8 LESSONS from the EU P.18 How to Go Net Zero in a Hurry TOP 50 GREEN BIZ MOVES P.26 Which Companies Helped Fix the Planet?

8 LESSONS FROM THE EU p.18 TOP 50 GREEN BIZ MOVES p.26 CRUELTY IN YOUR PENSION p.60 How to go net zero in a hurry Which companies helped fix the planet? Are your investments cruelty-free?

SPRING 2020 VOL. 19 ISSUE 2• $6.95 A paid insert to The Globe and Mail and The Washington Post Corporate Knights Letters

VOLUME 19 ISSUE 2 industry because of its commitment to increasing CEO and Editor-in-Chief: Toby A.A. Heaps its use of sustainable ingredients, as well as being EDITORIAL top quintile in gender leadership diversity. The Managing Editor: Adria Vasil Senior Editor: Rick Spence packaged-goods maker could certainly do better, Contributing Editors: Melissa Shin, Rachel Pulfer, but it’s committed to halving the waste associ- Jeremy Runnalls ated with the disposal of products by 2020. Let’s Copy Editors: Lesley Fraser, Jordan MacInnis Art Director: Jack Dylan hope it delivers.

ADVERTISING Associate Publisher: Erin Gardhouse EV ARTICLE OFF THE DEEP END

RESEARCH I started reading your article on EV battery Clean Revenue & Research Manager: Wendy Shen-Juarez “cleanliness.” I got to the discussion on Sr. Sustainability Research Analyst: Moshmi Desai “destructive” deep-sea mining, which you Research Analyst: Laura Väyrynen tossed out in a single sentence, which is when I

Website: theturnlab tossed the magazine. Questions: Is non-nascent Distribution: Washington Post, Globe and Mail, shallow-sea mining (e.g. diamonds) okay in Kable Distribution Services, Inc. your opinion? What is the comparison of the Printer: TC Transcontinental Printing cleanliness of shallow-sea mining to deep-sea Published by Corporate Knights Inc. mining? Are Fiji and Greenpeace the world © 2020 Corporate Knights Inc. All rights reserved. Any reproduction or duplication without prior writ- TICKED OFF BY TECK experts on the cleanliness of all types of “nascent” ten consent of the publisher is strictly prohibited. deep-sea mining? How do the various proposed I do not understand why a company (Teck types of deep-sea mining compare ecologically CORPORATE KNIGHTS INC. President/CEO: Toby A.A. Heaps Resources) that is a prime promoter of oil sands with existing terrestrial mining? How does the development can get into your top 100 global construction of offshore wind farms (e.g. subsea ranking. Their main source of revenue is coal, cable burial) compare with deep-sea mining? Printed in Canada/Imprimé au Canada admittedly steel-making coal not thermal, but How does port construction and harbour GST Number: 861416717RT0001 that and developing the oil sands? dredging compare? ISSN Number: 1703-2016 Publication Mail Agreement #40725542 –Michael Carter, Toronto –Eric Jackson, Vancouver

ADVERTISING INQUIRIES CK: Teck is a mining company that is strad- CK: The topic certainly deserves greater in- Tel. 416-203-4674 [email protected] dling the energy transition. It recently shelved its depth exploration. mammoth Frontier oil sands project, which had Apple iPad and iPhone users can download our become environmental and economic kryp- free app via iTunes; Kindle users via Amazon.com. SUBSIDIZE THIS Individual issues are US$4.99 to download. Annual tonite. Had the project gone forward, it would subscriptions are US$19.99. have sapped resources from Teck’s clean- Can you publish a list of the government

NOTICE OF POLICY: Corporate Knights has a economy mineral growth business, which is grants and incentives provided to the coal, oil strict policy regarding the separation of advertis- a prime reason for its Global 100 inclusion. and gas industries and propose clean-energy ing and editorial. Any employee who allows an ad- We take it as a positive sign that Teck has been developments where these grants could be vertiser to influence the magazine’s editorial will be dismissed. Corporate Knights does not rent plowing profits from its steel-making coal to redirected? or sell our mailing lists or information gathered become one of the world’s leading developers of –Doug Chivers, Vancouver from Internet transactions. From time to time, we clean economy minerals (like copper), which are may use your customer information to correspond with you regarding your subscription or to inform required to decarbonize the economy. CK: Great idea. According to the International you of special offers and services. Institute for Sustainable Development, federal

The information contained herein has been compiled fossil-fuel subsidies in Canada reached at least from sources believed to be accurate and reliable, INCREDIBLY SHRINKING PACKAGING $600 million in 2019, but this figure does not but its accuracy is not guaranteed. Corporate include subsidies for which publicly available Knights principals, staff and affiliates may from time to time have a position in investments I have used Dove underarm deodorant for a data was lacking, such as tax-related subsidies or referred to in this magazine. long time, and over the past couple of years I potential subsidies related to the Trans Mountain have watched the actual content shrink from Pipeline and expansion. The real number is likely Corporate Knights is proudly printed on 100% recycled biogas-powered Rolland cover stock and the original 100 grams to 76 grams – and the in the billions, money that would go a long way 100% carbon neutral FSC-certified Catalyst paper package size has stayed the same: a shocking to building out electric charging infrastructure or inside. waste of resources serving only to squeeze enabling ride-share services to electrify. more profit. So it was quite a shock to see Unilever move up the list to 46th place. To my unsophisticated mind, they should not even be We welcome readers to submit letters to on the list. [email protected] –Dave Ferguson or by mail to our office at: Information Corporate Knights Inc. empowering CK: Unilever (owner of Seventh Generation and 147 Spadina Ave., Suite 207 markets to foster Ben & Jerry’s) is considered among the best-in- Toronto, ON K a better world. M5V 2L7, Canada sector in the personal-care and cleaning-product

2 • Corporate Knights • Spring 2020 Cover by Istoica and Jack Dylan Table of Contents SPRING 2020

Applying a climate lens to our economic recovery package could get people back to work while building a more resilient Canada for the long term. p42

Editor’s Note p5 FEATURES Coronavirus connects us all and makes us all … vulnerable. Now if governments could just respond to the urgency of climate science as swiftly as they have to COVID-19. How to afford affordable green housing p14 News Briefs p7 Sustainably designed affordable housing projects have become increasingly Oil companies pull the plug on mega- critical in meeting cities’ climate and social inclusion goals. projects, pesticide propaganda exposed, and mandating corporate morality.

Global game-changer: Europe’s Green Deal has lessons for Canada p18 Is your pension banking on animal cruelty? p60 If Canada is serious about reaching net zero by 2050, it needs to learn Most pension funds are clued out on whether everything it can from the EU’s incoming Green Deal. the companies they’re invested in account for animal welfare.

Does your bank offer ethical investments? p22 5 green building trends for 2020 p62 Corporate Knights anonymously visited branches of the Big Five banks and asked From heating offices with sewage energy to about responsible investing. Which delivered? fast-tracking timber buildings.

50 years and 50 green company actions that helped heal Earth p26 On the 50th anniversary of Earth Day, we look at which corporate actions have had the biggest impact on improving the state of affairs on our planet.

How a green jolt could spur our economy and save the planet p42 As we start to move from crisis to recovery post-pandemic,Canada’s thought leaders weigh in on opportunities to build back stronger and greener. Heroes & Zeros p64 Marlboro maker says it’s cleaning the air, while Siemens controversy kicks up Mintzberg Declaration of Our Interdependence p58 firestorm. A bottom-up “call to action, not to arms” promotes collaboration for the greater good of society.

Knight Bites p66 Cashing in on Canada’s clean economy.

Clean Capitalism: An economic system in which prices incorporate social, economic and ecological benefits and costs, and people know the full impacts of their marketplace actions.

Cover and above illustration by Pete Ryan; right illustration by Joren Cull Spring 2020 • Corporate Knights • 3 Advertisement

4 • Corporate Knights • Spring 2020 Editor’s Note

falling into line. The Financial Times, flagship paper of the Davos class, signed off on the deal with an unsigned editorial this April: “Radical reforms – reversing the prevailing policy direction of the last four decades – will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities and look for ways to make labour markets less insecure. Redistribution will again be on the agenda, the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.” People must be at the front of the line come stimulus time. Fortunately, thanks in part to the clean innovation wave that Sir Parker’s ripples helped to generate, this could work out just fine for our climate. If the objective of the economic recovery is to get as many people back to work as fast as Our best shot at building back possible and lay the foundations for a strong economy capable of digging us out of a debt better after the COVID crisis hole, there may be no more effective strategy By Toby a.a. Heaps than applying a climate lens. Putting a climate lens on economic stimulus sounds like a constraint or dilution of the primary mission. But rather than a constraint or diluent, it’s more akin to X-ray vision that he COVID crisis and the climate crisis Again today, Nick had an answer to the will help us cut through the fog of old ways to T have a lot in common. climate riddle. He said we can think about this hone in on the most effective investments that Both are mortal threats to humanity, but in three phases. will get more people back to work faster while the coronavirus has the urgency of a bullet The first 30 days was about saving our lives. bolstering our long-term economic potential. coming at our heads, whereas the climate crisis The next 90 days is about keeping the economy That’s because the clean economy is gener- is a slower burn (albeit increasingly prone to on life support. The 900 days after that will be ally more labour-intensive (think retrofits) blazing flare-ups). about building the society we want. and has higher – more than double in most With the coronavirus, time is compressed As we plan for the next 900 days, there will cases ¬– compound annual growth rates as into minutes, hours, days and months. What be no shortage of suggestions for how we can compared to the general economy. we do today can determine if our families, build back better, but it would be a disservice to This flies in the face of a still popular neighbours and communities get deadly ill the moment if we are not clear-eyed about what perception that carbon reduction policies are in the next 14 days. That temporally com- will drive the recovery. It will be people. simply expensive. That might have been true 10 pressed line that connects our actions to their This virus has exposed the brittleness of years ago when the cost of clean technologies life-saving impacts has spurred governments our economic system, a system that has been was high. But since then the relentless march of around the globe to make the tough decision downloading costs to the most vulnerable for technological progress has slashed clean tech- to lock down their economies and bring the too long. As we hunker down in our homes, nology costs, and they continue to fall. engine of capitalism to a shuddering halt. we are sustained by essential workers, so many As it becomes ever-cheaper to make and With the climate burn, the time scales are of whom are not even earning a living wage. store clean energy; build smarter, more ef- longer. If we throw water on the fire today, In the starkness of our self-isolation we can ficient buildings and industry; and electrify it could take decades or centuries before the now see that the people we need the most are transport (even with oil at negative prices, flames are doused. often the ones we value the least. electricity is still by far the cheaper way to How to solve this riddle of time? For wis- As Mark Carney wrote recently in The move a car), demand for these products goes dom, I turned to my friend Nick Parker. Economist, “After decades of risk being down- up, and those economies that invest accord- Nick is the prophet of “cleantech.” He loaded onto individuals, the bill has arrived, ingly rise to the top. coined the term in 2002 and helped catalyze and people do not know how to pay it.” For these next 900 days, let’s take off an ecosystem that has since moved mountains The social contract just came up for the blinders of the past and put on a pair of of money ($150 billion of venture capital and renewal, and those who have been getting climate X-ray goggles. They can help guide private equity at last count) to develop cheap short-changed are demanding a raise. us through the pandemic portal to another and sustainable solutions the world now ap- The people who have been rigging the world, one we can be proud to bequeath to pears ready to adopt. game now recognize that the jig is up and are our grandchildren. K

Illustration by Kathleen Fu Spring 2020 • Corporate Knights • 5 Advertisement

ON APRIL 22, AND EVERY OTHER DAY, WE CAN ALL CHANGE OUR HABITS FOR A BRIGHTER FUTURE.

6 • Corporate Knights • Spring 2020 News Briefs SPRING 2020

Corporate Knights Spring 2020 — NEWS BRIEFS — VOL 19 ISSUE 2

An ambulance crosses through an empty Manhattan as COVID-19 brings the usually vibrant metropolis to a standstill.

COMPANIES STEPPING UP FOR COVID-19 Will the coro- businesses in March were unsure if they would ever reopen. navirus pulverize the global economy and turn us all into grieving par- The media has also identified the first winners of this global reck- anoids? Or will it usher in a new culture of community and conscience? oning. Setting aside for a moment the immeasurable personal trage- It’s too early to predict how COVID-19 will reshape the future. dies caused by the virus, here are some preliminary results: The travel, entertainment, hospitality and personal-services sectors • Greater concern for the environment could be COVID’s legacy, have already been devastated. A Canadian Federation of Independent wrote columnist Gwynne Dyer. “The clean air over China’s cities Business survey found that 32% of owners who had shut down their in the past month, thanks to an almost total shutdown of the big

