipeg, Manitoba. I'm also the Vice President, Commercial Financial Services in the Manitoba, Saskatchewan, Nunavut and Western Ontario region. As you join us today remotely from your homes and places of work, we host you from Canada, the unseated lands of our First Nation, Métis and Inuit people. We acknowledge that the indigenous people are stewards and guardians of this land. We give gratitude for the water we drink, the land we develop and electricity that lights our nation. RBC embraces the values of diversity and inclusion. We honor and we celebrate indigenous nations, their traditional knowledge and their many contributions to the well-being of Canada and the world. This past year has been and continues to be a year of awakening to the inequities and violence experienced by our Black, Asian and other marginalized communities. May we all listen, learn and be the change. And that is why we at RBC continue to acknowledge the harms of the past and move forward with indigenous communities in the spirit of reconciliation. We are more prosperous in a thriving world when we choose to champion diversity, inclusion and equity and belonging for all people. My challenge to you today is to learn more about the proud journey taken by indigenous people, the legacy of mistakes from our shared past and the lessons we are now learning to seek out a path towards a better tomorrow. [Foreign Language] Thank you. I'd like to introduce Kathleen Taylor, Chair of the Board of the Royal Bank of Canada.

Thank you very much, Aaron, and good morning, ladies and gentlemen. [Foreign Language] Welcome to our Annual Meeting of Common Shareholders. I'm Kathleen Taylor, and I have the privilege of being Chair of the Board of Royal Bank of Canada. As notice of the meeting has been duly given and a quorum is present, I call the meeting to order. I'm delighted to be able to connect with so many of you again this year. Like last year, we're in a meeting in a virtual format, but with the same goal: to ensure that you are able to participate fully in your annual meeting. Thank you for joining us. This morning, I'm accompanied on the webcast by Dave McKay, President and Chief Executive Officer; and Karen McCarthy, Senior Vice President, Associate General Counsel and Secretary. I'll act as Chair of the meeting, and Karen will be our Secretary. Pina Pacifico and [ Joe Kierko ], officers of our transfer agent, Computershare Trust Company of Canada, will be our scrutineers. Also joining us remotely are our directors and members of senior management. As always, the meeting will be conducted in English and in French. If you are using the Lumi web platform, you can either select English or French to listen to the webcast. If you wish to change languages, click on the language button shown on the right side of the platform. If you're listening by telephone and wish to change languages, you must hang up and dial back in using the phone number, which corresponds to the language of your choice, as indicated on our website and on Page 11 of our proxy circular. I invite shareholders and proxy holders to ask questions and vote on each of the matters of business via the Lumi platform as if you were attending our annual meeting in person. Participants attending via telephone can only listen to the meeting and cannot ask questions. I'll now ask Karen to explain how to ask questions during the meeting. Karen?

Good morning. Shareholders and proxy holders may submit questions in both languages through the Lumi web platform. If you wish to submit a question in writing, select the messaging icon at the top of your screen. Type your full name, whether you're a shareholder or a proxy holder, the control number listed on your form of proxy or voting instruction form and your question in the Ask-a-Question box at the bottom of the screen. Then click the send button. We will read your question at the appropriate time. If you wish to ask a question via live audio, type your phone number, your full name, whether you are a shareholder or a proxy holder, and the control number listed on your form of proxy or voting instruction form in the Ask-a-Question box at the bottom of the messaging screen. Please also include the general subject matter of your question if it relates to one of the matters of business in order for you to ask your question at the appropriate time during the meeting, then click on the Send button. A Lumi representative will dial you into the meeting. Once you answer the call, you will hear the meeting from your phone. Please mute your computer and listen to the live feed on your phone only. This will prevent any delay or feedback. When called upon to ask your question, you'll be automatically unmuted. [Operator Instructions] We encourage you to submit your questions as early as possible so that we address them at the right moment during the meeting. For more information on how this meeting will be conducted, please refer to the rules of conduct, which are available on our website and on the Lumi platform.

Thank you, Karen. After my introductory remarks, we'll hear from Dave McKay our President and Chief Executive Officer, followed by the matters of business, including the election of directors and the appointment of our auditor. Shareholders will also be asked to approve a nonbinding advisory resolution on our approach to executive compensation. We will then consider the shareholder proposals and deal with any other business, and we'll conclude our meeting with a question period. Please take a moment to review the caution regarding forward-looking statements provided on your screen. This caution can also be found on Page 14 of our 2020 annual report. At this meeting, we may make forward-looking statements, which involve certain assumptions and have inherent risks and uncertainties. Actual results could differ from these statements. I'd now like to say a few words about 2020. At our last AGM, no one was quite sure how the pandemic would play out. COVID-19 was spreading rapidly, and no viable solution was in sight. Lockdowns were putting the global economy into a tailspin, and many people were speculating about a deep and protracted recession. Against this backdrop, Dave McKay told shareholders the coming months would reveal a great deal about companies and countries alike. And so they did. The speed and scale of our collective response to the pandemic from slowing down transmission, to stabilizing economies, to discovering effective vaccines are all lasting impressions. But it wasn't just because people acted on evidence. It was also because they were guided by empathy. We are forever grateful to those who continue to lead the way, starting with our frontline health care workers and others in the essential economy who continue to protect and support us in our time of great need. The team at RBC has also been ever present on the front lines. Since the beginning of the crisis, our more than 86,000 dedicated employees have never let up in serving our clients and communities, focusing on what matters most to those we have the privilege to serve. By doing so, our employees have helped our clients navigate significant headwinds and have continued to set the bank up for ongoing future success. I'm also proud of my Board colleagues. Throughout the crisis, they were always available and prepared as a strategic resource for management, constructively challenging and providing sound advice as RBC navigated truly uncharted waters. Importantly, during 2020, we continued to strengthen our ranks, successfully onboarding Maryann Turcke and Cynthia Devine. Our 2 newest directors have already made significant contributions to our important work as stewards of RBC. At the same time, we say farewell today to 3 retiring directors, each of whom leaves a lasting mark on the enterprise. Alice Laberge, whose deep financial insights, governance, experience and strategic counsel made an important impact on RBC. Alice served on all 4 of the Board's committees during her tenure and was the Chair of the Human Resources Committee. Heather Munroe-Blum, whose distinguished corporate governance, talent management and public policy leadership provided deep insights to management and Board colleagues throughout her tenure. Heather also chaired the Governance Committee, helping to establish a robust succession planning process for our Board that has served us very well. And Michael McCain, who as an active CEO leading a consumer-focused company with cross-border operations has brought invaluable insights to RBC. Michael also served on all 4 of our committees during his time on the Board. So to all of you, we say thank you from all of us at RBC. You have each helped to leave the Board and the bank in very strong shape. Beyond the extraordinary efforts of our people at every level, RBC's performance was made possible by its strong financial position and balance sheet and robust risk management culture. The bank's growth strategy, diversified business mix and organic earnings and ongoing technology investments were also key to RBC's continued success. Foundationally, of course, we also relied on another strength, a hallmark of RBC's actually that enables us to remain resilient and create meaningful value year after year, and that is our purpose-led and principles-based approach to managing all aspects of our business. To ensure that our clients thrive and our communities prosper, we need to balance a complex network of stakeholders, from customers to suppliers, to regulators, shareholders and communities, each possessing a unique set of ambitions and expectations. And at RBC, we do all of that on the strength of our corporate culture of doing what's right. Today, more than ever before, boards must understand the dynamic of this interconnected ecosystem and measure performance in ways that include but go beyond financial results. Nowhere is this more evident than in the areas of ESG, where the Board oversees and advises on RBC's environmental, social and governance impact across a wide range of stakeholders, including our colleagues, clients, communities and the planet. It is for this reason that we ensure all director nominees have experience in ESG matters and are able to benchmark the impact of our strategic decisions against our purpose. It's also why a few years back, we redefined our community investment approach to better focus on addressing significant societal issues. As a result, our purpose is brought to life through a wide range of initiatives, including RBC Future launch. It's our 10-year $500 million commitment to prepare young people for the workplace of the future. RBC also focuses significant resources on building more inclusive and sustainable communities, in part by improving access to economic opportunities and investing in ideas and innovations that solve environmental challenges. Even more specifically, on climate change, RBC is fully committed to doing its part, scaling up support for clean economic growth and helping to ensure a socially inclusive transition to a net zero economy. The Board provides oversight of the bank's strategic approach to climate change, which includes how we manage climate-related risks and opportunities. To this end, our risk appetite framework requires consideration of environmental and social risks, including climate change risks when making all risk decisions. Similarly, the Board maintains a keen and unwavering focus on the people of RBC, actively assessing senior management and reviewing development plans for key executives and high-potential leaders. We oversee our executive compensation programs to ensure they align with overall performance, retain top talent and motivate the bank's senior leaders to bring our vision, values and strategy to life, including in areas like ESG. We also oversee and support the continued enhancement of diversity in our management team and our Board. In 2020, the Board also provided oversight of new initiatives to further enhance the diversity of its executive team, including increases in the executive staffing and targets for women and those who identify as Black, indigenous or people of color. And the Board will continue to monitor management's plans to ensure they're detailed, measurable and deliver the desired outcomes. At the Board level, while we are proud of the progress we have made on gender diversity, we recognize that we have more work to do to further reflect the communities we serve. Our society has come a long way since the uncertain days of the pandemic a little over 1 year ago. But even back then, RBC's role was clear to the Board and the bank's leadership. And so with the support and dedication of our RBC team, we continue to serve all of our stakeholders, helping them manage through these difficult times and look to the future with confidence. It's a defining trait of who we are and a competitive advantage of what we do. I'll now turn our session over to Dave McKay to provide his remarks to shareholders. Dave?

