Racial equity is critical to the advancement of Scotiabank?s long-term growth strategy. As early as 2041, underserved client segments, including Black, Indigenous, and other racially minoritized communities, will constitute upwards of 47% of Canada?s census, and in turn Scotiabank?s client base. These vital customer segments remain disproportionately underbanked, with reports of systemic barriers in accessing mainstream financial products and services. Financial institutions also face increased federal scrutiny and heightened regulatory expectations regarding substantive equality considerations in their employment practices, under Canada?s 2024-2028 Anti-Racism Strategy. In response, peer banks?Royal Bank of Canada (?RBC?), Bank of Montreal, Canadian Imperial Bank of Commerce (?CIBC?), and National Bank of Canada?are in the process of conducting racial equity audits of their employment and commercial practices to (1) identify and address systemic discrimination risks; (2) audit the effectiveness of existing credit programs and Indigenous banking solutions; (3) enhance their ability to identify and respond to the product and service needs of underserved client segments; (4) develop fair lending and equal employment opportunity informed compliance management systems; and (5) address barriers to inclusion throughout their employment and commercial footprints. Scotiabank remains the only ?Big Six? bank to abstain from conducting a racial equity audit. Scotiabank?s efforts to identify and address systemic discrimination risks and develop competitive, inclusive products and services remain inadequate in comparison to efforts undertaken by peers. For example, Scotiabank provides shareholders with limited disclosure regarding the merit and efficacy of its programs to support the financial inclusion of underserved client segments. To illustrate, unlike CIBC and RBC, Scotiabank has yet to disclose data on the efficacy of its Black-Led Business Financing Program, including the number of loans distributed and the number of Black entrepreneurs helped. Shareholders recognize that systemic discrimination risks may materialize as significant business risks. A racial equity audit would help Scotiabank manage reputational, legal, or regulatory risk exposure to systemic discrimination that may not be wholly apparent through existing policies, practices, or initiatives. A racial equity audit may also support Scotiabank in building and maintaining trust with stakeholders. At Scotiabank?s 2025 Annual General Meeting, nearly 38% of shareholders supported a proposal requesting that Scotiabank conduct a racial equity audit of its employment and commercial practices. Absent a racial equity audit, Scotiabank risks (1) failing to address Canada?s rapidly evolving demographics; (2) loss of competitive advantage as peer banks conduct the gap analyses necessary to enhance their service offerings; and (3) exposure to regulatory, legal, and reputational risks associated with systemic discrimination.