Photo Jack Dylan Spring 2020 • Corporate Knights • 7 News Briefs SPRING 2020 sources of pollution, has saved 20 times as many Chinese lives as COVID-19 has Global oil demand growth 2011–2025 taken . . . People will remember this when the filthy air comes back and want something done about it.” Historical Forecast Trend • Movements for social change may be empowered by governments’ rapid moves to restrict behaviour and unleash financial sup- 2.5 port. At TheConversation.com, U.K. economist Simon Mair said the virus “is expanding 2 the economic imagination. As governments 1.5 and citizens take steps that three months ago seemed impossible, our ideas about how the 1 world works could change rapidly.” • Retail and food workers are finally get- 0.5 ting some respect, with companies such as Maple Leaf Foods, Loblaw, Sobeys, Metro 0 and Walmart granting raises to frontline staff, introducing the concept of “hero pay.” -0.5 ThoughCorporate Knights asks whether 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 $2 extra an hour is enough for the gro- cery employees putting their lives on the Following a steep pandemic-related drop-off in oil demand in 2020, the IEA forecasts that demand line. Canadian banks are giving frontline will rebound in 2021 before decelerating again as global transportation is electrified. employees an extra $50 a day and additional paid time off; TD Bank Group is giving bonuses of up to $1,000. climate goal of achieving net-zero carbon • Tycoons such as Bill Gates, Mark emissions by 2050. That’s the deadline Zuckerberg, Jack Ma and Elon Musk polished to mitigate climate emergency by hold- their reputations by funding hospitals, med- ing global warming to the Paris Agreement ical supplies and research. But the Canadian target of less than 2 degrees Celsius (com- billionaire community, wrote the Toronto pared to pre-industrial levels). To start, Star’s David Olive, “has hardly been heard Repsol said it would take a post-tax from on arguably the greatest crisis Canada “impairment charge” this year of €4.8 bil- has ever faced.” lion (about $7 billion Canadian). • Manufacturers of everything from With that, the future came into focus. hockey skates to gin began retooling to Shell, BP, Eni, Equinor and Total all fell deliver personal protective equipment to into line, pledging to work toward the 2050 those who need it most. Heavyweights that Big Oil is losing: target – a complete set of Europe’s six larg- have stepped up include H&M, Ford, GM, est oil and gas firms. BP promised a trans- Dyson and Gucci’s parent company, Kering. Why climate change formative strategy that will emphasize inno- Several companies have been saluted for isn’t just our kids’ vation and boosting investment outside of establishing COVID relief funds, includ- oil and gas, as well as advocating for policies ing Facebook, which set up a US$100 mil- problem anymore that support net-zero emissions, “includ- lion relief fund for businesses in 30 coun- ing carbon pricing,” and strong-arming the tries, and meal-delivery companies, whose industry’s trade associations to stop drag- services helped thousands of restaurants hile energy-industry associations ging their feet on climate issues. stay open. Facebook also set up an addi- W and conservative politicians fight a These noble goals failed to move BP’s tional US$100 million fund to support news desperate rearguard battle against climate critics. “When will they stop wasting bil- media. Sony, Netflix and Amazon created economics, the global oil patch is slowly lions on drilling for new oil and gas we their own US$100 million global relief funds starting to accept the low-carbon economy. can’t burn?” noted Greenpeace. “And what — though striking Amazon employees say It’s a fitful revolution. There will be are they going to do this decade, when the not enough is being done to keep them safe. backsliding and green-washing. But we can battle to protect our climate will be won And then there are the hidden heroes: all breathe easier as more companies, insti- or lost?” the workers delivering essential services tutions and associations face up to their cli- Still, the tide is turning. Other resource across dozens of sectors, as well as anyone mate responsibilities. This in turn will put giants making carbon pledges include who is stepping up to support aging rela- increasing pressure on the resource-guzzling Vancouver-based mining giant Teck tives during the crisis, check up on their laggards as they see investors, customers and Resources (which cancelled its plans for neighbours, shop for the quarantined, far-sighted energy producers all betting on Canada’s largest oil-sands processing plant donate money or haul canned goods to food systemic change. due to uncertainty over the future of hydro- banks. We’re banging on our pots and pans In December, Spanish oil giant Repsol carbons), Calgary oil giant Cenovus and in thanks for you, too. K became the first oil major to adopt the UN UK-based mining giant Rio Tinto – which

8 • Corporate Knights • Spring 2020 Illustrations by Sam Island said it will invest US$1 billion over the next took a US$1.6 billion writedown on its investor focus on the need to address the five years to reduce its carbon footprint. 50% interest in a project to carry British climate emergency. The report’s top line: U.S. energy firms such as ExxonMobil Columbia gas to a new gas-liquefaction “Climate change: It’s not just our kids’ and Chevron have specifically declined to plant at the port of Kitimat. problem anymore.” K join Team 2050. At ExxonMobil’s annual And that was before COVID-19 quar- investor summit in early March, CEO antined the global economy. The pandemic Darren Woods dismissed the zero-carbon has seen financial analysts working over- pledge as a “beauty contest” and predicted time to lower their predictions for world significant demand growth. oil demand. On April 1, Norway-based The International Energy Agency is Rystad Energy estimated oil consumption challenging oil companies to dig into their would fall this year by 2.5 billion barrels – “deep pockets” to accelerate the carbon tran- a 6.4% drop from 2019 levels. And that’s sition. It says oil producers have the knowl- despite the Saudi-Russia oil-price war that’s edge and skills to develop new emissions- depressed prices to as low as US$26 a barrel reduction technologies, innovate in carbon – down from US$84 at the end of 2018. capture and storage, and exploit alternative In the four weeks following Exxon’s energy sources such as hydrogen, biofuels Investor Day, as the full impact of and offshore wind. COVID-19 hit home, Chevron and The alternative certainly looks bleak. ExxonMobil stock dropped 28% and BlackRock still all Certainly, business as usual ain’t working. 30%, respectively. BP’s and Shell’s shares Recently, Norwegian oil company Equinor both fell by just 19%. in on climate investing (formerly Statoil) dropped a plan to drill A small sample but perhaps a telling one. for oil in the Australian Bight Marine A recent Bank of America report he ambitious son of a California shoe- Park, 400 kilometres off the coast of South chronicled the energy industry’s decline. T store owner, Larry Fink got an MBA Australia. Oklahoma-based Williams In 2008, energy stocks constituted 16% in real estate management in 1976 and Co. cancelled a US$1 billion gas pipe- of the value of the S&P 500; today they soon disrupted Wall Street with a new type line to carry natural gas from Pennsylvania account for just 5%. The study cited con- of investment: the mortgage-backed secu- to New York City. And Chevron Corp. cerns around oil demand and increasing rity. But after one wrong prediction about

Better Mining. Better World.

At Teck, we are committed to reducing emissions and taking action on climate change. That’s why we have set an objective to be carbon neutral by 2050 as part of our new sustainability strategy.

Learn more at www.teck.com

Spring 2020 • Corporate Knights • 9 News Briefs SPRING 2020 interest rates caused his employer, First In March, BlackRock reiterated its floods and glacier melts, the study esti- Boston, to lose US$100 million, Fink pledge to hold corporate boards account- mates the probabilities of diverse poten- decided to start his own company, to invest able for acting on climate risks, even as tial impacts, to help decision-mak- clients’ money with greater emphasis on risk companies deal with the impacts of the ers better understand and mitigate these management. coronavirus. At a natural gas distributor, for risks. Fast-forward 30 years and BlackRock instance, BlackRock opposed the re-election McKinsey’s experts see five major types Inc. is now the world’s largest asset manager, of one director, the audit-committee chair, of potential disruption creating billions of with US$7.4 trillion in assets under man- because he’d paid insufficient attention to dollars’ worth of risks by 2050: agement. But Fink remains obsessed with reporting climate issues. • livability (for example, a billion reducing risk. Every year he writes a letter to BlackRock also voted against a shipping people will live in areas with a 14% aver- the CEOs of the companies in BlackRock’s company’s executive-pay packages “for not age annual likelihood of experiencing lethal portfolio, explaining how they can become setting sufficiently challenging performance heat waves); closer partners. These letters are now widely conditions” and helped convince a national • food systems (increased drought con- read manifestos on how businesses must poultry producer to adopt more stringent ditions are expected to reduce the global become more purposeful and socially sustainability reporting. annual harvest by at least 15%, at least once responsible in an era of change. “This year,” said BlackRock’s global a decade); BlackRock’s recent letters have focused head of investment stewardship, “we’re • physical assets (for instance, a 38-cen- on long-term thinking (2015), priori- being much more direct.” K timetre rise in sea levels in Florida could tizing value creation (2016), resilience lead to massive property destruction from (2017) and social purpose (2018/19). For a 100-year storm, totalling US$50 to $75 his 2020 letter, released in January, Fink billion); shifted tone from prescriptive to punitive. • infrastructure services (flood damage “The evidence on climate risk is compel- to municipal infrastructure in Ho Chi ling investors to reassess core assumptions Minh City, Vietnam, could hit US$8 bil- about modern finance,” he wrote. lion); and Fink urged every company to rethink • natural capital (45% of land areas are its carbon footprint and warned that projected to experience biome shifts, erod- BlackRock would begin to exit investing local livelihoods, ecosystem services and ments, such as coal producers, that “pres- species habitat). ent a high sustainability-related risk.” Starkly, the report says our insti- Declaring that “climate risk is invest- tutions are “unprepared” for the real ment risk,” Fink predicted there will soon impacts of climate change. That’s be “a significant reallocation of capital” McKinsey climate partly because even the nature of risk based on social and environmental con- will change over the next 30 years. It cerns. Accordingly, he said BlackRock report: “The good reviews nine case studies, the socioeco- would introduce new funds that shun fos- news is that we know nomic impact of which by 2050 varies sil-fuel-related stocks and would press com- between two and 20 times versus today’s panies to disclose plans “for operating under the bad news” levels. The earth is warming now and a scenario where the Paris Agreement’s goal will continue to warm even if we reach of limiting global warming to less than two ou’ve heard the predictions a thousand zero emissions. “Managing that risk will degrees is fully realized.” Y times. The climate crisis will change require not moving to a ‘new normal,’ Given the risks surrounding sustain- all aspects of life. Seas will rise, more forests but preparing for a world of constant ability, he said, “we will be increasingly will burn, crops will fail, and polar bears change.” disposed to vote against management will disappear. In each case the report studied, the when companies have not made sufficient Specifically, though, what will poorest communities were typically the progress.” happen over the next 10 years? Or the most vulnerable. “Emerging economies face Critics say that BlackRock came late to next 30? Consulting giant McKinsey the biggest increase in potential impact on the party and waited too long to demand just released a major report examining workability and livability.” that companies disclose their sustainabil- the increasing impact of climate change. Introducing the report on a panel at ity efforts. Arriving late definitely cost them: Drawing on the firm’s global consulting the World Economic Forum in Davos, in 2018 the Institute for Energy Economics teams, and supplemented by scientists, Switzerland, in January, McKinsey senior and Financial Analysis found that BlackRock engineers and risk experts around the partner Dickon Pinner positioned it as a had lost more than US$90 billion on big-oil world, the study paints a frightening pic- tool for creating hope. The study proves, he investments over the past decade. ture of the future. said, that “we need to put physical climate But the firm is starting to make up But unless you can see the future clearly, risk at the heart of all decision-making and for it now. Which is a good thing, since how can you prepare for it? risk management.” While the report paints BlackRock still has egg on its face from The report,Climate Risk and Response: a bleak picture, he said he hoped it will the 2019 annual meeting season, where it Physical Hazards and Socioeconomic motivate more people to action. opposed 95% of the 81 climate solutions Impacts, explores how physical climate Responding to Pinner’s comments, a it had a chance to vote on, according to change creates increased socioeconomic colleague quipped, “So, the good news is Proxy Insight. risk. From lethal heat waves to riverine that we know the bad news.” K

10 • Corporate Knights • Spring 2020 Illustrations by Sam Island Advertisement

Lululemon. Newcomers this year include Algonquin Power, Aurora Cannabis, toy- maker Spin Master, engineering giant Craving more Stantec and electrical producer TransAlta. Corporate Knights checked on a few of these firms to find out how they’re managing equality at the top. Our conclusion: Corporate awkwardly. • Only one of the 16 companies is headed by a woman: Dawn Farrell, CEO Knights? of TransAlta. The firm’s 12-person board includes only four women. COVID-19 is exacer- • Kathleen Taylor chairs the board of RBC, and six women sit on the 14-seat bating gender inequity board. But just one woman ranks among the bank’s 10 “executive officers.” n a special report on the gender pay • Manulife lists 12 men on its senior Igap, compensation data firm PayScale leadership team and just three women. noted that COVID-19 is exacerbating Marianne Harrison runs Manulife’s gender imbalances in the workplace. sprawling U.S. division, with assets near- Women occupy a high percentage ing US$500 billion. of positions in education, office sup- • Lululemon is the only Canadian port, social services and personal care, company with gender parity on its board: which are more likely to be suspended, five men and five women. Its website lists laid off or forced to work reduced hours a management team of six women and during the pandemic. PayScale noted that four men. K women “are also more likely to have to take time off work, or even resign their positions, in order to care for children who are no longer in school, as well as Pesticide propaganda other family members.” The report was released in advance of playbook Equal Pay Day on March 31. With the stats saying that women earn on average n 2006, American beekeepers in only 75 to 80% as much as men, Equal Pay I Pennsylvania reported they’d lost 30% Day was founded to recognize the day of of their honeybee populations over the the year when women have finally made as previous winter. Beekeepers from Florida much money over the past 15 months as to California soon raised similar alarms. their male colleagues earned in 12. Bees are nature’s prime pollinators; their While that pay gap has been shrink- tireless buzzing fertilizes two-thirds of the ing, it’s not happening fast enough to world’s agricultural crops, from apples to meet the goal of the Ontario-based Equal blueberries to coffee. Pay Coalition: to achieve wage parity by Fifteen years later, we’re no closer to 2025. Still, market forces are kicking in. solving the problem. And according to For weekly As big companies struggle to find talent, an investigative article by U.S. journal- green business they’ve been adopting more formal struc- ist Lee Fang of The Intercept, the cause of tures, such as pay parity, special leader- the bee decline is simple: the increasing analysis, ship programs and rules regarding sexual use of commercial pesticides. That and the harassment, to promote equity for women chemical producers’ determination to con- rankings and and other disadvantaged groups. ceal the truth by manipulating academia, Longer-term, the signs are more media and government. news that goes encouraging. Bloomberg publishes an Fang’s story, “The Playbook for annual Gender-Equality Index, which Poisoning the Earth,” shows how agro- beyond the tracks the progress of public companies chemical companies such as Bayer, headlines, committed to supporting gender equal- Syngenta and Monsanto (itself acquired ity. This year’s list includes 16 Canadian by Bayer in 2018) deflected attention from visit us at companies, up from just 12 in 2019. their pesticide products through misleading Canuck companies on the list include propaganda bolstered by relationships with all six major banks, plus insurance giant prominent academics and scientists. Corporateknights.com Manulife, as well as such outliers as Fang, like many, believes the heart Enbridge, Teck Resources and retailer of the problem lies with neonics (or

