The bank apparently recognized in about 2007 that the environment was becoming increasingly linked to the economy. The senior executive team wanted somebody to work at a senior level, reporting into the senior executive team, and someone who was not a banker but a scientist. Here is part of the Q&A between Clarke-Whistler and the Globe and Mail reporter.
Does the Environmental officer have any influence on the business the bank does? It encompasses every aspect of the bank: How we operate our business, environmental risk and opportunity in our financing and investing, green-product options, and engaging our employees and communities was the answer..
Is this really a C-suite position with actual power? I definitely lead by influence. But we have established specific goals that everybody has to follow, and they are goals that bite. I report directly into the senior executive team on a quarterly basis, and I report annually to our board. They are very happy with us setting aggressive goals.
Do you have veto power on lending? One of my first jobs when I arrived was to overhaul our environmental due-diligence processes around financing. We have said no to certain projects. I think we have educated our credit originators enough that they will look at a project and say: Before we even get into this, we think there are going to be some challenges.
Does your role create some tensions with the lending group? I think they were very worried when I arrived, [but] I didn’t turn up in a hemp skirt hugging a tree. We have built a great relationship, [especially] in our resource lending sector. I often accompany our folks in their interactions with clients. I work on advisory and working committees with many of our resource clients.
Can you actually control how borrowers use the money they get from the bank? The reality is that our financing is corporate finance, as opposed to project finance. That means we have long-term relationships with customers who may undertake projects that become controversial or challenging. We try to work through those specific aspects with them. I find that the Canadian resource industry is very sensitive to these issues now.
When taking a charge on commercial property, banks run the risk of having to manage an environmental problem if, in fact, the borrower defaults. It is therefore in the lender’s interest to understand the known condition of the site, AND to know what the “go forward” risk may be.
Further complicating this matter is the federal vs. provincial jurisdiction issue. Municipalities (even if they choose to get involved in a “private” dispute between land owners) are unlikely to have much clout with Environment Canada, and if the Ontario Ministry of the Environment has no jurisdiction, they’re very unlikely to be interested unless there is substantive damage to the natural environment that can be proven to be caused by activity at the air park. It’s anyone’s guess how the MOE would interpret the terms “substantive” and “proof”. Suffice it to say that any aggrieved landowner will have to incur the cost to of furnishing the evidence of actionable environmental damage.
Which means that if any action is brought against the air park through the far more likely process of civil litigation, the bank could potentially get dragged in.
Banks don’t like this.
It is therefore incumbent on the lender to have undertaken thorough due diligence BEFORE placing their charge on title. Whether TD performed an adequate assessment of environmental risk in this case remains to be seen.
Ms Whistler obviously didn’t do any environmental assessment on the Burlington AirPark. This is probably the most anti environment project that has ever taken place on the newly created Green Belt.
Smooth talking will outwit the environment any day. Perhaps the TD bank should have a look at how much it will cost to restore the damage done. They may have trouble with loan repayments.
Talking about the environment does not make one an environmentalist no more than standing in a garage makes one a car.