Thank you, Katie, and good morning, everyone. We hope you're feeling or keeping safe and well. We're living through a crisis like no other in our lifetime, one that has challenged our society in more ways than we have experienced in 3 generations. We have seen a heartbreaking loss of life and tremendous stress on our health care system and frontline workers. But we've also seen the magic of human creativity and scientific research that created and approved multiple COVID-19 vaccines within a single year. We have seen significant loss of jobs and businesses through the forced shutdown of our economy. Yet, we have managed the worst of the economic hardship through coordinated government response, central bank intervention and credit relief programs. And we've seen the impact of social isolation, school closures, the cancellation of family and community gatherings, yet people of all generations have learned new ways to connect using technology tools we never realized we're so capable. Throughout all of this, we have shown such incredible resilience as a society and as a globally linked economy. And while we are not through this pandemic yet and continue to need far greater global progress on vaccinations and variant control, we do see much better days ahead and expect improving health outcomes will lead to a rapid rebound in global growth, spurred by significant pent-up demand and consumer liquidity. The past year has unleashed and fueled a series of existing and new tectonic shifts that will affect us for decades to come. They present challenges and opportunities for countries, economies and companies including RBC. The forced pause in our busy and often over program lives has allowed us to really see that we have not created the best society for everyone. And therefore, we have a responsibility in a sense of urgency to ensure a more inclusive, fair and sustainable future. To make the necessary changes and seize the opportunity to improve the world for those that will inherit it, there are 4 pressing areas we must address. Climate change is the existential threat of our time, creating real pressure on businesses and governments around the world. Environmental, social and governance concerns have never been more important. And consumers, employees and investors expect firms to live their values and play a leadership role in driving change. Never was that more true than when the pandemic exposed and, in some cases, widened in equities that hold people down in communities back. Our society has a moral obligation and an economic imperative to bring everybody forward collectively and inclusively. Bringing society forward in this way is interconnected with the future of work. The pandemic has transformed how and where work is done, accelerating the need for new and evolving skills, including building relationships in a hybrid world and developing strong digital capabilities. Helping people prepare for the new world of work underpins this future and requires a heightened focus on our mental health. The pandemic has also accelerated a digital-first economy, changing consumer behaviors and rewiring our supply chains and services. Creating a bionic blend of people and technology will define the success of all organizations. Advancing this agenda will require a concerted effort by public and private sectors to invest in our tech sector, networks and talent. At a macro level, these 4 key areas will define our future and require our collective option to ensure that our country, its communities and its people continue to see opportunities ahead. Every action we take will matter because as a pandemic made perfectly clear, we're all connected, and we are all part of something greater than just ourselves. RBC has long seen our place in the world this way. We are guided by our purpose to help clients thrive and communities prosper. It not only defines who we are but also how we compete, win, grow and contribute to building a more sustainable future. Our purpose was at the center of the RBC story in 2020, and I'd like to share that story with all of you this morning. It begins with our phenomenal 86,000 employees. They are the beating heart of our bank, and I can't thank them enough for everything they did and continue to do to help our clients and communities manage through this crisis. As the pandemic took hold, we knew that taking care of our clients started by first taking care of our employees. We moved quickly to protect RBCers' physical health, transitioning more than 80% of our workforce across 36 countries off bank premise within weeks. For those who remained on our front lines and in critical on-site roles, we took measures to enhance their safety. They also received special compensation and additional days of paid leave. To support our employees' health and well-being, we introduced new mental health resources to instill greater awareness, empathy and coping in our workplace and beyond. Notably, RBC was the first major Canadian bank to promise no job losses during the -- due to the pandemic in 2020. This gave our employees peace of mind and the ability to put our clients first as they adjusted to a new hybrid world. Our people had never worked harder to support our clients. This included fielding more than 22 million calls to our contact centers, managing historic spikes in trading activity and proactively reaching out to 3.7 million personal and small business clients. They provide a reassurance, advice and helped our clients navigate an uncertain world from personalized check-ins to digital enablement. Our teams worked tirelessly to implement RBC's client relief programs for over 620,000 clients. As well, billions of dollars were made available in new and additional credit facilities to corporate and institutional clients. Our clients acknowledge these efforts by awarding RBC with top rankings in service excellence and customer satisfaction, including from Ipsos and J.D. Power. RBC has also created a national program called Canada United that helped to generate over $1 billion in purchases for small businesses across Canada who are hit hard by the lockdowns and the shift to digital commerce. I also saw our employees lead with heart and step up with generosity to help communities in need. They donated over $23 million of their own money for local charities, up over 20% from the previous year. Truly remarkable. This is who we are at RBC. We are a company that truly believes in our purpose. And during a year when helping others never mattered more, our employees stood tall. Thank you to each and every one of you. I could not be more proud. Alongside our people, our financial strength and diversified business model enabled RBC to navigate 2020 and continue delivering premium performance for our shareholders. The year was characterized by the shutting down of almost 40% of our economy during the first wave of the pandemic, followed by a gradual and uneven reopening and recovery through the last half of the year. It's the first time in my 35-plus year career that I have seen our global clients all impacted at the same time. The ensuing impact on our business was initially significant, and we prudently increased total provisions for credit losses by $2.5 billion to reflect the uncertainty of the pandemic's impact. We saw a 30% reduction in credit card purchases and significant draws on corporate credit lines in the early part of the pandemic. And the rapid decline in interest rates lowered our net interest margins, raising approximately $1 billion of earnings in 2020. However, government relief programs and Central Bank liquidity support, both stabilize markets and increase confidence. And we remained exceptionally busy serving customers. Our Global Markets and Wealth Management customer franchises saw a rapid increase in customer activity, including active corporate M&A and capital management as well as self-serve and adviser-led investing. We also saw unprecedented levels of savings being deposited in consumer and business accounts and exceptionally strong demand for housing in Canada and the U.S. These factors helped offset part of the lending margin compression, and we gained market share in most of the businesses where we compete, driven by our unwavering investment in people and technology. We closed out 2020 earning $11.4 billion in net income and a premium return of equity of 14.2% and maintained a strong capital position with a CET1 ratio of 12.5% and common equity Tier 1 capital of nearly $6 billion over the prior year. To our common shareholders, we paid $6 billion in dividends. Our stock traded at a premium valuation for most of the year. And we outperformed on total shareholder return in comparison to global peers over the medium term. Our underlying business momentum and robust client activity resulted in RBC delivering a very strong first quarter in 2021, which we announced at the end of February. Overall, I'm tremendously proud of our 2020 results and a strong start to this year. I remain optimistic about the recovery, but the road won't be as smooth as we hoped. However, as 2020 proved, RBC has a strength, resilience and business strategy to deliver more value to clients and drive premium returns and sustainable growth for all our stakeholders, including our shareholders. To deliver on these objectives, it starts with building deeper