Spring 2020 • Corporate Knights • 11 News Briefs SPRING 2020

But there’s hope for the old clunker yet – if we can adopt a hybrid system that runs on not just profit but purpose. That’s the diagnosis of London law firm Bates Wells, which has written a bill for the U.K. Parliament to reform the operating system of capitalism so that it “is responsive to a world of increasingly limited resources and in turn supports the development of a future-fit economy.” According to the Bates Wells coalition, capitalism contains a design flaw: businesses are managed for their own self-interest. In the U.K., the faulty driver is Section 172 of the Companies Act 2006. While it encourages boards to consider the interests of employees, communities and the environment in their decision-making, it permits them to prioritize shareholders’ interests over all others. Bates Wells’s “Operation Upgrade” Pesticide makers went to great lengths to influence public opinion, beekeepers and regulators, proposes tweaking Section 172 to require funding coalitions that promoted non-pesticide reasons for pollinator decline. companies to ensure that their business activities have a positive impact on society and the environment, alongside the neonicotinoids), the world’s most cited numerous research papers – many benefits they offer to shareholders. common class of insecticides (and a $6 of which were funded by the industry or Beyond mandating morality, the pro- billion global industry). Formulated to debunked by objective researchers. posal would require U.K. companies to kill specific pests, neonics are marketed Whatever happens to the honeybee, produce annual impact reports disclosing as being safe for other insects. But stud- this controversy illustrates an increas- their positive and negative impacts on ies have found that even trace amounts ing social problem: how can we make society and the environment. For pub- of neonics make honeybees much more the right policy decisions when power- licly traded firms, the reports would be vulnerable to fungal infections that ful interests are spending invisible mil- subject to annual audits. impair their ability to forage or resist lions to promote their own agendas? If The proposal goes against decades of parasites. you truly wish to understand the world, “Chicago school” rules, promoted by the To save the bees, the European be vigilant about analyzing where your late economist Milton Friedman, who Union has banned the use of many neo- information comes from, and who might famously said that businesses should be nicotinoid-based pesticides on flower- be influencing it. beholden only to shareholders. But the ing plants. But in North America, Fang pressure is growing for a social-purpose writes, the industry defied regulators by reboot. digging in, “seeking not only to discredit Leading the charge for Operation the research but to cast pesticide compa- Upgrade is Dutch executive Paul nies as a solution to the problem.” Polman, the former Unilever CEO who CropLife America, a trade associa- proved that sustainability and ethics can tion that represents the pesticide industry, go hand-in-hand with profit. Now, he led a public-relations effort to reframe the says, “if we want business and society to issues around bee decline by focusing on thrive, we need to set minimum expec- the threat of the Varroa mite, a disease- tations about how business will contrib- carrying parasite that infests beehives. ute to society and ensure it has a posi- Shifting the blame had the happy side tive environmental and social impact. effect of also boosting demand for new Otherwise, why would we give a business pesticides to control Varroa mites. Operation Upgrade: the permission to exist?” “The companies also sought influence While mandating morality sounds with beekeepers and regulators, and went Mandating corporate heavy-handed, Polman believes first to great lengths to shape public opinion,” morality movers will reap huge advantages. Fang writes. “Pesticide firms launched “Climate change, whilst the biggest chal- new coalitions and seeded foundations apitalism needs an upgrade. Its oper- lenge humanity faces, is also its biggest with cash to focus on non-pesticide fac- C ating system has been corrupted, the market opportunity, and worth at least tors in pollinator decline.” inputs and outputs are out of alignment, $12 trillion.” Companies that put pur- To counter government attempts to and the central processing unit needs more pose first, he says, will lead the way in regulate neonics use, pesticide producers air and light. this new world. K

12 • Corporate Knights • Spring 2020 Illustrations by Sam Island Advertisement

Spring 2020 • Corporate Knights • 13 Buildings susa tain ble housing

The case for funding more affordable green housing Sustainably designed affordable housing projects are increasingly critical to meeting climate and housing crises By John Lorinc

Toronto journalist John Lorinc writes about cities, sustainability and business.

n an urban landscape punc- Forking out for sustainable tuated by glass condos and affordable housing gleaming offices, the four city-owned parcels that Like a growing number of cities, have bobbed to the surface Toronto last fall declared a cli- of Toronto’s anxious con- mate emergency and is develop- versation about housing afford- ing an ambitious plan to slash Iability are nothing to look at . . . building-related emissions by for now. They are mainly park- 65% (from 1990 levels) over the ing lots with a few desultory mu- next decade. But given mounting nicipal buildings, located within While city officials are attach- public concern about escalating steps of suburban or downtown ing all sorts of planning conditions real estate, condo and rental costs, transit stops – all choice examples to these deals, one in particular it’s also clear that sustainably de- of “lazy land” in a city struggling stands out: they must satisfy a set signed affordable housing proj- mightily with real estate specu- of demanding environmental per- ects, such as those envisioned for lation and crushingly low apart- formance benchmarks set out in the Housing Now sites, have be- ment vacancy rates. Toronto’s plan has echoes of the 2018 version of the “Toronto come increasingly critical in meet- These sites represent the begin- the Vienna model. The city will Green Standard” (TGS), which ing the city’s climate and social- ning of a concerted drive by the leverage its own real estate to at- lays out the sustainable design re- inclusion goals. City of Toronto to develop thou- tract apartment developers, both quirements for new private and “Climate change and housing sands of units of affordable rental for-profit firms and non-profits. city-owned developments. That affordability are the two most diffi- apartments on publicly owned land But they must be willing to sign should translate into features such cult challenges facing communities – a program known as Housing on to unusual terms: the city will as better-insulated walls, less exte- and the country,” says Jake Stacey, Now that grew from a campaign offer builders prime locations, fi- rior window space, improved heat- vice-president of impact banking pledge by Mayor John Tory to nancial incentives (reduced devel- ing and ventilation systems and at Vancity Community Investment build 10,000 residential units on opment charges, for instance) and other measures meant to reduce a Bank, which is launching a “green 11 swaths of vacant municipal land, 99-year lease agreements instead building’s carbon footprint. commercial mortgage” this spring including 3,700 that will be desig- of outright land sales, as normally “It’s important that if we have to finance projects that combine nated “deeply affordable.” happens when public land is rede- an environmental emergency and both objectives. In many European cities, large veloped. The quid pro quo is that we have a homelessness and hous- Older buildings will also have segments of the population live in property managers must guaran- ing crisis, there’s a way to leverage to pull their weight. Hundreds of rental buildings that sit on public tee affordable rents for a centu- these sites and [address] both,” slab apartment towers construct- land. Indeed, the so-called Vienna ry. The builders that win the right says Mark Richardson, spokesper- ed in the 1960s and ’70s will re- model – a system for building af- to develop these first four sites son for HousingNowTO, an ad- quire deep energy retrofits (new fordable rental apartments on will be made public this spring. vocacy group tracking the roll- windows, insulation, LED lights, public land that goes back to the CreateTO, the city agency re- out of the program. “The upfront airtight building envelopes, high- 1920s and is lauded for its acces- sponsible for these projects, ex- costs may be high for creating efficiency mechanical systems, etc.) sibility – offers compelling proof pects construction to begin by more sustainable buildings, but in to meet council’s carbon reduction that quality urban housing isn’t late 2020 and will soon make oth- the long term, the operating costs targets. But in the past, financing just the product of market forces. er sites available. will be lower.” for such undertakings was elusive.

14 • Corporate Knights • Spring 2020 Illustrations by Benoit Tardif Greening building codes

For many years, sustainable-design activists, especially in North America, complained that building codes were far too lenient and set minimum standards that allowed developers to erect structures that leaked energy in the form of heat. Many of the condo Some of the capital costs can be re- towers that have sprung up in couped by reductions in operating Toronto in recent years fit the cri- costs related to energy efficiency Yet new public dollars will tique. Their perfunctory concrete retrofits, but property owners need likely deliver most of the needed balconies jettison heat, while the other sources of financing if they investment. This spring, Ottawa wall-sized windows are so cheaply hope to make these fixes without will begin flowing about $300 made and shoddily installed that hiking rents. million from a 2019 federal bud- they either radiate cold or trans- At various times, public fund- get commitment for a sustain- form small apartments into con- ing programs have helped make able affordable housing program. vection ovens, depending on the the math work, but mostly on Toronto Community Housing season and time of day. the margins. Case in point: since will receive $1.3 billion from the Voluntary green building cer- 2000, the Federation of Canadian $55 billion National Housing tifications such as the Leadership Municipalities’ Green Municipal Strategy for overdue repairs to its in Energy and Environmental Fund has provided $5.1 million in portfolio, with a portion of those This latest version of the TGS, Design (LEED) system have his- grants and $31.3 million in loans funds earmarked for energy retro- according to one city estimate, torically been taken up by only to a handful of social housing com- fits. A further $300 million from will add about 3.5% to overall a small percentage of builders. plexes looking to cut emissions. the federal government will help construction costs. Yet advocates (Since 2004, only 4,350 build- The Atmospheric Fund (TAF) municipalities offer retrofit fi- say that such buildings in the ings have been LEED certified in has provided $10 million in financing for low-rise homes, and long run are financially attractive Canada, according to the Canada nancing for 22 energy-efficiency it seems likely that governments because they slash energy expen- Green Building Council, which retrofit projects around the will add even more to these pots ses over decades. They also tend oversees the certification process. Greater Toronto Area, mostly old- of funding to counter the reces- to be better constructed, mean- To put that figure in context, the er apartments, using a profit-shar- sionary impact of the coronavirus ing they require less age-related country erected nearly 20,000 ing formula that sees TAF finance pandemic. maintenance. new buildings in December 2019 the capital expenditures and keep As it turns out, the implic- alone.) In the meantime, other, about 90% of the energy savings. it formula – additional upfront less demanding, voluntary stan- The organization invests from an “Climate change investment in sustainable de- dards have come on the market, endowment established by the sign in anticipation of lower such as Energy Star, which rates City of Toronto in the 1990s. and housing long-term operating and main- residential dwellings for energy There are also a few sourc- affordability tenance costs – is exceptional- efficiency. es of private sector financing. are the two ly well suited to companies and Vancity’s lending program has non-profits that own multi-unit underwritten more than 1,200 most difficult residential buildings and don’t in- rooftop solar and geothermal en- challenges facing tend to sell them any time soon. ergy projects for residential build- communities.” Yet it remains to be seen how ings. The bank also recently ac- —Jake Stacey, hard Toronto officials will push quired CoPower, which sells green Vancity the Housing Now developers to But in the past decade or so, bonds that have financed about maximize the sustainability fea- provincial governments in Ontario 400 energy-efficiency retrofits. tures of their plans. Richardson and BC have revised their build- Vancity’s community green mort- says CreateTO’s evaluation rubric ing codes to make them more gages, says Stacey, will allow prop- The Housing Now philosophy doesn’t assign enough weight to demanding in terms of ener- erty owners to borrow against offers a variation on the theme. the green design aspects of the gy efficiency and performance. long-term value growth created The city is aiming to entice devel- proposals submitted by the devel- Vancouver and Toronto have gone in their buildings by energy-effi- opers by leasing prime land and opment groups vying to build on even further with their own mu- ciency capital upgrades, such as providing breaks on development these four pieces of land. In late nicipal codes, joining a growing tighter building envelopes, new charges and property taxes in ex- February, CreateTO spokesperson cohort of cities pushing to achieve mechanical systems and LED change for more sustainably de- Susan O’Neill said it was too soon or surpass 80% reductions in car- lighting conversion projects. signed projects. to comment. bon emissions by 2050.

Spring 2020 • Corporate Knights • 15 Buildings susa tain ble housing

Because certified passive- house projects feature extremely airtight designs, smart heat- he TGS aspires to en- ing/cooling and humidity-control sure that all new build- systems, natural interior mate- ings will attain “near rials that don’t cast off chemi- zero” emissions by cal smells, and all sorts of de- T2030. The code offers build- vices tasked with capturing and ers more stringent voluntary fea- recycling waste energy (from hot tures and then sets out an aggres- water going down drains or from sive timetable for making those bathroom ventilation fans, for in- optional elements mandatory – stance), the design process is far a system known as a “step code.” from conventional, Lam explains. One such change in Toronto’s The team’s architects, engineers, green building standard: much energy consultants and construc- tougher rules for the so-called tors must all work together to fig- wall-to-window ratio, a shift that ure out how they’ll create struc- will effectively end the practice of tures that satisfy a demanding set building towers clad almost en- of performance standards. “The tirely in glass. objective of the building is so dif- According to Lisa King, the After an unusual competi- ferent that it requires a different senior policy planner who over- tive bidding process was com- design process and a different way sees the TGS, the 2018 rules have pleted last year, a consortium led of thinking about how architect, attracted all sorts of builders in- by Tridel and Diamond Schmitt engineering and energy model- terested in developing projects Architects won the contract, esti- ling work together,” says Lam. that satisfy the code’s tougher vol- mated to be worth about $10 mil- Detailed designs will be unveiled In 2013, Salus was trying to untary requirements. “What’s ex- lion. The tender process was out later this spring, and construc- figure out what to do with a piece citing, under [the newest version], of the ordinary because the two tion is expected to begin in about of donated land when a man- which is difficult [to satisfy] be- finalists had to present their plans a year. ager with a national affordable- cause it has absolute targets, is to community members, who housing umbrella group suggest- that we’re seeing a quick adjust- voted on the one they wanted. ed they try developing a passive ment in the market.” She says nu- TCHC architect Michael Municipal house project. Ker’s advisors pre- merous proposals have come in Lam, who will be the senior con- dicted that the costs would be 6 from firms developing smaller struction manager, says the proj- governments to 9% above a more typical build- commercial or office buildings as ect will be the first of its kind in should be ing. But, as she points out, Salus well as rental buildings. Greater Toronto. While residen- promoting was the first in the market, so tial passive-house developments, green affordable they had no real basis to evalu- Passive houses both for-profit and non-profit, ate. “We were very much an ex- pass on cost savings have gone up in Vancouver, housing by fast- periment.” However, Salus’s do- Ottawa and Hamilton, none have tracking approvals nors were very interested, and not One public agency has de- been completed in Toronto. “We and waiving just because of the environmen- cided to aim even higher. don’t have a lot of experience with development fees. tal features. As Ker points out, Toronto Community Housing this,” Lam says. Salus’s clients live on the fringes Corporation (TCHC) has em- Officials with TCHC, which of society and are generally seen barked on an ambitious plan to is in the process of redevelop- to be contributing little. Living in build 21 townhouses in Alexandra ing and intensifying a number An Ottawa non-profit sup- a cutting-edge project, she says, Park, a downtown affordable- of its housing complexes, looked portive-housing provider, Salus, “was a great opportunity to show housing complex, that meet the ahead five or six years and real- went down this road a few years they could bring something to the most demanding voluntary tar- ized that more demanding green ago, with a 40-unit apartment equation.” gets in the TGS – a set of bench- building codes, especially for city- complex for people with mental Salus’s architect, CSV princi- marks that are virtually the same owned projects, were inevitable as health issues. The project consists pal Anthony Leaning, adds that as “passive house,” a German cer- the TGS evolves. So Lam and his of 300-square-foot apartments passive house projects are nota- tification method associated with team decided to get ahead of the with small kitchenettes, about a bly comfortable to be in, and so draft-free structures that have, curve. “We thought, ‘We’ve got fifth of which are barrier-free. “At the design could improve clients’ among other things, thickly insu- an incredible opportunity in our the time, [passive house] was not health and well-being. And, he lated walls, state-of-the-art win- own revitalization projects,’ and something that was on the land- says, the durability of the build- dows and extremely low ener- this [the townhouses] was a fairly scape,” says Salus executive direc- ing materials means such projects gy bills. well-delineated project.” tor Lisa Ker. “will last a long time.”

