A global approach
Our approach to corporate governance has long been characterized by continuous improvement. Consequently, RBC has remained in the forefront of evolving best practices in governance. Many practices recently called for by regulators were already well established at RBC.

The strength of our governance is founded on having an independent chairman and knowledgeable, well-informed directors whose major concerns include oversight of the strategic planning and resulting performance of RBC, and ensuring that standards exist to promote ethical behaviour throughout the organization.

RBC believes that good governance requires controls and programs to promote a proactive governance culture within our global network. For this reason, some of our more recent innovations have focused on spreading a holistic approach to governance, compliance and ethics:

• Our Subsidiary Governance Office (SGO), launched in 2001, promotes consistency, simplicity and transparency in the global organizational structure of RBC. The SGO provides governance oversight among our many subsidiaries and has helped develop a more economical and sharply focused group structure.
• In 2000, we expanded the RBC Code of Conduct, introduced in Canada in the 1980s, to cover all RBC businesses. In 2002, we introduced a Code of Conduct e-Learning Program to ensure all our employees (from the CEO on down) know and understand the principles in the Code, including issues such as privacy and confidentiality. This e-learning program includes both an online course and an online test. In addition to our long-standing encouragement to our employees about reporting Code issues and protection of whistle-blowers, this year we set up a reporting hotline as an additional channel for employees to report concerns related to auditing or accounting irregularities.
• RBC’s Financial Controls Office, created in 2003, introduced an automated, enterprise-wide process focused on managing auditor independence. It provides a structure and an online system for RBC’s business platforms, functional units or subsidiaries that are entering into a relationship with a public accounting firm, to confirm or obtain approval prior to the commencement of work.

Current and emerging best practices
RBC was rated among the top 10 companies in the Report on Business Magazine 2004 survey of corporate governance in Canada, based on board composition, compensation features, shareholder rights and disclosure practices.

Increasingly, public companies are asked to report environmental, social and ethical performance in addition to financial measures. In this emerging field, RBC reports in a number of ways, including our online Sustainability Report and Index, based on regulatory guidelines, best practices and responses to independent surveys.

In 2004, RBC was named to the Dow Jones Sustainability Index for the fifth consecutive year. This Index recognizes some 300 companies that lead their industries with a business approach that recognizes opportunities and manages risks stemming from economic, environmental and social developments.

RBC also earned an overall award of excellence in corporate reporting from the Canadian Institute of Chartered Accountants.

As a fund manager, our mutual fund subsidiary, RBC Asset Management, is a member of the Canadian Coalition for Good Governance, which promotes the best corporate governance practices in companies its members consider for investment.