relationships with all our clients, winning a growing share of new customers using our balance sheet efficiently and cross-selling a wide range of value-added services. Our strategy is to create more value for each client. We do this by leveraging our significant operational scale and data capabilities with the power of people, brand and culture. Our operational scale enables us to continue to expand our network of customer-facing employees from private and commercial bankers to financial planners, investment advisers and investment bankers. Our scale also allows us to continue making technology-related investments at a faster rate, over $4 billion a year, providing greater capabilities to our frontline employees, greater efficiencies in our back office and new and expanded self-serve capabilities for our clients. Uniquely combining our people and technology creates a bionic blend for RBC. They create exponential advice and service opportunities and sales power. It's not just about building the technology. Everyone can do that eventually. The lift comes from integrating into our teams and creating value with it for clients. For example, MyAdvisor is our online advice platform that helps clients reach their goals. Today, 2.3 million of our clients now have personalized financial plans. In our Canadian Wealth Management Advisory businesses, we've attracted and retained experienced investment advisers to ensure our clients can feel confident about the choices they make. Earning their trust has grown our business. Today, our nearly 1,900 investment advisers manage on average, nearly 2x more fee-based client assets than the Canadian peer average. In the U.S. at City National, our premier private and commercial bank, so much of our success comes down to the exceptional advice we provide our clients. Over the past 5 years, we've more than doubled loans and deposits and added more branches and more private bankers in our core markets. Across all our core franchises, our leading digital and artificial intelligence capabilities set us apart. Building mobile and online banking capabilities is something all banks do, but differentiated value comes from better design, more convenience, and leveraging new artificial intelligence technologies at scale to customize experiences. Within our mobile banking experience, AI-based solutions like NOMI deliver personalized services tailored to individual banking needs. NOMI Find and Save, for instance, helped clients save an average of approximately $350 per month in 2020. Our Capital Markets AI-based electronic trading platform, known as Aiden executes trades based on live market data and dynamically adjusts to new information and learnings from each of its previous actions. Aiden has increased the number of shares and notional volumes traded by over 45% and 75% year-over-year, respectively. Another differentiated element of our customer strategy is to build ecosystems that participate in a broader part of the consumer journey and value chain. We see this as an evolution from traditional banking to broadening our relationship with customers in new and unique ways. Our proven ability to innovate and harness technology is setting us apart. For example, in the U.S., City National is fast becoming a leader in managing IP content and the payment life cycle for the entertainment industry. Through the acquisitions of FilmTrack, Exactuals and Datafaction, we've created an entire B2B ecosystem for entertainment clients, with specialized lending and managing intellectual property rights to monetizing royalty and licensing streams and providing financing from music catalogs, video games and film financing. City National has unparalleled technology and servicing capabilities that no other bank can match in the entertainment business. Final pillar of underpinning our strategy and long-term success is our fundamental belief in reciprocity, which rewards clients for the depth and breadth of their relationship with us. With our size, scale and brand power, we are able to leverage partnerships to provide our clients with more value. In our credit card business, RBC Rewards has been a key part of that success. In 2020, the program delivered nearly $1 billion in value to our members through more than 400 partners and brands. We have plans to extend the benefits of these relationships to more products and clients relationships in the coming weeks. What I've just described is a story of RBC's differentiated strategy and a few examples of how our approach to value creation is propelling us forward. Equally important is what this value creation enables us to do for others. As I said at the start, at RBC, we believe we are part of something bigger than ourselves. And our strategy to create more value for clients and drive business performance to reward all stakeholders provides us with the resources to boldly reinvest in our communities. Companies are only as strong as the communities in which they live and work. And I fundamentally believe that the prosperity of a community is dependent upon its financial and environmental health, underpinned by an inclusive society that provides hope and opportunity for all and a thriving creative class. Today, I'd like to highlight 2 of these areas of long-time focus for RBC and how they play an important role in our shared future. The first relates to inclusion. As I said earlier, the pandemic has put a spotlight on the pervasive societal problem of inequality. RBC was the first bank in Canada to publicly commit to actions to combat systemic racism following George Floyd's murder and the subsequent riots. Our plan includes increasing diversity and inclusion in our workplace, providing better access to capital in these communities and creating even more meaningful opportunities for young people to reach their full potential. In 2020, for instance, BIPOC talent made up 23% of RBC's executive appointments. We've raised our goal to 30%. We've also committed $100 million in small business loans to unlock the ambitions of Black business owners and giving young people access to work integrated learning experiences as one of the great democratizers of opportunity. Summer jobs are vital to help youth who have been hit hard by the pandemic. And once again, this summer, RBC is hiring more than 1,400 students, the most of any Canadian bank, with 40% of all summer opportunities going to BIPOC youth. And through RBC Future Launch, our 10-year $500 million commitment to empower youth, we are investing $50 million to create meaningful and transformative pathways to prosperity for 25,000 BIPOC youth between now and 2025. Second important area of focus is climate change. This is the most pressing issue of our time. It's costing our economies billions of dollars in damage and lost productivity. And it's going to require a massive amount of innovation and trillions of dollars of capital to reduce carbon emissions and ultimately achieve a net zero economy. Government and policymakers set the national climate strategy for Canada, and they are actively balancing the needs of our country and its citizens. Democracy has chosen the path forward, and RBC is aligned with a strategy that the majority of our society has voted for. Consistent with this, RBC is committed to accelerating the transition to net zero. That's why RBC increased our sustainable financing target to $500 billion by 2025. Our lending businesses will also align with global ambitions. And by 2050, we will achieve net zero emissions in our lending portfolio. Additionally, RBC Tech for Nature, which launched publicly in 2019, will bring the best and boldest thinking together to accelerate clean economic growth. With a $27 million investment to date, we're already supporting more than 120 universities and charities to put our society on a more sustainable path through the deployment of artificial intelligence, machine learning, and other innovations. This transition is complex and will take time, but we have clear commitments to help accelerate change, and we will continue to be transparent with our progress. To close my remarks, I'll end where I began. This last year has been a challenging one for all of us, but our prospects will improve. And RBC is well positioned to grow and create even more value for all its stakeholders. We possess the best people, tools and technology, supported by a strong and trusted brand. We've got market-leading client franchises in our core businesses and key markets. We're continuing to make bold investments to create value and reimagine relationships with new and existing clients. And our financial discipline, risk management culture and robust capital position provides the foundation to deliver sustainable growth for the long term. But we will continue to grow in an inclusive and sustainable way that allows our clients to thrive and our communities to prosper. I want to thank each and every one of our employees for their contributions to living our purpose. Especially this past year, your efforts have never mattered more. I also want to thank our shareholders for their ongoing support. And finally, I want to thank Katie Taylor, our Chair, and the entire Board who's support and guidance in helping RBC to build a more prosperous future for all our stakeholders. Thank you. And I'll now hand the meeting back to Katie Taylor.