16 • Corporate Knights • Spring 2020 Illustrations by Benoit Tardif

Building on lessons learned demanding minimum-energy and This story, of course, isn’t just about ecological-performance standards, the performance of individual but also breaks on a range of buildings. HousingNowTO’s Mark charges, including property taxes. Richardson points out that the And as with TCHC’s Alexandra best strategy for reducing the emis- Park venture, the eventual win- sions associated with any apartment ning Housing Now bidders will CSV is now working on nu- building is to situate it close to a include both for-profit and non- merous other passive house af- transit stop. Such locational deci- profit developers, meaning there’s fordable-housing projects, and sions also bring financial dividends an opportunity for the design les- Leaning points out that Ottawa’s because the developer may not need sons to find their way into the public housing agency has also to build a giant, expensive under- private development sector. begun to promote aggressive en- ground parking lot in such projects, Vancity’s Jake Stacey adds that vironmental standards in its new- provided municipal planning offi- as recently as two years ago, few est projects. Some of the federal cials waive those requirements. builders or agencies would have government’s $55 billion 10-year TCHC’s Michael Lam hopes had the chops or the courage to National Housing Strategy fund- that as for-profit builders like Anthony Leaning says mu- attempt a net-zero or near-zero ing will pay for large-scale energy- Tridel gain experience with more nicipal governments should be building, of any sort. But as more efficiency retrofits of older afford- environmentally ambitious proj- promoting the case for green af- organizations gain experience in able-housing projects that need ects, such as the townhouses in fordable housing by offering to building or rebuilding afford- everything from new boilers to Alexandra Park, they’ll begin to fast-track the approvals of such able housing that meets the ambi- proper windows (in addition to incorporate those energy- and projects and waiving develop- tious emission-reduction standards funding 125,000 new housing cost-saving features in more mar- ment fees. we’ll need in the near future, other units). “There’s a shift happen- ket-oriented apartment building The Housing Now program agencies, developers and financing ing,” Leaning says of the afford- projects. “They’re seeing the writ- that is attracting so much atten- sources will fall into line. able-housing sector’s growing em- ing on the wall: ‘Sooner or later, tion certainly has deployed all “There’s a way to do it,” she says. brace of energy-efficiency design. we’ll be asked to do this.’” available carrots and sticks – more “I want to be out in front of this.” K

nuclear energy helps MITIGATE CLIMATE CHANGE It is helping Canada meet its climate targets and reducing the effects of climate change.

Spring 2020 • Corporate Knights • 17 Climate crisis C LEan ECONOMY

8 net-zero lessons for Canada from Europe’s Green Deal If Canada is serious about going net zero by 2050 it needs to learn all it can from the EU By Adrian Hiel

Adrian Hiel is a Canadian dad, husband a glass wall of interpreter booths and another of painstaking planning. The European Green and writer who has spent the last 16 years wall with rows of now-empty stadium seating. Deal, in the space of less than 24 months, has in Brussels imbibing more Tintin, Gueuze and As EU policy and communications man- gone from NGO wish list to “the new defin- political dysfunction than he ever thought ager for Europe’s association of cities in energy ing mission” of the EU. Faster still has been the possible. transition, I am here to meet Europe’s energy EU’s response to the coronavirus. EU leaders commissioner, Kadri Simson, along with rep- have been clear that pandemic response must resentatives from businesses, cooperatives, integrate a “green transition.” And while the he view from the floor-to-ceiling windows NGOs, industry and think tanks who make urgency of the pandemic will delay some as- T of the 11th-floor meeting room in the Ber- up the Coalition for Energy Savings. Simson pects of the Green Deal by weeks or months, laymont, home of the European Commission, is responsible for the “renovation wave” com- the overall package could receive a boost from is all orange tiled roofs and sad-looking chim- ponent of Europe’s Green Deal, as well as the increased lending and spending as the bloc lays neys in the January gloom. You’d think Brussels offshore wind strategy, energy efficiency and out its plans for economic recovery once the hadn’t changed in 50 years. Inside, however, is other initiatives. crisis has passed. a sleek, modern meeting room where 30 of us Big changes at an EU level, like the euro, Last fall, Canada set the same goal as the are gathered around an enormous table, next to come about as the result of years or decades EU of reaching net-zero emissions by 2050.

18 • Corporate Knights • Spring 2020 Illustrations by Dalbert V But they’re not at the same start line. Between data-driven jobs. The Canada Green Build- Green jobs won’t be just at the manufactur- 1990 and 2018 the EU reduced greenhouse ing Council, in its Roadmap for Retrofits in ing and construction level. Digitalization is a gas emissions by 23%. Canada’s GHG emis- Canada, recommends targeting large buildings, key part of Europe’s decarbonization strategy. sions rose by 18.9% between 1990 and 2017. especially in Ontario and Alberta, for retrofits Think smart grids that track when and where If Canada is serious about reaching net zero by to slash GHG emissions by 30% by 2030 and electricity is needed and drive down genera- 2050 it needs to learn everything it can from potentially as much as 51% by 2050. tion, or “5G corridors” for connected and au- the Green Deal. Here are eight lessons for tomated mobility. Most excitingly, the EU Ottawa on how to design its own Green Deal. Commission wants to create a “digital twin” of Earth that would “radically improve Europe’s environmental prediction and crisis manage- 1. Ride the “renovation wave” ment capabilities.” Above all, the goal is to form European digital champions that special- enovating Europe’s notoriously drafty old ize in monetizing industrial data and ensure Rbuildings is set to be the flagship program those companies are well placed to dominate of the Green Deal. Buildings account for 40% The pandemic the field globally. of energy use, and the goal is to renovate 3% may delay aspects Lesson for Canada: There’s no decarbonization of buildings annually in the EU over the next without digitalization, and this is one area in decade. It’s an easy idea to sell but harder to of the Green Deal, which Canada could be well placed, with its do, as current renovation rates languish be- but the overall internationally recognized strength in artifi- tween 0.4% and 1.2% in EU countries. Expect package could cial intelligence. That expertise, however, can a focus on public buildings (schools, hospitals) receive a boost in be commercialized only if government policy and social housing. Public ownership makes ensures that a market forms quickly enough to renovation much easier (for more on greening spending as the maintain a global edge. Canada’s world-class public housing, see p. 14) and the benefits are EU lays out plans network speeds are also a strong asset in maxi- much greater. Lower energy costs means more for economic mizing the technological opportunities of the money for schools and health, and tackling en- recovery once the energy transition, but creaking rural connectiv- ergy poverty in social housing can bring huge ity could leave part of the country behind. The social benefits. crisis has passed. EU is in a similar boat and unlikely to meet its Renovating private homes and apartment 2013 goal of 100% broadband coverage by the buildings with a mix of owners and renters is end of this year. more complicated and will require carrots and sticks. The carrots will likely come in the form 3. Make it right of low-cost financing, energy-efficiency mort- gages and schemes to bundle lots of individual hat and how things get made in the EU renovations into big projects to lower costs. Wis set for a complete overhaul. Some en- Sticks might include a checklist of things that ergy-intensive sectors, like steel, chemicals and need to be done in five-year intervals for home- cement, will get investment to develop new, owners: improved insulation, new windows, lower-carbon manufacturing techniques. Using new heating systems, for instance, that force hydrogen to make steel is a good example. As- people to upgrade their property over time. suming that zero-carbon steel is more expensive Or, it might be regulations mandating a deep than traditionally made steel, a carbon border energy retrofit when a building is sold or ten- tax will likely be implemented on imports to ants change. As with the rest of the Green Deal, make sure they don’t undercut European com- the details are still being worked out in Brus- panies. A “sustainable products” policy will sels. Either way, there could be pushback from ensure that all products are designed with com- property owners when the final proposal comes mon principles that prioritize reducing and re- out in September. New buildings in the EU using materials before recycling them (such as will be “nearly zero energy buildings” (NZEB) the Netherlands’ Fairphone) and prevent envi- from the end of this year, and the target for net- ronmentally harmful products from being sold. zero buildings will be 2025 or earlier. 2. Fuel clean tech growth As well, all packaging will have to be reusable Lesson for Canada: Setting aggressive energy- or recyclable in an economically viable manner retrofit targets for buildings will be key to Cana- uropean Commission President Ursula by 2030, with new rules for biodegradable and da reaching net zero, too. This is one area where Evon der Leyen called the climate crisis a bio-based plastics. Canada can learn by watching what works and challenge that “we can turn into an economic Lesson for Canada: Canada needs to decide if it what doesn’t in the EU and rapidly rolling out opportunity . . . Europe has the first-mover ad- wants to sell goods to the world’s largest econ- version 2.0 of the renovation wave. Aside from vantage. The whole world increasingly needs omy or not. If it does, then it is going to have drastically cutting energy consumption, there clean technologies and solutions.” She cited to read the fine print on the Green Deal closely should be a big boost for the construction in- batteries, smart grids, green hydrogen power, and change the way it manufactures products. dustry (already worth $141.6 billion in Canada offshore wind-power, clean steel and decarbon- Biofuels, made using Canada’s low-carbon in 2018) in urban and rural areas – especially ized gas as industries that “will create innova- grid, could lead to the production of sustain- amongst people who wouldn’t benefit from tion, value and jobs.” ably sourced aviation biofuels that European

Spring 2020 • Corporate Knights • 19 Climate crisis c lean economy airlines will be increasingly anxious to use. Ca- Lesson for Canada: Canada may not think it has cash rebates for EV purchasers. Canadian auto nadian products that don’t meet these emerging the market size to push car manufacturers, but sales to Europe rose 83% in 2018 thanks to standards either won’t be allowed on the mar- with more than two million new cars purchased CETA; if Canada wants to maintain that ket or will be hit with a carbon border tax or each year, it is a larger market than California, growth in the coming years, it will need to en- something similar. If Canadian manufacturers which is setting its own fuel economy standards. courage more EV production, which is almost embrace this change, they will have privileged Canada can put some teeth in its pledge to ban non-existent in the passenger market at the access to 500 million consumers. internal-combustion vehicle sales by 2040 and moment. ensure that its ambitious clean-fuel standard is 4. Bet the farm on greener food systems implemented with a sense of urgency. 6. Go local to get community support

U food makers are going to be biting off uropeans might have a reputation for being Esome big changes under the Green Deal. Etree-hugging, planet-loving people, but the Foods will be grown with drastically fewer scope of these changes promises to challenge even pesticides, antibiotics and fertilizers, and sales their willingness to embrace sustainability. Senior tax could be lower on things like organic fruit officials have warned of a “tectonic” shift and and vegetables. Eating locally produced food is compared the Green Deal to changes brought also expected to be strongly encouraged. As the about by the industrial revolution. To cope with world’s largest importer and exporter of food, this, the Green Deal envisages a big effort to en- the EU is also looking at raising international Canadian gage with citizens to ensure they “remain a driv- food standards; in particular, there will be pres- products that ing force.” This is known as the Climate Pact, and sure to curtail soybean and beef imports from don’t meet the the Covenant of Mayors Europe will play a cen- regions that don’t promote biodiversity or re- EU’s emerging tral role in rooting the Commission’s high-level duce pesticide use. objectives in the local community. Lesson for Canada: Canadian farmers are already standards either Lesson for Canada: It’s no secret that parts of torn between their biggest market, the U.S., and won’t be allowed Canada are less keen on an energy transition the higher standards in the EU. Canadian ag- in or could be than others. Emulating something similar to ricultural exports to the EU fell 15% after the the Climate Pact to transform headline ambi- Canada-EU Comprehensive Economic and hit by a carbon tions into local improvements in infrastruc- Trade Agreement (CETA) was signed, thanks border tax. ture, air and water quality and other tangible to Europe’s ban on antibiotics and growth hor- benefits, particularly in rural farming commu- mones. If Canada wants to improve its trade nities, will go a long way to making a Canadian deficit at all in the coming decades, it will have Green Deal more politically palatable. to raise the bar on greening its farms (see “Seed- ing Climate Action on Canada’s Farms,” p. 50). 7. Bank on financially savvy climate spending 5. Rev into emissions reductions he European Commission is more he Green Deal aims to move substantial T of a regulator than a government. Its Tamounts of freight off roads and onto rail strength is setting the rules for the game and rivers. Aviation and maritime fuels face the rather than spending money the way a na- prospect of new taxes, while emissions from tional government does. Its budget is about those sectors may soon become subject to pay- 1% of Europe’s gross national income. So ments under the Emissions Trading System. the headline of €1 trillion in green financ- The delicate matter of road-pricing is on the ing between 2020 and 2030 is substantial. table, and rural EV-charging infrastructure About half the money comes from the reg- and alternative fuels can look forward to di- ular EU budget – 25% of the EU budget rect financial support. Car emission standards is expected to be spent on climate action. will be reviewed in 2021. Already, tough new Then there is an existing fund, which will standards (set in 2009) that level hefty fines be rebranded and used to leverage €280 on automakers are being phased in for 2020. billion and another €143 billion of public The result has been a massive increase in the and private investment, specifically to help number of battery-electric and plug-in hybrid regions most reliant on carbon intensive cars available in Europe. Groupe PSA (Peu- activities. It’s an impressive amount of fi- geot, Citroën, Opel, Vauxhall and others) sold nancial heft when the total amount of new more electric cars in January 2020 than in all of money is a mere €7.5 billion over the next 2019. Of course, the pandemic has since stalled seven-year budget. that growth. The main European auto industry Canada could also follow the EU’s lead on A major player in the leveraging and in- association has been lobbying to have stricter setting ambitious standards and levying steep vestment is the European Investment Bank emissions standards delayed, but VW, Daimler penalties on automakers that fail to keep up (EIB), which announced in November a and BMW have said they plan to hit the ambi- with the program. This would result in a mas- phase-out of all fossil fuel funding and a tious targets. sive uptake in electric vehicles without costly ramp-up to 2025, when 50% of its lending

