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Why TD Executives Are Banking on Sustainability

By Jake Hiller

Nicole Vadori remembers being in grade school and watching the news about a fire at a tire warehouse with big plumes of black smoke that would inevitably cause environmental damage and thinking at that moment, “how can adults let this happen?”

Today Nicole is associate vice president and head of environment at TD Bank Group, where she spends her days finding ways to help reduce the bank’s carbon footprint, mitigating climate risk in its investment activities, and helping to drive business initiatives that can create positive environmental and social impacts.

I recently caught up with Nicole to talk about what TD is doing to help support the transition to a low-carbon economy, how the company analyzes climate risk, and to hear about her favorite Toronto restaurants.

Here’s an edited transcript of our conversation.

TD was the first major North American bank to go carbon neutral. What’s the story behind setting and meeting this goal?

We became carbon neutral in 2010, though the process started long before then. Nearly a decade ago TD identified climate change as an issue that would impact the business and the communities we serve – and it was also registering as an important issue for our customers. After setting the carbon neutrality goal, we then measured environmental impact because you can't reduce your footprint until you understand the scope of it. We factored in the footprint of thousands of branches in the U.S. and Canada, plus our corporate offices, data centers, and employee travel.

Then we had to figure out how to reduce our impact, so we developed environmental expertise within our enterprise real estate team, which manages all of TD’s branches and corporate spaces. Part of their job is to identify opportunities for reducing energy use and improving efficiency. Today, more than 200 of our branches are LEED certified, we’ve transformed our lighting to LEDs, and over 140 branches in the U.S. have solar panels that produce electricity.

The last step in going carbon neutral was to offset the remainder of our energy consumption. We buy renewable energy credits and carbon offsets to account for the rest of our electricity use and emissions. Since 2015, we have met our 100% renewable electricity commitment and have sourced renewable energy credits to account for 100% of the electricity used in our operations.

Now that you’ve reached the carbon-neutrality goal, what’s the next big target for TD?

A general trend within the industry, which we agree with, is to shift focus from just environmental impacts within our own operations to a conversation about the broader role of banks in the world.

That’s one reason why we’re a part of CDP’s supply chain program, which has allowed us to engage some of our largest vendors in discussions on greenhouse gas management. We also support our small to medium sized vendors through grassroots initiatives to help them manage, understand and reduce their own emissions.

We are also looking at how we can help drive growth in the renewable energy market and support clean tech initiatives that encourage more responsible energy use.

This work is part of a larger commitment for the bank through our corporate citizenship strategy, The Ready Commitment. Launched in March 2018, the multi-year initiative includes a target of CDN $100 billion by 2030 through our financing and investing activities, and other programs, to support the transition to a low-carbon economy. It’s aligned to a larger vision for TD to be a leader in helping shape the green economy.

Our TD Green Bond program is one example of how we’re using traditional financing products to drive low-carbon, clean tech projects. We were the first Canadian bank to issue a green bond, raising CDN $500 million in 2014, with the proceeds helping to finance green loans on our commercial banking side. We issued our second green bond – USD $1 billion in 2017 – that was hugely successful, oversubscribed, and attracted even more investors to the bank.

How does TD decide which projects to invest in?

We developed a framework that we follow and criteria we consider when reviewing different loans and types of ventures. With a green bond, we look at three different areas: low-carbon energy generation (wind, solar, etc.), energy efficiency and management (e.g., green buildings), and green infrastructure and sustainable land use (this includes investments that support conservation and climate resiliency).

What we are seeing through our low-carbon financing is that the market demand is there for these types of initiatives. But we also know that the transition to a low-carbon economy will take several decades as we invest in the necessary infrastructure to support clean, low-carbon growth.

We see an opportunity to work with all energy players, to help develop innovative solutions to make the production of existing traditional energy sources cleaner, while supporting the growth of renewable energy and encouraging more responsible energy use altogether.

What best practices help ensure a level of standardization across the banking industry?

For greenhouse gas reporting, there’s a pretty standardized set of metrics, though there are some nuances. But if we look at our low-carbon target of $100 billion, measurements can vary bank by bank, depending on bank size, function (retail or wholesale), product offerings, and geography.

The recommendations put forth by the Financial Stability Board's Task Force on Climate-Related Financial Disclosures (TCFD) are also really important for our industry, because they help assess risk due to climate change in a systematic way. It's not just the physical impacts such as severe-weather events, it's also about how your business will be impacted by rapid sifts in technology and potential climate policy. TD is proud to be one of the 16 global banks convened y the UN Environment Finance Initiative to participate in this Task Force.

The TCFD says that companies need to start conveying the financial risk of climate change to investors – and increasingly investors are showing interest. The analysis requires a shift in thinking and is a huge undertaking not just for banks, but also for our clients in various industries – oil and gas, mining, consumer goods, etc.

What tools or innovations are you using to assess climate risk?

Bloomberg MAPS is a great data processing and visualization tool. The platform allows for geographic reconciliation of data. For instance, you can take a bank's loan portfolio, place it on a map, and overlay it with predicted exposure to extreme weather events like cyclones, wild fires, and floods. From there, we can calculate and determine the amount of the bank’s portfolio at risk. We’re starting to do this analysis with the portfolios most exposed to climate related risk – our lending, investment, and insurance portfolios.

A tool that's able to layer multiple datasets in a standardized way is hugely powerful for us to be able to complete this analysis. Otherwise, it would involve multiple spreadsheets and trying to correlate everything manually. Also, when you're able to visualize data, it's easier to have conversations internally and with our clients about where impacts could occur, what the exposure could be and how risks can best be mitigated.

Last but not least, Toronto has a reputation for having an amazing food scene. What’s your favorite restaurant?

One of my favorites is Kid lee by chef Susur Lee. He makes an amazing Singapore slaw that has 19+ ingredients, including flower petals and I don’t even know what else, but it tastes delicious. Terroni is another favorite for Italian comfort food. Best.Pasta.Ever. (outside of Italy).

Previously published on EDF+Biz and 3BL Media news.

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Jake Hiller is Sustainable Finance Manager at Environmental Defense Fund, overseeing development and implementation of strategies that help to leverage the influence, expertise and capital of the financial marketplace to protect the environment, improve livelihoods, and achieve the ambitious goals in EDF's Pathways 2025 strategy.

Read more stories by Jake Hiller