Thank you, Dave, for your presentation. At this point in the meeting, I'd like to introduce Samuel May, the representative of PricewaterhouseCoopers, our auditor for the 2020 fiscal year, who is also joining us remotely for this meeting. As indicated in our proxy circular, copies of the auditor's report and the financial statements are included in our 2020 annual report, which can be found on SEDAR and EDGAR as well as on the websites of RBC and Computershare. Karen, are there any questions from participants on the financial statements?

Yes, Madam Chair, we have a question on the financial statements. I see that we have Mr.

Thank you, Dave, for your presentation. At this point in the meeting, I'd like to introduce Samuel May, the representative of PricewaterhouseCoopers, our auditor for the 2020 fiscal year, who is also joining us remotely for this meeting. As indicated in our proxy circular, copies of the auditor's report and the financial statements are included in our 2020 annual report, which can be found on SEDAR and EDGAR as well as on the websites of RBC and Computershare. Karen, are there any questions from participants on the financial statements?

Yes, Madam Chair, we have a question on the financial statements. I see that we have Mr. [indiscernible] on the line and would like to ask a question.

I'm [indiscernible], shareholder. The credit bureau observed 90% of fraudulent mortgage applications were generated by banks. The IMF and the OECD have warned the risk from housing market collection impairing bank's balance sheet. This happened to RBC in 2009. Government ended up injecting $25 billion cash into RBC. That is equivalent to 60% of RBC share value in order to avoid liquidity crisis, then bailout cost each Canadian $3,400. Since then, RBC mortgage portfolio has bloated by more than $100 billion. What action RBC has taken to prevent the taxpayer bailout of potential rationalization?

Thank you, Mr. [indiscernible] for your question. As it doesn't relate to the financial statements, I'm going to ask that we bring that back for the question period. Thank you. Karen, are there any further questions?

We have no further questions.

Thank you so much. We'll now proceed with the business of the meeting. You've received the notice of meeting, which outlines the matters to be considered today. The notice of meeting is also included in our proxy circular, which is available on our website and on the Lumi platform. I'll now ask Karen to review the voting procedures. Karen?

Thank you. Registered shareholders and duly appointed proxy holders will be voting online. The poll will remain open throughout the meeting until the last business item has been put to a vote and the Chair of the meeting declares voting closed. The meeting resolutions are being displayed on the website. To vote, tap one of the voting options available. Your vote will be automatically submitted to Computershare, our scrutineers, after you click on your choice. Votes may be changed up to the voting -- up to the time voting is closed. If you do not press for withheld, against or abstain as applicable when voting is open, your vote will not be recorded, and you will be regarded as having abstained from voting. Preliminary results will be announced later today, and final results will be posted on our website. A simple majority is required to approve matters voted on at this meeting.

Thank you, Karen. I declare voting on all matters now open. To facilitate proceedings since the meeting is conducted in a virtual-only format, I've asked Karen McCarthy, who is also a shareholder, to move all motions. I'll call on her at the appropriate time. We'll now proceed with the meeting's first item of business, which is the election of directors. Your Board places strong emphasis upon the selection of director candidates by assessing the Board's existing strengths against the evolving needs of RBC. An important element of our process is ensuring that a diversity of viewpoints, backgrounds and experiences are present at the Board. This year, the number of director nominees has been set by the Board at 12. Biographies of each of the nominees begin on Page 14 of the circular. One of the nominees, Cynthia Devine, is standing for election for the first time this year. Ms. Devine is the Chief Financial Officer of Maple Leaf Sports & Entertainment. Prior to that, he was Executive Vice President, Chief Financial Officer and Corporate Secretary of RioCan Real Estate Investment Trust from 2015 until 2017, and Chief Financial Officer of Tim Hortons from 2003 until 2014. Cynthia has been a member of the Audit and Governance Committee since her appointment to the Board in August of last year. We welcome the extensive experience that Cynthia brings to RBC, and we are very pleased to welcome her to our Board. I'll now ask Karen to nominate the individuals proposed for election as directors.

I am pleased to nominate each of the following persons to be elected as a director of the bank to hold office until the close of the next Annual Meeting of Common Shareholders or until their successors are elected or appointed: Andrew Chisholm, Jacynthe Côté, Toos Daruvala, David Denison, Cynthia Devine, David McKay, Kathleen Taylor, Maryann Turcke, Bridget van Kralingen, Thierry Vandal, Frank Vettese and Jeffrey Yabuki.

Thank you, Karen. Are there any questions from participants on the nominations?

Yes. We have a question on the line from [ Mr. Jurgen. ]

Go ahead, [ Mr. Jurgen. ]

I'm [indiscernible]. The proposed Board does not reflect a proportionate representation of RBC share stakeholders. Few shareholders such as banks and investment funds that owns millions of RBC shares control bank's agenda and elect directors with 99% of the votes. There is a lack of diversity and designated groups such as Canada's indigenous people. RBC is adding more and more directors from U.S.A. to serve the Wall Street clients and not people like Bernie Sanders or Elizabeth Warren to serve the 1% Main Street shareholders. There is a need for a broader representation to prevent widening the income gap among RBC shareholders. Thank you.

Thank you for your comments, [ Mr. Jurgen. ] As I said in my introductory remarks, we're very pleased with the progress we've made on gender diversity on the RBC Board. The 2 nominees that I mentioned earlier in my remarks from last year, both Canadian women. So we're very proud of that progress. I also acknowledged that we do have more work to do in ensuring that the Board fully represents the communities we serve. Thank you for being with us. Are there any other questions, Karen?

No. There are no further questions.

Thank you. I'll then declare the nominations closed, and we'll now proceed with the vote. [Voting]

The next item on the agenda is the appointment of our auditor. I'll ask Karen McCarthy to make a motion for the appointment of the auditor.

I move that PricewaterhouseCoopers be appointed the auditor of the bank until the close of the next annual meeting of common shareholders.

Thank you, Karen. Are there any questions from participants on the appointment of the auditor.

No. We have not received any questions.

Thank you. We'll now proceed with the vote. [Voting]

The next item of business on the agenda is the shareholder advisory vote on our approach to executive compensation. The text of this advisory resolution is set out on Page 7 of the circular. We hope that you've had a chance to review our compensation discussion and analysis in this year's circular, which explains in detail how our compensation programs are designed to pay for performance are aligned with effective risk management practices and the long-term interest of our shareholders. We take a progressive approach to continuously improving our compensation programs, integrating best practices and responding to input from our shareholders and our independent compensation adviser. In considering our approach to compensation in the future, the Board will take into account the results of today's vote together with other feedback received from shareholders. I'll now ask Karen McCarthy to make a motion to approve this resolution.

I move on an advisory basis and not to diminish the role and responsibilities of the Board of Directors, that the shareholders accept the approach to executive compensation disclosed in the management proxy circular delivered in advance of the 2021 Annual Meeting of Common Shareholders.

Thank you, Karen. Are there any questions from participants on the approach to executive compensation?

Yes, madam Chair. We have an additional question from Mr. [ Jurgen ].

Thank you, Karen. Mr. [ Jurgen ], please go ahead.

The executive compensation promotes greed and labor exploitation. Banks use thousands of temporary workers to avoid paying the basic benefits. Tellers' pay may have increased by $3 per hour over a 30-year period, but the executive compensations have risen by millions of dollars. In this pandemic, government injecting millions of cash in the banks to help working families repay household debt and interest. Therefore, feeding the hungry and providing basic relief to the poor RBC clients within the province is reasonable than paying millions of dollar compensation to executives.