20 • Corporate Knights • Spring 2020 will be spent on climate change projects. It is the EU’s “climate bank.” A “green taxon- omy” was agreed upon last year that clearly defined what constitutes a green investment Green Deal plans to help funnel interested investors. Non- financial risk disclosure rules will be updated to force companies to come clean on the There are 47 initiatives listed in the Green risks they face and actions they are taking to Deal communication, with the aim of slashing mitigate climate risk. They propose raising additional money with a new tax on non- emissions and creating a climate-neutral recyclable packaging waste and rolling out a continent by 2050. Here are the top market for green bonds. 10 that haven’t already been mentioned. Lesson for Canada: The figures involved in the energy transition can seem large, but making systemic changes to the financial system can bridge the gap between purse strings and ambition. The Canada Infrastructure Bank already Carbon border tax has a similar mandate to the EIB, but reimag- A carbon tax, likely on just a few sectors to start, to ensure carbon-intensive ining the much larger Business Development industry doesn’t move abroad. Bank of Canada as Canada’s climate bank would be a boon to green businesses. Strategy for smart sector integration Matching industries with complementary energy profiles – think data centres and 8. Act soon – it’s cheaper than stalling district heating.

conomic opportunities aside, climate EU industrial strategy Echange is still a bad thing. The EU Com- Creating European champions and funnelling subsidies into priorities like mission estimates that a high warming sce- e-mobility, hydrogen, health, the Internet of Things and microelectronics. nario of more than 3 degrees C will result in Decarbonization of energy-intensive sectors such as cement, steel and chemicals. GDP losses in EU countries ranging from 2% in northern Europe to more than 8% around Circular economy action plan the Mediterranean as productivity dives and Designed to decouple resource use from growth. Will halve waste, reduce mortality climbs from heat, forest fires, floods embodied carbon in construction and put in place sector-specific plans for and other natural disasters. Climate neutrality, textiles, food and transport. however, is expected to boost GDP by 2% and create millions of jobs. Waste reforms Lesson for Canada: Canada is already warming Tackle over-packaging, mandatory recycled content. New EU-wide model for twice as fast as the rest of the world, and aver- separate waste collection and new rules on waste shipments and illegal exports. age temperatures have increased 3.06 degrees since 1948. The cost of coping with the fallout EU biodiversity strategy for 2030 of a warming world will be far more than the Increase biodiversity-rich land under protection, restore damaged ecosystems, cost of climate neutrality. “green” cities and increase urban biodiversity.

he three-hour meeting in the Berlaymont EU forest strategy Tis up, and we’ve barely had enough time Increase absorption of CO2, reduce forest fires; focus on afforestation, forest to have a shallow discussion of the issues in- preservation and restoration. volved in energy efficiency. Much like this -ar ticle, there just isn’t time and space to go into Trans-European Network – energy regulation review all the details and all the different initiatives Ensure pan-European energy infrastructure is prioritized: smart grids, hydrogen because of the Green Deal’s enormous scope, networks, energy storage and carbon capture, storage and utilization. size and ambition. Two things are clear though. One, Canada Zero-pollution action plan has a lot of catching up to do if it is going to hit Tackle urban runoff of microplastics, chemicals and pharmaceuticals; revise air net zero by 2050. The head of the Business Coun- quality standards; create specific measures to help cities improve air quality. cil of Canada, Goldy Hyder, agrees, recently telling the government “Let’s get on with it,” with Research and innovation respect to the net-zero target and calling on busi- “Green Deal Missions” will help deliver large-scale changes in areas such as ness, government and labour to “lay down the adaptation to climate change, oceans, cities and soil. This will entail funding arms on this issue and find a way forward.” research and start-ups and forming industry-government partnerships in batteries, And two, in the EU’s Green Deal, Cana- clean hydrogen, circular bio-based sectors, food, urban transport and more. dians have a template that can drastically improve their prospects of getting there. K

Spring 2020 • Corporate Knights • 21 Finance responsible investing

HOW CLEAN ARE THE BANKS’ INVESTMENTS?

Sustainability Renewable Oil & Gas Sustainable Harmful Score* Loans ($M) Loans and Solutions Investments Acceptances Investments ($M)** ($M) ($M)

BMO $3,900 $9,168 $17,812 $17,812 RBC $2,200 $16,406 $14,690 $14,690 CIBC $1,500 $7,439 $3,986 $3,986 TD $2,563 $6,579 $9,833 $9,833 Banking on a Scotiabank $0 $14,800 $6,430 $6,430 greener future?

Sustainable funds are Once relegated to the fringes of crunchy gra- Of course, that was before the coronavirus proving more resilient nola credit unions, ethical investing is now began pummelling the economy. COVID-19 stepping into its power. From millennials is only deepening our desire to support com- to crisis – but not wanting to purchase with purpose all the way panies that behave nobly and put people and every bank carries up the corporate ladder to the world’s larg- planet ahead of profits. est investment houses vowing to put climate It just so happens that corporations with them action at the heart of investment decisions, better environmental, social and governance responsible investing is quickly rising to be- (ESG) scores are proving themselves to be By Adria Vasil come the defining investment issue of the more financially resilient during the pandem- new decade. ic. Yes, sustainably minded funds have taken

A SHORT HISTORY OF RESPONSIBLE INVESTING By Toby Heaps

1758 1928 1960 1966 1968 1970

Religious Society Philip Carret Martin Luther Rules for Radicals The Medical Consumer of Friends launches the King Jr. proposes author Saul Committee for protection (Quakers) Fidelity Mutual that the AFL-CIO Alinsky convinces Human Rights advocate Ralph Philadelphia Yearly Trust (which labour union invest the owners of acquires shares Nader helps Meeting prohibits became the pension assets 39,000 Eastman in Dow Chemical launch the members from Pioneer Fund), in housing, to Kodak shares to and submits a Campaign to Make participating in the first publicly lessen economic sign over their proxy statement General Motors the slave trade – offered socially inequality. proxy votes to be proposal to amend Responsible buying or selling responsible The Office of used as leverage Dow’s corporate (Campaign GM). humans. investment fund. Investment was to advocate charter to prohibit Wielding just 12 of With a 91-year then established to for greater sales of napalm to GM’s 285 million track record, it has ensure that union opportunities any buyer unwilling shares, Campaign GM submits three 1760 earned average pension funds for minority to give reasonable annual returns of were invested communities, assurance that shareholder proposals: amend John Wesley, 11.7%, besting the responsibly, leading the the substance GM’s charter to the founder of S&P 500 Index’s leading to the company to adopt would not be limit operations to the Methodist 9.84% tally to the AFL-CIO Housing a minority hiring used against those consistent movement, end of September Investment Trust. program. human beings. with “public delivers his 2019. With more than Dow sought health, safety, and sermon “The $4.5 billion in net unsuccessfully to welfare”; establish Use of Money,” assets, the trust omit the proposal a shareholder outlining the basic has helped finance and quietly ceased committee tenets of social more than 100,000 production of on corporate investing, including affordable housing napalm in 1969. responsibility; we “ought not to units. and include gain money at the public-interest expense of life representatives or by losing our on GM’s board of souls.” directors.

22 • Corporate Knights • Spring 2020 Illustration by Sam Island a big hit because of COVID-19, but Bloom- berg found that they have been outperforming their conventional peers. Bloomberg’s analy- Big Five ethical sis of 2,800 responsible investing (or RI, also known as sustainable, socially responsible or investing report card ethical investing) funds globally found that the average RI fund has fallen by about 12% We visited Toronto-area branches of the this year as of March 12. That stings, but it’s Big Five banks and asked advisors what ethical just half the decrease seen by the S&P 500 Index over the same period. or sustainable investment options they offered. According to Ipsos polling released by Here’s what we found: RBC Global Asset Management in January, two thirds of Canadians surveyed say they’re interested in RI. Nearly three out of four believe RI is “the way of the future.” So why do so few Canadian banks offer BMO any sustainably focused investing options? Ethical options: Branches offer BMO’s Sustainable Opportunities Global Equities mutual fund, as well as a Women in Leadership fund. There are eight new ESG Most bank advisors are poorly ETFs for self-directed online accounts. informed about ethical options Fossil-fuel-free or climate-conscious funds: Yes, the BMO Sustainable Opportunities fund. The new ETFs are not fossil fuel–free. Sustainability Corporate Knights anonymously visited Toronto knowledge of advisor: The personal bank associate was enthusiastic about BMO’s branches of the Big Five banks in January and sustainable opportunities fund, explaining that she invests in it herself, but she inquired about ethical investing. While some cautioned that it is mid-to-high risk and is best for longer-term investments. A bank advisors were enthusiastic and fairly well financial planner followed up via email to discuss ESG options further. informed, many advisors didn’t know whether their banks offered ethical investments or what Cost of values-aligned portfolio: Fees vary, but the Sustainable Opportunities fund has a somewhat lower fee than comparable BMO funds. The ESG ETF fees are also priced lower than many non-RI equivalents.

Bank loans and investments in dirty vs. clean companies: BMO has both the biggest renewable-energy loan book and sustainable-solutions investment book among the Big Five, but it has the largest amount invested in companies classified as “harmful.” 1971 1978 B Paul Neuhauser, Jeremy Rifkin and founding Randy Barber RBC member of the publish The North Ethical options: RBC’s Vision line uses ESG filters to determine holdings while Interfaith Center Will Rise Again: screening out weapons makers, as well as traditional sin stocks like tobacco on Corporate Pensions, Politics Responsibility, and Power in and alcohol. RBC Vision also has a Women’s Leadership fund. Fossil-fuel-free or files the first the 1980’s as a climate-conscious funds: Yes, the RBC Vision Fossil Fuel Free Global Equity Fund. shareholder movement builds Though a financial planner at one branch said the bank doesn’t offer entirely resolution to democratize fossil-free options, suggesting that omitting a whole sector could limit the on behalf of pension funds opportunity to grow. RBC’s Vision Fossil Fuel Free fund actually outperformed a religious to serve a more organization, holistic economic RBC’s Global Equity Fund in both 2018 and 2019. requesting that function. General Motors Sustainability knowledge of advisor: The financial planner was well versed in withdraw its the Vision line (besides being unaware of RBC’s fossil-free fund) and enthusiastic business from South Africa about the Vision balanced fund, saying it has outperformed RBC’s regular until apartheid is balanced fund (“being green is saving companies a lot of money down the road”). abolished. In 1986, with pressure Cost of values-aligned portfolio: Varies, but many are slightly lower than building, GM conventional funds. divested its South African assets. Bank loans and investments in dirty vs. clean companies: Canada’s largest bank has the highest total amount of oil-and-gas loan exposure on its books ($16.4 billion). That’s more than seven times more than its renewable loans, which gets C+ it into trouble with environmental activists, though it also has the biggest ratio of investments in sustainable solutions to harmful companies among the Big Five.

Spring 2020 • Corporate Knights • 23 Finance responsible investing those offerings entailed. Some advisors down- told Corporate Knights that “all the mutual robo-advisors (digital platforms such as apps right discouraged us from putting our savings funds we offer have gone through these ESG that rely on software to offer financial advice), into RIs. Notably, BMO and RBC were the checks.” Ditto for all of RBC’s funds around which often offer access to a number of Ameri- only two banks that had dedicated RI funds. the globe. That doesn’t mean they screen can and international ETFs, or exchange-traded The Toronto-based Responsible Investment out any dubious companies or sectors. funds. (Branch-level bank advisors are gener- Association (RIA) did its own polling with Ip- Only exclusionary funds with negative ally not able to sell ETFs despite their booming sos in 2019 and found that while 79% of Ca- screens do that – and they may just screen popularity.) One ETF known as iShares MSCI nadian respondents would like their financial out, say, tobacco and gambling but not ACWI Low Carbon Target ETF was called out services provider to inform them about RI op- thermal coal and oil. Part of the problem is for having holdings in Shell, Chevron and a tions, only 23% have been asked by their banks there’s no universal standard for how terms number of other high-carbon companies. if they’re interested in RI. That helps explain like “ESG,” “low carbon” and “fossil-fuel To counter potential “impact washing” in why only a quarter of Canadians say they al- free” are defined or applied, leaving funds Europe, the EU sets standards for the labelling ready have responsible investments, according vulnerable to “impact washing.” of financial products, mandating that finan- to stats from Wealthsimple, BMO and the RIA. Many Canadian ethical fund managers cial advisors disclose the sustainability risks In the U.S., meanwhile, new investments choose not to screen out fossil-fuel compa- of a finance product to investors, “regardless into sustainable funds quadrupled in 2019 nies, instead investing in those they consider of the sustainability preferences of the end compared to 2018 (pulling in a record US$20.6 sector leaders. Which is fine for some re- investors.” billion in new money last year), and European sponsible investors – if funds are transparent Canada’s federally convened Expert Panel investments doubled to a record-busting €120 about it. But after the RIA received flak for on Sustainable Finance recommended we do billion, according to Morningstar. listing fossil-fuel-free funds in its directory something similar here. The panel (which in- that were later exposed to contain oil and gas cluded Tiff Macklem, a Scotiabank director Push to regulate the wild companies, the association is now consid- and Rotman School of Management dean, as west of green investing ering creating a certification process for RI well as RBC director Andy Chisholm) recom- funds in Canada. mended that Finance Canada create “financial The tricky part for would-be purchasers is It gets even more muddled when retail incentive for Canadians to invest in accredited figuring out what investments genuinely align investors start exploring the wider world of climate-conscious products through their regis- with their values. One CIBC branch advisor self-directed online trading accounts and tered savings plans.”

A SHORT HISTORY OF RESPONSIBLE INVESTING

1980s 1989 2006 2012 2015 2018

Widespread In the wake United Nations Bill McKibben’s Bank of England Larry Fink, CEO divestiture of the Exxon Secretary-General article in Rolling Governor Mark of BlackRock, the of economic Valdez oil spill, Kofi Annan Stone magazine, Carney delivers world’s largest holdings in South social investment rings the bell at “Global Warming’s his “tragedy asset manager, Africa is directly executive Joan the New York Terrifying New of horizons” writes in his credited with Bavaria mobilizes Stock Exchange Math,” based speech, defining annual letter that the collapse of a coalition of to launch the on work by the climate change companies had apartheid and the investors and UN-supported non-profit Carbon as a financial better contribute Afrikaner minority environmentalists Principles for Tracker Initiative, stability issue. By to society or risk government. to launch the Responsible launches the fossil 2020, investors losing BlackRock’s By 1993, when Valdez Principles, Investment, which fuel divestment representing support. the De Klerk a green code now counts movement. By more than US$120 administration of conduct for investors with 2020, investors trillion in assets took steps to business. More US$86 trillion with assets of had signed on in end apartheid, than 50 companies in assets under US$12 trillion had support of the Task $625 billion was endorsed the management. pledged to divest Force on Climate- being screened to principles, some or all of their related Financial exclude investment including 13 fossil fuel holdings. Disclosure, an in South Africa. Fortune 500 2008 initiative led by companies that Carney and Mike adopted their The World Bank Bloomberg. own equivalent launches the first environmental green bond. In principles. 2019, green bond issuance topped out over US$200 billion.

