Royal Bank of Canada | Regulating AI to put humans first at Royal Bank of Canada

Status
Filed
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
RY:CN
Lead filer
Mouvement d'éducation et de défense des actionnaires (MÉDAC)
Resolution ask
Report on or disclose
ESG theme
  • Social
ESG sub-theme
  • Digital rights
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Financials
Company HQ country
Canada
Resolved clause
Regulating AI to put humans first It is proposed that the Bank prepare a report on the use of AI in high-level decision-making as well as in risk assessment and granting loans.
Supporting statement
AI is rapidly transforming the financial sector, particularly in risk analysis, loan automation, fraud detection and product recommendation. This shift brings new risks however, which have been clearly identified in international policies and studies. In a report published in August of 2023 (Generative AI in Financial Services: Risks and Policy Considerations),1 the International Monetary Fund (IMF) warns against: “algorithmic biases, privacy violations, threats to financial stability and governance risks due to the unregulated use of AI”. At the same time, several renowned experts, including Turing Award Laureate Yoshua Bengio, a major figure in AI research, have publicly expressed their growing concern due to the absence of effective safeguards. In an interview with Les Affaires (May 2023), Bengio confirmed: “The urgency to act is real. Powerful AI systems are already able to manipulate and mislead people”. These alarm bells have prompted several countries to adopt or study regulatory frameworks. At the federal level, Bill C-272 — the Digital Charter Act —, currently before the Senate, proposes the creation of a special legal framework for high-impact AI systems. This framework will impose new responsibilities on companies that use AI, including banks. In this shifting regulatory and technological context, it is in the Bank’s interest to: • demonstrate its responsibility and transparency; • prevent legal, reputational and systemic risks; • position itself as a prudent and ethical leader in AI adoption. Proactive publication of a structured report on the use of AI will enable informed oversight by shareholders and will allow the organization to build a corporate governance that the public and the regulatory authorities can trust. This report should cover the measures the Bank has taken to: • promote transparency in how, why and when it uses AI; • evaluate the output of AI systems, in particular generative tools, to minimize biases and inaccuracies, and allow users to distinguish AI output from that generated by humans; • train employees or contractors who develop or use AI to understand the legal, ethical and operational challenges, in particular protection of privacy, security and biases, so they can adopt AI systems responsibly. This proposal received 14.29% of the votes cast at the last AGM. 1 https://www.imf.org/en/Publications/fintech-notes/Issues/2023/08/18/Generative-Artificial-Intelligence-in-Finance-Risk-Considerations-537570 2 https://www.parl.ca/LegisInfo/en/bill/44-1/c-27

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