Thank you for your comment. As outlined in the -- in our circular, in our CDNA, one of the Board's most important responsibilities, of course, is overseeing the performance and compensation of our CEO and members of the executive team. In connection with 2020, we looked at a lot of different elements of the executive team's performance, including financial performance. You noticed there that the short-term incentive paid out at 0 as we were not able to meet target during the pandemic year. On many other measures, the bank truly outperformed. And as a result, the Board was very comfortable in recommending and approving this set of compensation results for management. Thank you. Karen, are there any further questions or comments?

No, we have no -- received no further questions.

Thank you. We'll now proceed with the vote. [Voting]

The last item of business on the agenda are the shareholder proposals. Shareholders have had an opportunity to read these proposals and the Board's responses, which are set out in the circular, starting on Page 106. There are 4 proposals that are being put to a vote today. The first proposal was submitted by Patricia McMaster and Paul Sharkey represented by SumOfUs. Ms. Amelia Meister of SumOfUs is here today on the telephone to present the proposal. Ms. Meister, thank you for joining us today. I'd ask that you take a few minutes to speak to the merits of the proposal, and we will then open the floor for discussion. Ms. Meister, you may now proceed.

Thank you. Can you hear me?

We can hear you well.

Wonderful. This statement was prepared by myself, Amelia Meister, a senior campaigner at SumOfUs, representing the 2 independent shareholders mentioned who are both in Canada. We are living in unprecedented times. COVID-19 has caused massive social and economic disruptions. However, RBC's response to COVID-19 is the perfect example of how it has the creativity, resources and impetus to react quickly and effectively during a crisis. Now 2 shareholders are asking RBC to take bold and visionary action on another longer-term and more destructive crisis that the world faces, climate chaos. These shareholders are the ones who filed the proposal, but over 1,300 shareholders let us know they support this proposal but weren't able to file the appropriate paperwork this year. Our shareholder proposal, proposal 1 in the proxy circular, asks RBC to create time-bound, quantitative targets to reduce greenhouse gas emissions in its lending and underwriting portfolios and tackle climate chaos in a real way. Our company's argument is that it has set a net zero 2050 target. However, without any interim target and no plans to announce them before 2023, shareholders are concerned for the continued risk exposure in the form of stranded assets from fossil fuel companies, and more generally, the risk to our entire economy from the escalating impact of climate chaos. RBC was recently identified in the Banking on Climate Chaos report as the fifth largest funder of fossil fuels in the world and, according to the 2020 Global Coal Exit List, the 12th largest funder of coal in the world. These figures have garnered our company significant negative publicity which further adds risk to shareholder value from its tarnished reputation. And our shareholders know this reputational risk is real. Over 2,500 SumofUs members identified that they would move their money from RBC because of this issue, and several thousand youth, the future of RBC's business, are pledging to move their money away from RBC and other Canadian banks because of our company's lack of urgency on the climate crisis. This proposal seeks to address this risk by pushing for greenhouse gas reduction target, not just for 30 years in the future, but for the short and medium term that will show RBC as a leader instead of a laggard in climate action. RBC has had decades to act on reducing finance emissions in its lending portfolios but was one of the last major banks globally to make a commitment on it. For example, one of its Canadian counterparts, Desjardins, recently announced a complete coal phaseout plan. And in Europe, the European Investment Bank made a 2025 fossil fuel phaseout commitment. We know RBC has the means to rapidly respond to a crisis, as it did for the COVID-19 pandemic, and this shareholder proposal asks RBC to act decisively and urgently on the climate crisis. More so than even the 2019 pandemic, climate chaos threatens our economy. Insurance Business Canada identified 2020 as one of the worst years for insured losses since 1980 and identified that these losses were directly linked to increased extreme weather events. We know that climate chaos will only worsen without action, but the good news is that with bold immediate action, we can still mitigate some of the worst effects and protect our social and economic fabric from collapsing under the weight of catastrophe. Without more specific targets before 2050, our company is contributing to the economic instability caused by climate disruptions and endangering shareholder value by failing to adequately prepare for the future. A vote for proposal 1 is a vote for a stronger economy and a healthier planet to leave our children and grandchildren. I urge you to vote for proposal 1 today. Thank you.

Thank you, Ms. Meister for speaking to proposal 1. As Dave highlighted earlier, RBC recently announced progress on its climate strategy with a commitment to net zero emissions in our lending by 2050 and an increase of our sustainable financing target to $500 billion by 2025, up from $100 billion previously. You can find more information about our commitments and performance in our RBC climate blueprint as well as our environmental, social and governance performance report and our TCFD report published on our website on April 6. Karen, are there any questions from participants on this proposal?

No, we have not received any questions or comments. [Voting]

Thank you. We will now proceed with the other shareholder proposals. The other 3 shareholder proposals that are being put to a vote were submitted by Mouvement d’éducation et de défense des actionnaires, or MÉDAC, which is today represented by Mr. Willie Gagnon, who is here on the phone to prevent -- present these proposals. For the information of shareholders, also included in the circular are 5 other proposals that MÉDAC submitted but withdrew following discussions with RBC. Mr. Gagnon, I would ask that you take a few minutes to speak to the merits of each of the 3 proposals that are being put to a vote and also comment on the 5 withdrawn proposals. We'll then open the floor for discussion. Mr. Gagnon, you may now proceed.

[Interpreted] Good morning, Chair. Can you hear me? [Technical Difficulty] My name is Willie Gagnon, and I'm here on behalf of MÉDAC, Mouvement d’éducation et de défense des actionnaires. We had 8 proposals to the RBC AGM. 7 of them were sent to all major Canadian banks, and 1 proposal was specifically sent to the Royal Bank. 3 of those proposals will be tabled and submitted to a vote, so that means that 5 proposals have been withdrawn. MÉDAC is celebrating its 25th anniversary this year, and this is why we sent you a proposal on the company's purpose. We agreed with other banks to withdraw this kind of proposal because they undertook to have a follow-up of the purpose of the company with the Governance Committee of the Board. RBC did not accept that the Governance Committee should follow up with the purpose of the company. We hope that RBC does it in the next year, and we invite all shareholders to support this proposal. There's another 2 proposals for voting, first, on the circular economy. Two banks decided to comply with the principles on circular economy. We asked the -- we ask RBC to do the same, but it disagreed. And there's another proposal about gender diversity in -- on the Board, which is a follow-up of a past proposal. And as we did with CIBC, we would have agreed to withdraw the proposal if the bank had agreed to reach gender equality, just like is done at the National Bank. A few other proposals were sent, for example, about virtual meetings. We agreed and not -- we agreed to withdraw these proposals. On the virtual meetings, we decided to withdraw this proposal because you are allowing verbal presentations this year. We agreed to withdraw the proposal on employees' health and safety and that this should be studied by the Human Resources Committee. You're saying that the Human Resources Committee already does that. We want there to be a follow-up of well-being of employees, as is done at the National Bank. And we sent a proposal for a follow-up of information about the health crisis. Your answer is in the circular. We sent a proposal on global warming, and we're happy with the discussion we had with you as far as your membership of TCFD and your undertaking to take measures in loans and investments. We sent you a proposal on the discretionary authority as far as the Compensation Committee is concerned for the establishment of the compensation of management. So those are the proposals we sent you this year. We're hoping to have the expected results on purpose. And on a circular economy, we hope that you will comply with the principles on circular economy. We invite the shareholders to support all our 3 proposals. And I'm sorry, Chair, with the technical issues that we had. Thank you.

Thank you, Mr. Gagnon. Rest assured, we could hear you.

Thank you, Mr. Gagnon. We could hear you very well.

Karen, are there any questions from participants on these 3 proposals?