24 • Corporate Knights • Spring 2020 D How green are the banks’ own investments and loan books? CIBC Ethical options: No specific RI funds. CIBC’s VP of public affairs says that “ESG Many climate-conscious investors will also factors are included in our investment process across all funds.” Fossil-fuel-free want to know just how their banks are dishing or climate-conscious funds: No. out their own money. All five banks have signed on to the UN-supported Principles for Respon- Sustainability knowledge of advisor: Initially, the branch manager said that CIBC sible Investment, promising to fold ESG fac- has some ethical funds that “don’t invest in tobacco companies or oil companies,” tors into investment decisions, though research but the manager and a financial advisor weren’t aware of specifics, so they by Corporate Knights has found that while the placed a phone call. “We don’t get asked this question frequently,” the manager Big Five invest billions in sustainable-solution said. After their call, the manager updated earlier comments: “The good news is companies, they also invest billions in contro- there’s no specific mutual funds that actually do that since all the mutual funds versial weapons, for-profit prisons and severe we offer have gone through these ESG checks.” environmental violators, as well as a number of other themes that would register as egregious Cost of values-aligned portfolio: N/A. on many responsible investors’ radars. All five also have loan books bulging with fossil fuels in Bank loans and investments in dirty vs. clean companies: CIBC says all its funds relation to their renewable energy lending, put- are filtered through an ESG lens, but it has $2.7 billion, or 6.4% of assets, invested ting them at odds with global money trends. in companies flagged for harmful products and activities, including palm oil With former Bank of Canada governor deforestation and severe human rights violations. On the bright side, 9.4% of its Mark Carney cautioning that firms that ig- investments are in sustainable-solution providers, companies that earn more than nore the climate crisis “will go bankrupt a fifth of their revenue from themes like renewable energy and electric cars. On without question,” Canadians should be able the loan side, CIBC’s exposure to oil and gas companies is almost five times as to readily invest their retirement savings in large as its renewable energy book. environmentally-conscious options, sustainable finance champions say.K Scotiabank Ethical options: No responsible funds are available at branch level, though Scotiabank said in a statement that it has “considered” ESG factors in the investment process and that for direct investors, “Scotia iTRADE offers sustainable investing tools [online].” D- Fossil-fuel-free or climate-conscious funds: No.

2019 2020 Sustainability knowledge of advisor: The personal banking advisor was unaware of any sustainable options and returned five minutes later to confirm that no EU governments Morningstar and the European reports that options exist that the bank’s financial advisors were aware of. Parliament sign sustainable funds, Cost of values-aligned portfolio: N/A. a landmark which invest based agreement on on environmental, Bank loans and investments in dirty vs. clean companies: Scotiabank dishes out how to classify social or the second-most oil and gas loans ($14.8 billion), compared to zilch in loans to green investments governance — the first time a themes, pulled in renewables. global regulator a record US$20.6 has designed a billion in new labelling system money in 2019, TD Canada Trust for what counts four times higher as a sustainable than in 2018, which Ethical options: TD Canada discontinued its sustainability funds in 2013, and at financial product. was the previous this point there are no specific RI-themed funds available to Canadians at branch record. level. TD did not respond to our request for comment.

Fossil-fuel-free or climate-conscious funds: No.

Sustainability knowledge of advisor: One bank advisor was blunt, saying, “To be completely honest, most socially aware investment funds don’t make a lot of profit. As such, we don’t have funds that invest in these companies.” Cost of values-aligned portfolio: N/A.

Bank loans and investments in dirty vs. clean companies: TD has the smallest oil-and-gas loan book of the Big Five, but its investment book is another story. D- Among the Big Five, it has the worst ratio of investments in sustainable-solution companies to harmful companies.

Spring 2020 • Corporate Knights • 25 It’s been 50 years since the first Earth Day in 1970,when 10 million In the 50 years since people took to the streets for a national teach-in on the environment. Earth Day was launched, At the time, questions were mounting about the lead fumes puffing out of tailpipes, the Cleveland river soaked in industrial waste that had which companies stepped caught on fire the year prior, and the thousands of dead, oil-soaked birds that had washed up on the beaches of Santa Barbara in the largest oil up to deliver green solutions? spill in American history. That April, 10% of the U.S. population came together to voice their outrage and “demand a new way forward for the planet.” By the end of the year, the Environmental Protection Agency had been founded, ushering in an era of groundbreaking clean-air, water and endangered-species regulation that would reshape corporate America’s relationship with nature, providing a cornerstone for modern By Adria Vasil, Laura Väyrynen and Toby Heaps environmental policy.

26 • Corporate Knights • Spring 2020 Illustration by Nolan Pelletier The business community hasn’t always been an ally of the planet, but company that had made the chemical in great quantities for decades), but it would have a significant role to play in the next half century of environ- it spent years aggressively undermining earlier domestic bans in the U.S. mental action – including developing and deploying solutions, on a global GM was the first North American automaker to say it would make cars that scale, to problems they quite often had a hand in creating. run on both unleaded and leaded gasoline, but the car company (which There is a lot to reflect on from the last 50 years. Amidst the invented leaded gas in 1921) also fought tooth and nail against regulations COVID-19 pandemic, it’s worth remembering we have a pretty good track that would effectively outlaw leaded fuel altogether. Another nominee, record of fixing planetary-scale problems when we set our minds to it: General Electric, made waves when it launched its multibillion-dollar Ecomagination branding initiative in 2005, but it ultimately failed to heed • The destructive pesticide that prompted Rachel Carson’s seminal book its own marketing and today still earns just a tenth of its revenue from Silent Spring, DDT, was banned in 34 countries, leading to the dramatic what could be considered “green” sources. And more recently, BlackRock’s comeback of bald eagles, peregrine falcons and osprey. newfound climate investment convictions are most welcome, but it’s still • We are just two countries away from the global elimination of lead in the world’s premier funder of destructive fossil fuel activities, and when gasoline, which the UN says has resulted in US$2.4 trillion in annual bene- it has a chance to shift corporate behaviour through shareholder votes, it fits, 1.2 million fewer premature deaths, higher overall intelligence and 58 more often than not has sided with management over the climate. million fewer crimes (thanks to lower levels of lead in people’s blood). The final top 50 actions that made the list are examples of moments • CFCs, once found in every fridge and aerosol can, were phased out that reveal the profound impact corporations can have on the planet globally, with recent evidence showing that the hole in the ozone layer when they lead change rather than follow it. The Top 50 isn’t an endorse- over Antarctica is beginning to repair itself (though CFCs leaking from ment of a company’s entire corporate legacy. It’s a recognition that one old appliances and such have created a recent upswing in emissions). act – one sustainability chief’s initiative, one big-tent collaboration with • Emissions of sulphur dioxide and nitrogen oxide were capped, eliminating the non-profits, regulators and like-minded companies, one sustainably scourge of acid rain that threatened to blacken our forests and kill our lakes. minded CEO – can shift the tides. • Ontario became the first government to ban coal power, eliminating In reality, a whole cohort of players made each action possible – educa- more greenhouse gases than any action to date in North America. tors and agitators (i.e. persistent scientists, activists and journalists) as well as implementers and navigators (behind-the-scenes public servants and Three things have become employees). Combined, their efforts have helped clear toxic pollutants, curb gigatonnes of climate-cooking carbon, conserve landfills of waste, preserve clear over the last 50 years: acres of forest and save countless species, giving our grandchildren a fighting chance to call a thriving planet home on Earth Day’s 100th anniversary. 1. Deadly environmental problems require regulation, often in the form of In the meantime, the whole purpose of this year’s Earth Day, explains banning offending pollutants. co-founder Denis Hayes in a phone call with Corporate Knights, “is to try to create enough pressure on governments and companies around the 2. Unlike, say, the Olympics, the cost of tackling environmental problems world to be aggressive in their leadership on [climate action].” usually ends up being less than what anybody thought it would be, as “In my ideal world,” says Hayes, “we would look back on 2020 as an former U.S. Treasury Secretary Larry Summers puts it, partly because inflection point for carbon emissions . . . I’d like to see us having designed projected costs are inflated by those who have a vested interest in the an economy that can operate with equilibrium.” status quo and unexpected innovations drive down costs. While the pandemic is the most urgent threat facing us this year, the climate crisis represents the greatest challenge to the future of human- 3. Business can innovate and deliver solutions at scale when ity – and also vast opportunities for those disruptors and scalers that governments get the regulations right. deliver closed loop, clean economy solutions. We hope this Top 50 list will inspire more leadership at a time when the planet and every living So in honour of the 50th anniversary of Earth Day, Corporate Knights, entity on it needs it most. Earth Day Canada and Earth Day Initiative decided to launch an open- Open nominations for the Top 50 were held in February. In addition, nomination process to determine which corporate actions have had the Corporate Knights contacted close to 100 thought leaders in various sectors biggest impact on improving the state of affairs on our planet. and industries to get their input. A team of expert advisors* helped reduce The final list includes a few companies that reflect the visionary the shortlist to 150, then a panel of judges voted on their top 50 picks. souls of their environmentalist founders, like Patagonia, Body Shop and Interface flooring. There are also some mad-scientist disruptors and The following judges brown-to-green corporate chameleons in the bunch. But by far the most common type of hero is the early mover, those companies that heard the helped us select the Top 50: bell tolling before the rest of their peers and made a beeline to change their destructive ways – and, collectively, the trajectory of life on Earth. Pierre Lussier, director of Earth Day Canada Some of the early movers were major emitters under the glare of John Oppermann, executive director of Earth Day Initiative heavy activist campaigning that brokered peace deals with non-profits Toby Heaps, CEO and co-founder of Corporate Knights and regulators. Others were entrepreneurs who saw which way the wind Adria Vasil, managing editor, Corporate Knights turbines were blowing or scalers who used their market power to corral large segments of the economy into greener pastures. * Adèle Hurley, Andrew Craig, Andy Behar, Beatrice Olivastri, Blair Feltmate, Bruce Lourie, Céline Bak, Charmaine Love, David Love, David Runnalls, David Wheeler, Frances Edmonds, Frank Frantisak, Geoff Many companies didn’t make the cut. DuPont was nominated for Love, Greg Payne, Hazel Henderson, Hunter Lovins, Ivo Mulder, Jane Ambachtsheer, John Cook, John Elkington, Julia Christensen-Hughes, Mark Rudolph, Mark Tercek, Michael de Pencier, Monte Hummel, breaking ranks with other chemical giants by backing the Montreal Nick Parker, Peter Love, Ralph Torrie, Shanta Chatterji Simon Zadek, Tyler Hamilton, Valerie Chort, Protocol’s phase-out of ozone-depleting CFCs (a critical move from a Vicky Sharpe.

Spring 2020 • Corporate Knights • 27 F1. Sustainable Apparel Coalition, which drives impact reductions at over 200 Body Shop companies with combined revenues of $500 billion. It’s also a recipient of the F1. 1976 Jump-started wave of 2019 UN Champions of the Earth award. Patagonia founder conscious consumerism and Yvon Chouinard, cruelty-free cosmetics To Do: 86% of Patagonia’s emissions pictured in the come from the creation of its product 1972 Chouinard Under its crusading founders, Anita materials. It’s gunning to be carbon Equipment Roddick and her husband, Gordon neutral by 2025 by using only recycled catalogue. Photo: Roddick, the Body Shop set a new or renewable materials (including more Tom Frost. standard for “retailing with a conscience,” ocean plastic) and switching to renew- trailblazing the sourcing of fairly traded able energy in all its operations. ingredients that weren’t tested on live animals.

F2. F2. Catalyst: Roddick’s travels on what Ozone hole she called the “hippie trail” through the over Antarctica, South Pacific and Africa seeded her pictured in interest in sourcing natural, fairly traded 2004. NASA ingredients. Patagonia image courtesy of the Scientific Impact: The company helped spark 1973 First major clothing company Visualization consumer activism in generations of to put protecting the planet at core Studio. young people and helped push the UK of its brand government to ban animal testing of cosmetics ingredients in 1998. It says its Patagonia wasn’t always a green cloth- “community trade” has benefited more ing company per se; it made durable SC Johnson than 12,000 workers in 23 countries. clothing for wilderness enthusiasts. The F3. former maker of mountaineering tools 1975 First to ban ozone-destroying Anita Roddick To Do: Body Shop’s 2018 sustainabil- had stopped selling climbing pitons CFCs from aerosol products pictured refilling ity report admits that only 10% of its because they damaged rock faces and Body Shop bottles ingredients can be deemed “sustain- became the first major clothing brand Three years before the U.S. banned the in 1978. The Argus able,” though it pledged to reach 100% to donate 10% of profits (and offer use of chlorofluorocarbons (CFCs) in archives. by 2020. Post COVID-19, we’d like to training) to grassroots eco groups aerosol propellants and more than a see it return to its roots by rolling out (1986), the first to make clothes out of decade before the Montreal Protocol product-refill stations in all its 3,000 recycled pop bottles (1993) and one of called for a global phase-out, SC stores (it’s now at trial phase). the first to convert its entire cotton line Johnson became the first aerosol maker to organic cotton (1996). It has stood to pull all products containing CFCs apart by putting environmental activism from shelves. at the heart of its branding. F3. Catalyst: Mounting scientific evidence, Catalyst: Patagonia’s mountain-climb- including Nobel Prize–winning research ing founder, Yvon Chouinard, rooted his by Paul Crutzen, Mario Molina and company in a “leave no trace” phi- Sherwood Rowland, triggered a 25% losophy. However, it wasn’t until 1988, drop in sales in CFC products in the when formaldehyde off-gassing from its first six months of 1975 and prompted clothing made workers at one Patagonia a Natural Resources Defense Council store in Boston sick, that Patagonia campaign against CFCs. began investigating the environmental impacts of its supply chain. Impact: As one of the first large companies to take a public stance against Impact: Nearly 70% of its product line a substance that harmed the environ- now comes from recycled materials, ment, SC Johnson helped build support “I have been part of a different, smaller but the company’s impacts reach far among corporations for broader bans. beyond its own supply chain. Among its business movement, one that tried to put achievements: it co-founded 1% for the To Do: The maker of Ziploc, Glade and idealism back on the agenda.” Planet (which has 1,200 members in 48 Drano could green more ingredients countries that donate 1% of profits to and ramp up its use of post-consumer — Anita Roddick, Body Shop co-founder environmental organizations) and the recycled content (at 11% as of last year).