No. We have not received any questions or comments. [Voting]

Before we proceed, I just want to make a note here that we've been informed there was a problem with the list of director nominees in the polling section of the Lumi platform. The list has now been corrected, so please ensure that your vote is recorded correctly. You can vote on any matters, of course, until all voting is closed. Thank you. We'll now proceed with the vote on all the shareholder proposals. If you've not yet voted on any of the other business items on the agenda, please do so now as well. [Voting]

As we've now dealt with all the business items on the agenda, I declare the voting on all matters closed. Before we move on to the question period, we'd like to highlight how strongly young people have felt the impact of the pandemic. That's why RBC's major commitment through Future Launch, which I referenced in my opening remarks, is ever more important. We're pleased to share this short video on how we're helping youth prepare and succeed. [Presentation]

Let's now move on to the question period. Before we begin, Karen, could you please remind us how to ask questions during the question period?

With pleasure. [Operator Instructions] Questions should be of interest to all shareholders and not of a personal nature. If your question is related to a personal matter, an RBC representative will contact you after the meeting. For more information on how this question period will be conducted, please refer to the rules of conduct, which are available on your website and on the Lumi platform.

Thank you, Karen. I was informed that we've received a number of questions from shareholders before the meeting. Karen, could you please tell us what these are?

Yes. We received numerous questions and commentaries from shareholders submitted in advance of the annual meeting on the topic of climate change. The majority of the questions were the exact same or a modified version of the same questions. In accordance with the rules of conduct of the meeting, we have grouped and summarized the questions in order to address them all at the same time. The questions consisted of 4 parts. One, the climate crisis needs urgent and bold action, and your current plan is too slow. When will you commit to a 50% reduction of greenhouse gas emissions in your lending portfolios as recommended by the 2018 International Client Panel on Climate Change (sic) [ Intergovernmental Panel on Climate Change ] , IPCC report? Two, why is RBC continuing to fund contentious fossil fuel projects like Line 3 and Coastal GasLink when it goes against your own policies on free, prior and informed consent? And how are you addressing the reputational risk this funding means up for our company? Three, RBC has been identified in multiple new sources around the world as the biggest funder of fossil fuels in Canada. When will shareholders see a change in these numbers, and therefore, a reduction to the reputational risk for our company? How will you protect future shareholder value when youth, a demographic necessary for the long-term sustainability of our corporation, are pledging by the thousands to leave RBC and other Canadian banks for not taking a bold and urgent enough stance on climate chaos? Certain shareholders submitted additional observations with these questions that I will read. RBC advertises that they are supportive of environmental responsibility, and at the same time, funded billions upon billions into Canadian fossil fuel projects. RBC is Canadian. It has to raise the bar for others. Climate change has become affiliated with politics as certain people don't acknowledge that it exists. Universal Wealth is divesting from fossil fuel assets over a 3- to 4-year period with a recent Board vote and will be shifting to support climate-sustainable assets. RBC needs to start funding electric vehicle, EV, production right here in Canada instead of supporting industrial projects that threaten future generations.

Thank you, Karen. I'm going to invite Dave McKay, our CEO, to join me to respond to these questions and commentaries from our shareholders. Dave?

Thank you, Katie, and thank you for all those comprehensive questions. And let me make a series of responses to that and try to cover off all of them as best we can. Like you, we believe that climate change is one of the most pressing issues of our time. And we all have an active role to play in accelerating the transition to a net zero society. It is important, though, that the society charts a smart transition and one that allows our economies to adjust without causing undue hardship to its citizens, one I would say that is inclusive in helping all citizens adapt and one that respects the will of democracy and the path of citizens or that citizens have chosen and which government policies articulate. Here in Canada, we have a national climate strategy, and all levels of government and policymakers are actively balancing the needs of our country and its citizens. RBC is aligned with a strategy that the majority of our society has voted for. And consistent with this, we are firmly committed to accelerating the transition to net zero, as you've heard me articulate many times, including in my opening comments this morning. We have a coordinated enterprise strategy. We call it our Climate Blueprint. And in this strategy, we have made significant commitments to an inclusive and smart transition. A few examples I would offer: the $500 billion commitment to sustainable financing, which builds on our previous $100 billion target achieved last year, 5 years ahead of schedule; our commitment to net zero lending portfolio by 2050, which many comments have already reinforced; and a 70% reduction in our own greenhouse gas emissions by 2025. Touching on another thematic within those questions, specifically when it comes to financing energy projects. When we do finance responsible energy projects, they must be approved within the laws, the regulations and the policies of the jurisdictions within which they operate. I would say they must also be evaluated against international standards and our own enhanced due diligence frameworks and our human rights statement. Now they were thematic, and they're about the size of our financing and where we rank globally. I would first remind you, we are one of the largest banks in the world by market capitalization and balance sheet size. So while our absolute financings may be large compared to smaller banks, our relative basis to capital, our exposure to carbon-intensive sectors represents less than, I'd say, 9% of our total exposure -- total credit exposure and specifically with our exposure to oil and gas represents only 1.6% of our total credit exposure. There was a theme about how are we supporting individuals and citizens and consumers in making the transition and businesses. It's important to note that RBC has been financing the smart transition with our clients for many years to help accelerate change. We were the first bank to establish a dedicated sustainable finance team to integrate ESG factors across our capital markets business. And we're also the first Canadian bank to not directly finance projects in the Arctic National Wildlife Refuge. We partner with our clients to support their sustainability strategies. And many of our clients in the oil and gas sector, they publicly outlined clear carbon-reduction objectives or net zero commitments and are very important part of this transition journey. At the consumer level, our involvement includes supporting a growing role in climate literacy as well as home renovation projects and electronic vehicle purchases. And we're going to continue to grow our business in renewable energy and clean technologies. And I would say we're a Canadian leader in the green bond market and one of the most active global banks in carbon markets. We're also an exclusive financial adviser to both Eni SpA and Greencoat UK Wind on acquisitions of offshore wind farms, which is a demonstration of our growing role in European renewable power. We've also supported General Motors in their partnership with EVgo to build a network of EV charging stations. Now within our own organization, what are we doing? Our operations are carbon neutral, and we are committed to net zero carbon emissions in our operation. We'll meet that goal, in part, through agreements like our purchase power agreement for renewable energy, one of the largest in Canadian history. This agreement is expected to create 300 new jobs and inject $70 million into the provincial economy. So maybe in closing these series of questions, let me again reinforce that this is one of RBC's highest priorities and part of our broader strategy to drive sustainable growth. Well, thank you for those series of important questions.

Thank you, Dave. Karen, are there other questions from shareholders?

Yes, Madame Chair. We have a question from Ms. DeMasi from Federated Hermes on the line.

Hello, Ms. DeMasi.

I thank the Chair, members of the Board and fellow shareholders. My name is Emily DeMasi, and I work for EOS at Federated Hermes. I'm here on behalf of our institutional investor clients who own CAD 4 billion in Royal Bank of Canada equity, effectively making the bank's third-largest holder. I would like to address financing restriction policies related to the bank's climate strategy as we consider this important for the long-term success of Royal Bank of Canada. We'd like to mend the bank on its commitment to a net zero by 2050 target and appreciate the bank's acknowledgment that interim goals will be necessary to achieve net zero by 2050, and we look forward to more reporting on finance submissions in 2022 according to the time line set out by the bank. Our clients appreciate the restriction on new project financing for oil and gas activities within the Arctic Circle, including the Arctic National Wildlife Refuge, as well as restrictions on new coal-fired power generation, thermal coal mines and coal mines that require mountaintop removal. Investors expect that activities already generally incompatible with the goals of the Paris agreement are prioritized for curtailed financing. This includes, but is not limited to, financing coal, gas, oil, fossil fuel expansion and other fossil fuel-related operations. We acknowledge the unique role of the fossil fuel industry in the Canadian economy but cannot discount the reality that the rate of global warming is higher in Canada than in other parts of the world. We appreciate the bank's approach to engaging with the corporate customers to finance the transition in a responsible, inclusive, stakeholder-focused manner. But investors also request banks disclose explicit criteria and time lines for withdrawal of financing for Paris misaligned activities. I ask the Chair, when will the Royal Bank of Canada be setting new financing restriction policies with explicit criteria for the withdrawal financing to activities that are misaligned with the goals of the Paris agreement? Thank you.

Thank you, Ms. DeMasi. It was a pleasure to engage directly with you and the Federated Hermes team in January earlier this year on key governance topics, and it's good to speak with you again today. Thanks for being with us. Climate change is a collective issue that requires us to work closely, inclusively and openly with our peers across industry sectors and with government to build a sustainable economy that's ready for the 2020s and beyond. RBC is fully committed to doing our part in the financial systems efforts to scale up support for clean economic growth and transition to a net zero economy. As Dave mentioned earlier in his remarks, the transition is complex and will take time. But RBC has clear commitments to help accelerate change, and we will be transparent with our progress. Management's plans and assessing the effectiveness of those plans requires continuous oversight and calibration, and the Board has regular discussions with our management to ensure the strategic response reflects the urgency required to address climate change, balanced with the realities of a socially inclusive transition to net zero. Thank you. Karen, are there further questions or comments?

Yes. We have a question come from Mr. [ Richard Sambrook ]. Congratulations and appreciation to the entire RBC community for its performance and service during such a historically challenged year. Watching RBC's ads on ESG and reading the ESG report, my question is to better understand whether the company's current approach to lending and investing is leading to an absolute criteria basis, i.e., avoiding certain sectors or companies like in the energy industry? Or is RBC looking more at a company's relative performance and improvement efforts being made in these areas? Or alternatively, is RBC at this time using a more blended and evolving approach? Finally, I am curious, from an overall total ESG perspective, what is RBC's current view on cryptocurrencies?

Well, thank you, Mr. [ Sambrook ] for your question. As I've shared today, we are committed to accelerating progress on climate change, and some of our -- our key commitments include expanded sustainable financing targets and pledging net zero emissions in our lending book by 2050. Very important to be in sync with our democracies, our communities and our government policy. But let me pass it to Doug Guzman, our Group Head of Wealth Management, Insurance and I&TS, who will speak to leading business in ESG investing. And I'll return for the cryptocurrency question.

Sure, Dave. Yes. So on the question of whether it's absolute black or white, exclusion of investments or more of a relative comparison and an assessment of improvement, it's -- frankly, it's both, which I'll come back to. But I think the most important -- because we think investor choice is important, we offer both. But what's really important is to understand the foundational conviction we have, which we've had for a long time, and we were very early and remained advanced on ESG. And that conviction is that companies and management teams that actually consider these risks, consider longer-term risks, and certainly, climate is one of them, but other areas of ESG as well. But those companies and management teams and Boards are much more likely to outperform their peers than those that don't incorporate those issues. And since the core part of our mandate is to deliver superior returns to our investors, it's important from our perspective that we understand those risks and engage with companies to make sure that we're incorporating what they're doing into our investment decision-making process. And so it's important to understand that foundation. Some of those companies permit us to actually influence what they're doing, which we're happy to do, because we see a lot of companies and have a sense for what is good practice and what is less good practice in terms of disclosures, for example. Those processes are embedded directly in the investment team decisions, so it's not an overlay or something that's off on the side. And we've got a central group of experts that assist the portfolio managers. So that's, I think, a very important point. Now back to the question. For those who feel very strongly that their investment vehicles don't include, for example, fossil fuels, we have a family of funds called the RBC Vision series of funds that is a socially responsible investment funds that permit an investor to choose that fund and have 0% of their investment dollars invested in social funds. So we do a little bit of both, but that foundation is really important to understand.

Thank you, Doug. Just on the specific question on crypto and cryptocurrencies, obviously, an evolving place an asset class. I would say the recent price surge in Bitcoin is notable. We will continue to follow the evolution of the crypto asset space. That includes the regulatory environment; client interest, which is growing; ESG implications; and the marketplace for crypto-related products and services. We don't currently offer any products or services for clients relating to crypto assets, such as Bitcoin. However, for the past several years, we have maintained internal research and development teams that have been monitoring the space and building RBC's expertise in crypto assets. We're familiar with the significant energy demands required for Bitcoin mining. We will take a balanced approach in making any future decisions on whether or not to participate in this market.

Thank you, Dave. Karen, are there other questions?

Yes, Madame Chair, we have a further question from Ms. Meister from the SumofUs, who is on the line.

Please go ahead, Ms. Meister.

Thank you, Mr. McKay and the Board of Directors. I want to thank the other shareholders who address the similar issue. Today, I have a joint petition from SumOfUs, Leadnow, North99, Greenpeace and Stand.Earth calling on RBC to defund fossil fuels with a 50% reduction in finance emissions by 2030 and to withdraw and stop financing all projects that violate free, prior and informed consent of indigenous communities, such as Line 3 and Coastal GasLink, which appear to go against your own policies in the matter. The petition has 70,000 signatures from people across Canada, including over 16,500 RBC customers and over 3,000 shareholders. It's clear that people in Canada, your customers, potential customers and shareholders are not all happy with your current climate plan and the fossil fuel projects you are currently funding. I'm wondering what, if anything, will you be doing to update your current climate plan to address the urgency and human rights issues raised by this petition?

Thank you, Ms. Meister, for your follow-on question, and I would just go back to kind of the key thematics that we absolutely believe that this is one of the most pressing issues of our time. We have made significant commitments. But I do want to reiterate, it's so important as a society that we make a smart transition, a transition that is inclusive and brings our society with us and doesn't project undue hardship on an economy and on individuals in this economy, that we make this transition, as a society, including democracies and the policies that are government sets that are consistent. So we are taking our lead from many of those policies and society who have voted how we want to make this transition. We've committed to a very significant leadership role in helping that transition, whether it's a sustainable financing commitment of $500 billion, our own footprint within this organization to net zero in our lending portfolio. The timing of those commitments again have to sync up with how each society where we operate wants to make that transition. Different choices will be made in different countries based on where they are and where they need to go, and we have to respect that journey and align ourselves to that journey. And I think that's the commitment you have from RBC is to be aligned with our society, the timing and the nature of that transition. It's very important. We're proud of our commitments. They're market-leading, and we will make this journey together.

Thank you, Dave. Karen, are there further questions or comments?

Yes. We have a further question from Mr. [ David Banerji ]. RBC stock has rebounded some 30% since March. Roughly, how much of this gain was based on fossil fuels? I'd like to feel less guilty about the world I'm leaving my daughter. So can you still get significant returns without these investments?

Yes. We're very proud of the returns we've generated and our market-leading valuations. These returns have been generated across a global business across 15-plus million clients across our Wealth Management business, across our Canadian retail business, which is half the bank. So I could say that when we look at our overall financing business within the oil and gas sector, that 1.6% of our overall balance sheet has actually declined year-over-year. And therefore, I think you can feel confident that the vast, vast, vast majority of this performance hasn't been generated from one individual industry sector or clients. So I think it represents a diversity of our business lines, diversity of our geographies and client base and the strength of those franchises is how we've generated those returns. And those sustainable returns over time requires that diversified business model.

Thank you, Dave. Karen, are there further comments or questions?

Yes. We have a number of questions from -- on the web from Mr. [ Chris Fried ]. Mr. [ Fried ], we thank you for your active engagement and thoughtful questions. Mr. McKay will answer one question now, and a member of the Investor Relations team will follow up with you directly to answer your other questions. Question, there is substantial value in the Royal Bank of Canada brand name. What are you doing to preserve this brand value? What are you doing to increase this brand value?