28 • Corporate Knights • Spring 2020 and trucks deployed globally (including in formaldehyde in its particle board furniture Cascades Germany, California and China). in the 1980s and again in the ’90s, at which Tissue Group point sales in Denmark plummeted by To Do: Scale production and bring 20%. The world’s third largest consumer of 1977 Pioneered turning recycled down costs. wood was also threatened with boycotts waste into tissue products over its use of tropical rainforest wood.

The Lemaire family founded the F4. Drummond Pulp & Fibre company in 1957 F5. with the goal of reusing recovered household and industrial waste. In the 1960s they started making paper out of recycled materials and by the 1970s launched the tissue group, scaling up its pulp recycling.

Catalyst: Recognizing that old paper could be used to create new products. HP F4. Impact: Cascades was making recycled Hewlett-Packard’s paper and tissue products more than a 1987 Early leader in e-waste recy- HP-87 computer decade before the Forest Stewardship cling and take-back programs was one of the Council came along. It now saves first computers Impact: IKEA has since set strict form- 45 million trees every year by using HP began recycling computer hardware in that could be sent aldehyde standards and largely banned recycled paper rather than virgin wood 1987 and officially launched the HP Planet back for recycling. PVC and heavy metals such as lead pulp and is the largest collector of pa- Partners return-and-recycling program for from all products. It became a found- per fibres in Canada HP LaserJet print cartridges in 1991. ing member of the Forest Stewardship Council (FSC) in 1993. It now claims To Do: Cascades uses 83% recycled Catalyst: The dumping of hazardous that 97% of its wood is FSC–certified materials in the manufacturing of all its waste overseas became a hot-button topic F5. or recycled and, with WWF, has helped products. We’d love to see that number in 1986 and led to the signing of the 1989 IKEA’s catalogue certify 35 million hectares of forest. climb to 100. Basel Convention that propelled legitimate is now printed electronic recycling. HP got a head start. entirely on FSC- To Do: IKEA’s furniture is notorious certified paper. for its lack of durability, something it Ballard Impact: Through 2018, HP has used re- promises to improve upon as it aims to Power Systems cycled plastic to manufacture 4.2 billion become fully circular by 2030. Scaling ink and toner cartridges, and more than up its furniture rental pilots will help it 1983 Trailblazing developer of 80% of its ink cartridges now contain recycle and reuse materials at end of life. hydrogen fuel-cell technology between 45 and 70% post-consumer F6. recycled content. Herman Miller's The Canadian company started out iconic Mirra F6. developing rechargeable batteries, then, To Do: Last year, HP announced that chair was its first in search of clean energy solutions, it plans to increase its recycled plastic Cradle-to-Cradle switched gears to fuel-cell technol- content to 30% by 2025. We’d like to see certified product. ogy in 1983. A decade later it unveiled it up its goal to 100% post-consumer or a small zero-emissions bus that was post-industrial recycled content. powered completely by hydrogen and soon partnered with Ford and Daimler. Co-founder Geoffrey Ballard, a former IKEA oil industry engineer, has been called the “father of the fuel cell industry.” 1990 Early adapter of Natural Step framework Catalyst: Geoffrey Ballard was working in the oil industry in the 1970s when the The Swedish furniture giant was one Herman oil crisis hit. He became driven to develop of the first companies to adopt The Miller and MBDC environmentally clean energy systems. Natural Step (TNS) framework as the basic structure for the implementation 1990s Creation of system for de- Impact: Ballard is credited with kickstart- of its environmental policy and plan. signing cradle-to-cradle products ing and expediting the hydrogen movement. The company now says it has 70 to Catalyst: IKEA approached TNS In the late 1990s, office furniture manufac- 80% market share of all the fuel-cell buses after it was outed for the high levels of turer Herman Miller began collaborating

Spring 2020 • Corporate Knights • 29 with architect William McDonough and chemist Michael Braungart’s McDonough F8. Braungart Design Chemistry (MBDC) to create a system for designing closed-loop “cradle-to-cradle” products.

Catalyst: In 1991, the Environmental Health and Safety group at Herman Miller was drafting its first “Design for the Environment” (DfE) guidelines. F7. Noticing gaps in their knowledge, they Sony’s first later partnered with MBDC (founded in commercial 1995) to develop the cradle-to-cradle lithium-ion battery (C2C) protocol for material selection. helped spawn the mobile revolution. Impact: The collaboration led to the creation of the DfE product-assessment tool, which evaluates progress toward cradle-to-cradle products, going beyond limitations of life-cycle assessment tools, F8. laying the foundations for today’s circu- Nichia’s blue Impact: This powerful, lightweight, quarter of the world’s electricity is used lar economy advancements. There have LEDs enabled the rechargeable battery has been crucial to generate light, the economic and now been more than 600 C2C certifica- invention of the to the mobile technology and electric environmental impacts of widespread tions in 30 countries. groundbreaking vehicle revolution. It can also store sig- LED use are monumental. white LED. nificant amounts of energy from solar To Do: To date, 76% of Herman Miller and wind power, making a fossil-fuel- To Do: Nichia originally awarded products are DfE-approved, but recy- free society possible. Nakamura only US$200 for his inven- cled content levels could be improved. tion. However, a US$8.1 million settle- To Do: Considerable work remains to ment was reached in 2005, prompting F9. effectively recycle batteries around the calls for greater profit sharing between F7. BYD is supplying world and ensure battery minerals are on-staff inventors and Japanese Toronto with sourced ethically. corporations. e-buses made at its assembly plant in nearby Nichia Interface Newmarket. Corporation 1994 Launch of the Mission Zero 1993 Started production of the program first high-brightness blue LED light, leading to the development of the Ray Anderson, founder and CEO of modu- Sony first white LED lar carpet company Interface, launched the Mission Zero program in 1994, challenging 1991 Released the world’s first An employee at Nichia Corporation, Shuji the company to eliminate any negative commercial rechargeable lithium- Nakamura, first solved the challenge impact it had on the environment by 2020 ion battery of creating blue LEDs, which enabled – a radical path for a mainstream industrial his later invention of the groundbreak- business in the mid-1990s. The oil embargo of the 1970s prompted ing white LED. The invention effectively an Exxon scientist to develop the earli- made Edison’s energy-hogging incan- Catalyst: Anderson read Paul Hawken’s est rechargeable lithium-ion battery as descent light bulb obsolete. Ecology of Commerce in 1994; he said a fossil-fuel-free way of storing energy. the book hit him “like a spear in the Exxon shelved that research, but it was Catalyst: Commercial interests and heart,” opening his eyes to the impacts later picked up by Sony, which in 1991 scientific innovation built upon decades of business on the environment. released the first commercial lithium-ion of research, including the work of two battery, enabling a revolutionary shift in Japanese professors who shared the 2014 Impact: In 2019, eight years after portable power storage. Nobel Prize in physics with Nakamura. Anderson’s death, Interface declared Mission Zero accomplished, with dra- Catalyst: Market opportunities fuelled Impact: LED bulbs typically use up matically reduced GHG emissions, water by two decades of Nobel Prize–winning to 80% less energy than traditional usage and waste in the company’s oper- scientific breakthroughs in lithium-ion incandescent bulbs and can last several ations. Interface blazed a trail for other batteries. years longer. Given that approximately a companies, in its industry and beyond,

30 • Corporate Knights • Spring 2020 to invest in sustainability, proving that it It wasn’t a glitzy moment in history. ABB Catalyst: Toyota wanted to develop also benefits the bottom line. had been making variable-speed drives a “global car for the 21st century” to for motors and pumps in the metal, compete against a Clinton-Gore admin- To Do: Interface’s next “moonshot” marine and mining industry since the istration push for more fuel-efficient involves making an entirely carbon- 1970s. Then it developed its first AC in- American cars. negative product – a first step in its new dustrial drive with direct torque control. Climate Take Back mission. It sparked dramatic reductions in power Impact: In 2012, the Prius became the use across a wide array of industries, bestselling car in California and in 2018 often chopping energy use in half. was the bestselling hybrid vehicle in the F9. U.S. Worldwide sales of Toyota hybrids F10. have surpassed 14 million units, and F10. ABB’s direct Toyota now sells more than 30 different torque control hybrid models in more than 90 coun- innovation can tries and regions across the globe. chop energy use in half. To Do: Toyota has focused on hybrids and researching hydrogen cars rather than going all-in on EVs. Considering BYD the speed at which the global transportation fleet is set to become electrified, 1995 Founded its first F11. Toyota has some catching up to do. rechargeable-battery factory, Catalyst: Growing calls for energy sav- The Toyota Prius setting it on path to become ings drove market innovations. became America’s . world’s largest electric carmaker top-selling hybrid. Unilever Impact: According to the company, its China’s BYD started out by manu- low-voltage drives saved an estimated 170 1997 Launch of the Marine facturing rechargeable batteries for terawatt hours of electric power (roughly Stewardship Council (MSC) electronics and has since become equal to the needs of 42 million European with WWF the world’s largest maker of electric homes) and reduced global CO2 emissions F12. Unilever and WWF founded the MSC with vehicles (both consumer and commer- by 140 million tons in 2008 alone. Today, Globally, 15% the goal of curbing overfishing. At the cial) for the past three years. Its bat- more than half of ABB’s worldwide rev- of wild-caught time, Unilever was the leading seafood teries are also enabling bulk storage of enues are generated by technologies that fish are Marine processor in the world. After international renewable energy. combat the causes of climate change. Stewardship consultations with scientists, academics, Catalyst: BYD’s founder reportedly To Do: In 2014, ABB set a goal of Council certified. activists and industry organizations, the started BYD with the goal of edging in having its “eco-efficiency” products -ac first fisheries were certified in 2000. on the Japanese-dominated battery mar- count for 60% of total revenue by 2020; ket with cheaper made-in-China options. in 2019, they were at 57%. Catalyst: Collapse of Grand Banks cod fishery in Canada in the 1990s. Impact: BYD’s rechargeable batteries have helped the car industry shift away Impact: MSC has compelled both from gas-powered vehicles. It’s also paving F11. industry and government regulators the way to increase global adoption of to become more “proactive over the renewable energy by enabling the storage last decade in addressing sustainability of solar and wind energy in its batteries. concerns,” says SeaChoice.org. Today,

To Do: BYD’s new fully automated production lines are a shift away from its original factories, operated by migrant workers, where labour rights were a F12. concern. As with all battery producers, ensuring its minerals are sourced ethi- Toyota cally should be a top priority. 1997 Debuted the world’s first mass-produced hybrid electric ABB vehicle

1995 Started production of direct Toyota brought the first mass-market torque control drives, catalyzing hybrid to the market in Japan in 1997, energy efficiency in industrial with demand exploding when the car operations reached the U.S. a few years later.

Spring 2020 • Corporate Knights • 31 Impact: In early 2018, LONGi broke F13. the global record for monocrystalline PERC cell efficiency for the third time in five months, reaching 23.6% efficiency. It has been a significant driver of efficiency and economic improvements in PV manufacturing, bringing the price of solar power down across the globe.

To Do: Eliminate lead from the manufacturing process.

Umicore

2000s Transformation from destructive miner to world’s largest recycler of precious metals

15% of the world’s wild-caught fish are environmental solutions while reaping F13. Umicore had its origins as a participant in MSC certified. Unilever’s early involve- economic benefits. Today, it has £15.1 Mining e-waste Belgian King Leopold’s exploitation of the ment encouraged other food companies billion in assets and is one of the 145 turned Umicore Congo in the first half of the 20th century. to sign up for certification. investor companies that have signed the into a leading Today, the forming mining company largely We Are Still In declaration for climate metal recycler. “mines aboveground,” processing e-waste, To Do: MSC wants to see more than a action. Photo: Martin spent batteries and smelter residues. third of global marine catch certified or Mach Ondřej. “engaged” in the process of certification To Do: Scale up distribution and inte- Catalyst: Umicore transformed its by 2030. Before it scales up, it needs to grate its impact reporting into standard business model to move away from the address critiques by several NGOs, in- investor materials. increasingly volatile smelting business. cluding SeaChoice.org and Greenpeace, which say too many questionable fisher- F14. Impact: In 2019, Umicore derived ap- ies are allowed to carry the MSC seal. F14. LONGi’s proximately 65% of its revenues from monocrystalline recycling metals. For example, Umicore’s silicon wafer furnace in Hoboken recycles up to 250 Impax innovations were million mobile phone batteries, two million critical in bringing e-bike batteries and 35,000 EV batteries 1998 Pioneered investing in envi- down the costs of a year. Recently, Umicore partnered with ronmental solutions and helped solar panels. Audi to improve its EV battery recycling bring the idea to scale rate to 90%.