As I referenced in my opening comments, our brand and our culture are a huge part of the success in the core assets and strength of RBC. Our brand strength comes from the trust in the organization, how we interact. It comes from our balance across our stakeholders. We've articulated for 7 or 8 years now, a balanced scorecard approach, well before most other institutions started articulating a balanced score credit approach across employees, clients, communities and shareholders. It's an inclusive strategy that balances the needs. And as I said, we're only as strong as the communities within which we operate. Our brand strength comes from that commitment to a balanced scorecard. Our brand strength comes from the trust and how we interact with our clients. Trust is promises made, promises kept. How we make those daily interactions and our brand promises are absolutely critical. So that brand strength still, I believe, the #1 brand from a valuation perspective in our country, in Canada, is a core asset that we protect, and we nurture and we grow and is so important to our plans and our future as a market leader and our strategies to grow this franchise sustainably for some time to come. Thank you for your question.

Thank you, Dave. Karen, are there further questions or comments?

Yes. We have a question from Mr. [ Harry Rathnum ]. The bank is reappointing PwC as the auditors for 2021 full year. How does the bank ensure that there are no conflicts of interest on the part of this major audit firm?

Thank you, Mr. [ Rathnum ]. Obviously, auditor independence is a very, very important issue for the Board and for the bank. The Audit Committee has oversight of the independence of the auditor issue. We receive regular reports from PwC on this topic and are confident that their protocols and ours will ensure that we maintain strong oversight of that all-important independence factor. Thank you. Karen, are there further comments or questions?

Yes. We have a further question from Mr. [ Jeff Carlson ]. The Board and management seem to be focused on diversity and inclusion targets as ends in themselves. What is the Board and senior management doing to ensure that the best qualified and capable people are working for RBC, particularly in senior leadership roles?

Thank you, Mr. [ Carlson ] for that question. As I mentioned in my opening remarks, the oversight of talent and high-potential leaders is an important focus for the Board which we conduct through the Human Resources Committee. And we have a chance to meet regularly, even in the virtual world, with our top talent across the bank to ensure that we have the depth and strength in that bench to take RBC forward. As to the details of our approach to diversity with the management team, Dave, I'm going to turn that over to you.

Yes. Thank you, Katie. I would just reiterate those comments that diversity and inclusion are a core value within RBC and are critical to our current success and absolutely are critical to our long-term success. We're very proud of the diversity and inclusion within our teams, but we can always be better. And when I look at some of the statistics that we referenced and we talk about -- we have a Diversity Inclusion Committee that I chair within the organization, representation globally from all our businesses, and we review where we are and what journey we want to take together. Recent statistics I can give you that we're exceptionally proud of is 46% of our global leadership group are female, and that's up from 35%, 36% 5 years ago. So we've made significant progress. We're on a journey. Representation, 21% of our executives are BIPOC. We're setting increasing targets. That diversity leads to more creativity, more innovation, connecting with consumers and our clients in different ways and leads to our success. So we've seen that success internally that created -- that creative integration and inclusiveness. And therefore, we're proud of the journey we've taken. In addition, we were just honored with the global Catalyst Award by the Catalyst in New York. I accepted that award on behalf of the organization a couple of weeks ago for our progress towards that 46% for our commitment to change and inclusiveness. So I think other key points I can -- Refinitiv's diversity -- Global Diversity Index. We've been in the top 2 or 3 spots globally, all companies, not just banks. So the benchmarks that I get externally reference our own internal goals, where we are vis-a-vis our competitors, we benchmark all of that. We're very proud of the journey we're on and we'll continue to take.

Thank you, Dave. Karen, are there further questions or comments?

Yes, Madame Chair. We have a question on the phone from Mr. [ Michael Pereira ].

Mr. [ Pereira ], please go ahead.

Hello. Good day to everyone. I am commenting about the shareholder proposal #1 that requests Royal Bank takes much more active steps in reducing carbon footprint, et cetera. And the speaker who presented that mentioned that there's a very real loss, of very real stress of loss of customers and investors. And I want to confirm to you that you've already lost me as a customer. And I am soon going to be reevaluating the pace at which you are traveling to meet those commitments that you keep mentioning, that you are going to be taking to improve the carbon footprint or go to zero carton footprint. I'll be watching over the next year, and I will move my little investment, just to make a statement. I understand and I am thankful to know that there are significant investors who feel the same way that I do. Thank you for the time.

Thank you, Mr. [ Pereira ]. Karen, are there further questions or comments?

Yes, Madame Chair. We've received 3 questions in connection with dividends. Ms. [ Dah ]. Is there any indication to if, when OSFI will remove relaxed restrictions with respect to dividend increase or share buybacks? And what are RBC's intentions once these restrictions are lifted? Mr. [ Alan Best ]. RBC suffers -- shares suffered the smallest percentage price decline amongst the big 5 when the reality of the pandemic impacted all markets. Rumor has it that OSFI will begin to relax restrictions on financial institutions in May 2021. Are the OSFI restrictions the only factor holding RBC back from growing dividends and perhaps even share buybacks? And the final question comes from Mr. [ Jeff Carlson ]. I am a shareholder in RBC. I understand that restrictions on increasing shareholder dividends that have been placed by federal regulators have not yet been lifted. If this is the case, what is RBC doing, if anything, to convince regulators to remove these restrictions? If this is not the case and if these restrictions have been lifted, what is RBC's plan to once again resume regularly raising shareholder dividends and get back on track?

Thank you for those series of questions, obviously, a topic that's on shareholders' minds, whether large institutional shareholders or our retail shareholders. We are starting with, as you know, of our Q1 results that we announced a month ago with a very strong CET1 ratio, 12.5%. It gives us enormous strategic flexibility and enormous flexibility to organically grow our business. And particularly around organic growth, that is our primary avenue to use our capital. Having said that, returning capital to shareholders is also part of our overall strategic capital management plan. Now I can't comment on rumors about timing and OSFI. They will make a decision that's consistent with the prudential management of the overall financial system, and I would expect that they're waiting to see strong signs of recovery in Canada, specifically, how we're managing the pandemic. These are all variables, as you would expect, that they're going to evaluate. And they will make the decision and their purview and when they think it's appropriate for banks to have more flexibility in using their capital in that fashion. So I wouldn't speculate on what that happens. So organic growth, growing the business, we have sufficient capital to do that. And returning capital to shareholders is all part of our overall strategic plan.

Thank you, Dave. Karen, are there further comments or questions?

We receive no more comments or questions.

Thank you, Karen. I've been informed that the scrutineers have now completed their preliminary tabulation of the votes cast in respect of each of the items on the agenda. I'll now ask Karen McCarthy to speak to the preliminary voting results. Karen?

The scrutineers have reported that 54% of eligible shares have been voted at this meeting. According to the scrutineers' report, I am pleased to report that all 12 nominees named in the circular have been elected with over 97% of the votes in favor. PricewaterhouseCoopers was reappointed as our auditor with 99% of the votes in favor. The advisory resolution on the approach to executive compensation was passed with 96% of the votes in favor, and the shareholder proposals were not approved. Proposal #1 on greenhouse gas emissions reduction target received 68% of the votes against. Proposal #2 on purpose and undertakings received 86% of the votes against. Proposal #3 on circular economy received 83% of the votes against. And proposal #4 on diversity target received 92% of the votes against. Final detailed results will be posted on the bank's website and on SEDAR.

Thank you, Karen. Ladies and gentlemen, that completes our meeting today. Before we close, on behalf of the Board and our shareholders, I would like to once again express sincere appreciation to RBC employees. During this unprecedented year, your dedication and commitment to serving our clients has been the force that continues to differentiate RBC as an organization. We are all very grateful for all you do. I would also like to thank Dave McKay and his senior leadership team for their values-led leadership, their focus on youth and their commitment to helping our clients thrive and our communities prosper. Your ongoing leadership will ensure an enduring legacy and build long-term value for all our stakeholders. To our shareholders, thank you all for being with us today. Until we meet again, we wish good health to you, your families and your communities. The meeting is now concluded. [Foreign Language]. Thank you for joining us. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]