Impax was the first significant invest- To Do: Decrease the use of virgin miner- ment firm dedicated entirely to fuelling als while increasing the vigilance of its the transition to a more sustainable LONGi Solar ethical sourcing, especially given that global economy, disrupting the financial the cobalt processor was named in a status quo at the time of its founding. It 2000 Driver of the solar industry recent U.S. lawsuit against Apple, Dell pioneered several responsible investing shift to efficient mono wafers Microsoft and Tesla over the deaths of tools and indexes, including the FTSE children in Congolese cobalt mines. Environmental Markets classification Founded in 2000, LONGi is the world’s system, defining and measuring the first and largest manufacturer of performance of global environmental groundbreaking monocrystalline silicon Tembec markets. wafers, which was a key factor in opti- mizing the power-cost ratio of the solar 2001 First and largest Canadian Catalyst: An International Finance photovoltaic (PV) industry. forest-products company to Corporation mandate created a market op- commit to FSC certification portunity for mission-driven CEO Ian Simm. Catalyst: Surging demand for solar in Germany in the 1990s fuelled China’s After facing years of protests, Tembec Impact: Impax’s work blazed the trail early investments in solar panel de- (now Rayonier Advanced Materials) for today’s explosion in responsible velopment, enabling the creation of signed a historic accord with WWF, investing, proving that you can invest in companies like LONGi. making a company-wide commitment

32 • Corporate Knights • Spring 2020 to seek FSC certification on all of teamed up with PayPal co-founder Elon its 32 million acres of forest under Bioregional Musk, who had a shared interest in com- management. mercializing a prototype electric sports 2002 Developed One Planet car called the “tzero” at a time when only Living framework for global hybrid cars were on the market. F15. eco-communities Catalyst: After GM forcibly recalled The UK social enterprise Bioregional, all its electric cars in 2003 and along with WWF, created the One destroyed them, Musk said that “the Planet Living framework based on only chance was to create an EV the founders’ experience developing company, even though it was almost BedZED, the UK’s first large-scale eco- certain to fail.” village. Bioregional provides tools and training and works with developers to Impact: Tesla showed it was possible create sustainable homes and communi- to make an EV that accelerates as fast ties around the globe. as a Ferrari, which influenced legacy and luxury automakers to embrace Catalyst: Founders recognized that the commercialization of EVs. In 2007, Catalyst: WWF, Wildlands League. “our over-consumption of resources is GM’s vice-chair credited Tesla with the major driving force for environmen- inspiring GM’s re-entry into the EV Impact: Tembec’s leadership broke a tal degradation.” market. decades-long standoff between environmentalists and loggers, paving the Impact: Bioregional has helped more To Do: Tesla is under pressure to reduce way for other industry players to adopt than 50 organizations create their own F15. its projected water usage at its new FSC standards. Now Canada is home One Planet Action Plans and has collab- Canada’s largest Gigafactory in Germany – that and to five of the world’s 10 largest FSC- orated with developers to create 11,000 industrial forest deliver a fully ethical battery. certified forests, with more than 53.9 One Planet homes. Four cities on three became FSC million hectares certified. continents are now officially engaging certified under with One Planet Living principles. Tembec. Walmart To Do: Focus on cleaning up water discharges into the Altamaha River. To Do: Abu Dhabi’s mega eco-commu- 2005 World’s largest company nity Masdar City, still under develop- commits to shrinking its footprint ment, was considered a One Planet Legal & General Living flagship project, but labour rights F16. In 2005, Walmart announced that it concerns have stopped it from getting The first Tesla was going green, launching zero-waste, 2002 First backer of CDP (formerly the One Planet label. Roadster was 100%-renewable-energy and sustain- the Carbon Disclosure Project) produced in 2008. able-product targets.

In 2002, this multinational financial F16. Catalyst: Public backlash over preda- services company was the first investor tory pricing, labour abuses and environ- to back CDP’s push to get companies to mental impacts were digging into sales. disclose their greenhouse gas emissions. That and Hurricane Katrina are said to have inspired Walmart CEO Lee Scott Catalyst: The business risks of global to launch a “sweeping sustainability warming and growing interest in “re- strategy” that also enlisted its 60,000 sponsible investing.” suppliers.

Impact: More than 525 investors glob- Impact: One 2014 study found that ally, with assets of US$96 trillion, have Walmart was the top-cited retailer now signed CDP’s disclosure request, driving supplier investments in and more than 8,400 companies report Tesla sustainability. In 2006, Walmart also on climate change, water security and began to develop “sustainable value deforestation. 2003 Founded with goal networks” in 14 sectors, from seafood of bringing high-performance, to fashion (including co-founding To Do: Review why its climate-con- zero-emission EVs to the masses the Sustainable Apparel Coalition scious Legal & General Future World with Patagonia), to have a broader Climate Change Equity Factors Index Tesla was started by a group of engineers industry-wide impact. Fund has more oil and gas investments who wanted to prove that “electric ve- than its comparator benchmark (FTSE hicles can be better, quicker and more fun To Do: Meeting its science-based All World Index). to drive than gasoline cars.” In 2004, they climate target (which includes slashing

Spring 2020 • Corporate Knights • 33 BlaBla has also branched out into bus F17. service in Europe. F20. To Do: COVID-19 poses existential challenges to carpooling services. Rebuilding once the pandemic is over will be an upward climb.

Seventh Generation

2007 Becomes a founding certified B Corporation Intel

This maker of green cleaning 2008 One of the first companies to a gigatonne of greenhouse gases from products, founded in Vermont in the link employee bonuses to sustain- its global value chain by 2030) will be late 1980s, was one of the earliest ability performance a challenge. Whether it gets to zero purpose-driven companies. It became waste and 100% renewable energy a founding B Corporation member Since 2008, Intel has linked the annual remains to be seen. in 2007 – certifying its entire social performance bonuses of its execu- and environmental performance – to tives and employees to the company’s “help set the standard for corporate achievement of sustainability goals such F18. responsibility.” as reductions in GHGs and energy use – effectively making its sustainability Catalyst: The company’s decision to goals everyone’s job. F17. become a B Corp was motivated by a Walmart launched drive for transparency and desire to Catalyst: Recognition that achieving a dedicated distinguish it from competitors in the sustainability goals is critical to the organic produce growing green-cleaning market. company’s long-term viability. section in 2019. Impact: By 2012, the company’s GHGs F19. had dropped 35% on an absolute basis. The company inspired others to follow suit in tying environmental indicators to F18. executive pay; in 2012, 15% of companies BlaBlaCar BlaBlaCar has 87 had sustainability pay-links, which grew million members to 24% in 2014, according to Ceres. 2006 Established world’s leading in 22 countries. long-distance ride-sharing start-up To Do: Provide more detail on how bonuses, and what portion, are tied to It all started when Frédéric Mazzella meeting sustainability goals. couldn’t catch a train back to Paris for Christmas in 2004. He noticed that F19. France’s roads were filled with drivers Seventh Ørsted alone in their cars, and the idea for an Generation was online platform for carpooling was born. one of the first Impact: Besides selling US$250 million 2009–2019 Transformed its energy By 2019, BlaBlaCar had a valuation of companies to of largely eco-friendly cleaning and per- generation from 85% fossil fuels to more than US$1 billion. become a certified sonal-care products annually, the com- 75% renewables in a decade B Corporation. pany is working to get all its suppliers Catalyst: Founder’s vision of a people-pow- certified as B Corp by 2020. Now owned In 2009, the former Danish Oil and ered travel network enabled by technology. by Unilever, Seventh Generation paved Natural Gas emitted one third of the way for other large companies to Denmark’s CO2 emissions, but a radical Impact: BlaBla has grown from five seek certification (including Patagonia, decision to shift investments away from million users in 2013 to 87 million in 22 Ben &Jerry’s and Danone). fossil fuels to renewables cut its emis- countries, mostly in Europe but also sions by 83% (compared to 2006). including Brazil, India and Mexico. To Do: It’s working on making all its 1.6 million tonnes of CO2 were saved plastic bottles from 100% recycled Catalyst: Climate crisis–fuelled back- by BlaBlaCar carpoolers in 2018 – “as content and decoupling GHG emissions lash against coal in Europe convinced if Paris was free of traffic for a year.” from business growth. leadership to make big investments in

34 • Corporate Knights • Spring 2020 wind, which it doubled down on in 2012 Catalyst: Pressure from EU and U.S. when a debt crisis forced it to sell off its regulators to phase the two chems out; F21. loss-making gas businesses. campaigning by the Environmental Working Group, Greenpeace and Impact: Ørsted’s decision has proved it others. is possible for large fossil fuel companies to transform themselves in a Impact: The ban reduced consumer remarkably short time while also suc- and worker exposure to the persistent ceeding economically. toxins. IBM made new formulations available to other companies through To Do: By 2025, Ørsted aims to be carbon technology development alliances. neutral in its energy generation and company operations, and by 2040 it aims to To Do: In 2018, IBM generated 1,760 do the same for its supply chain and trad- tonnes of hazardous waste. Of this, ing activities (phasing out natural gas). 51% was recycled; 30% was incinerated and 12% ended up in a landfill. Catalyst: Former Puma CEO Jochen Kimberly-Clark Zeitz was inspired by the Economics Sainsbury of Ecosystems and Biodiversity 2009 Agrees to stop clear-cutting (TEEB) study on the economic ben- old-growth boreal forest 2010 Becomes world’s largest efits of biodiversity. Zeitz wanted retailer of fair trade products to “make the point that the current After years of Greenpeace campaigning, economic model . . . must be radically the world’s largest manufacturer of tis- The British grocer was the UK’s first changed.” sue paper products set a goal of getting retailer of fair trade products, starting in 100% of its wood pulp from environ- 1994, and has been the world’s largest Impact: In 2015, Puma’s parent company, mentally responsible sources. Fairtrade-certified retailer since 2010. Kering, extended its EP&L scope to all F20. the group’s brands, becoming the first Catalyst: Greenpeace, WWF. Catalyst: Fairtrade Foundation, set up Intel may be best international group to do so and disclose by church groups and NGOs in 1992; known for its the results. By sharing its methodology in Impact: Before 2009, Kimberly-Clark consumer demand. core processors, an open source mode, the group encour- got 90% of its wood fibre from what but it also kicked aged Novo Nordisk, Philips and others to Greenpeace called “unsustainably Impact: In 2017 and ’18, the grocer’s off a wave of attempt natural capital accounting. managed” forests, most notably the sales of fairly traded products reached sustainability- boreal forest in Canada, predominantly more than £380 million, and it sold linked bonuses. To Do: EP&L and natural capital ac- via clear-cutting. Since 2009, it has more than 500 Fairtrade-certified prod- counting are yet to be scaled to global, increased its use of environmentally ucts sourced from around the world, standard accounting procedures. preferred fibres, including FSC-certified including nothing but 100% Fairtrade fibre, in its global tissue products to 87%. bananas (650 million a year) for more than a decade. F21. F22. To Do: The recycled content in K-C’s Ørsted’s tissue products is stuck at the same To Do: Sainsbury’s decision to drop former 30% level it was at globally nine years Fairtrade certification from its private Svanemølle Power ago. It could learn from Cascades Tissue tea brand in 2017 drew criticism for Station once Group, whose recycled content is 84%. signalling the demise of the Fairtrade burned coal and label. is now becoming a Danish science IBM museum. Kering 2010 First electronics maker to phase out two “forever chemicals” 2011 Publishes first Environmental from its chip manufacturing Profit & Loss (EP&L) Account of its Plastic Bank business Puma division 2013 Turns plastic waste into IBM was the first in its industry to Kering’s former subsidiary, Puma, pio- currency fully remove the “forever chemicals” neered EP&L accounting in 2011, assign- perfluorooctane sulfonate (PFOS) and ing a monetary value to nature’s “ser- In 2013, Plastic Bank co-founder David perfluorooctanoic acid (PFOA) from the vices” used by the business – fresh water, Katz had an epiphany: if waste plastic company’s chip manufacturing business clean air, healthy biodiversity – as well as could be turned into a currency we in 2010, making IBM’s e-waste less toxic. to the company’s negative impacts. could tackle global poverty and ocean

Spring 2020 • Corporate Knights • 35 pollution at the same time. The social decision to shut down coal power in enterprise launched the concept of Ontario, OPG was selected as one of Social Plastic in Haiti in 2015, paying col- F23. the Top 50 for making good on the task lectors of waste straws, lids and bottles a with an innovative approach, including living wage. The recycled plastic is then partnering with Six Nations of the Grand sold to 75 brand partners, including Lush River Development Corporation and the and Henkel. In 2019, SC Johnson and Mississaugas of the Credit First Nation Plastic Bank opened eight branches in to build a 44-megawatt solar facility at Indonesia, paying local waste collectors the former home of North America’s in digital tokens they can use to buy largest coal-fired power plant. needed goods and services. Catalyst: The deadly impacts of smog Catalyst: Ocean plastic pollution, and air pollution on the health of children global poverty. Philips and adults were highlighted by several groups, including the Ontario Medical Impact: Since its founding, Plastic Bank 2014 Pioneered circularity Association, the Canadian Association of has recovered and recycled more than as a service Physicians for the Environment and the 6,000 tonnes of ocean-bound plastic and Ontario Clean Air Alliance. improved the lives of more than 4,300 Philips didn’t invent the light bulb, but it families living in poverty in Haiti, the F22. did reinvent how we buy them. Its Light Impact: The closure was one of the Philippines, Indonesia and now Egypt. Plastic Bank has as a Service model installs, maintains and main reasons Ontario achieved its 2014 kept more than manages a building’s lighting, making it emissions-reduction target, and it im- To Do: Scale up rapidly to meet the 500,000,000,000 much easier for Philips to reclaim valu- proved air quality noticeably. The move wave of corporate recycled-content plastic straws out able materials at their end of life and put contributed to the development of the commitments through 2025. of the ocean. circular economy principles into action. province’s renewable energy sector, demonstrating that large energy- Catalyst: Philips’s CEO has said, “It’s generation shifts are possible in popu- important to disrupt your business lous, coal-dependent areas. Rockefeller before someone else does.” Philips Brothers Fund F23. was a founding member of the Ellen To Do: Decarbonize the remainder of its Philips LED bulbs MacArthur Foundation in 2013. fossil fuel assets (natural gas) and invest 2014 Announces that it’s divesting can now be in storage and charging infrastructure to from fossil fuel investments rented as part of Impact: Philips has operated recycling enable the scaling up of renewables. the company’s programs for more than 25 years, but The heirs to the Standard Oil fortune Light as a Service turning lighting into a service helped at the helm of the US$860 million model. the company design for multiple reuse Rockefeller Brothers Fund shook the and recycling. Installing the most Norges Bank investment community when they energy-efficient lighting systems has Investment announced they would be joining the helped businesses reduce energy use by Management divestment movement by ditching oil up to 70%. (NBIM) and coal holdings. To Do: Philips hopes to decouple its 2015 World’s second-largest asset Catalyst: 350.org, Divest Invest, As You business from resource extraction, but owner exits coal investments Sow, Wallace Global Fund, Green Faith, etc. it has a ways to go. Its 2020 targets include generating 15% of sales from In 2015, Norway’s parliament issued a Impact: The fund’s announcement circular products and services. unanimous recommendation to divest helped kick off the divestment move- the country’s sovereign wealth fund ment, which has now been embraced from the coal industry. This excluded by major financial players, representing Ontario companies that derived more than 30% assets in excess of US$11 trillion at the Power Generation of their revenues or their power produc- end of 2019. By June 2019, the fund’s (OPG) tion from coal, the biggest energy- exposure to coal and tar sands has related climate change culprit. been choked to less than 0.05% of its 2014 Closure of Ontario’s last total portfolio (vs. 1.6% in 2014), with coal-fired power plants and launch Catalyst: Greenpeace, WWF, Future total fossil fuel exposure around 1% (vs. of solar plant in Our Hands, Urgewald, 350.org, eco- 6.6% in 2014). nomic interests and public pressure. The closure of Ontario’s coal-fired To Do: The fund has set a target of power plants remains the world’s single Impact: Norway took the lead among sov- allocating 20% of its portfolio to impact largest realized GHG-reduction measure ereign wealth funds to start divesting from investments. to date. While it was a government the worst fossil fuel, withdrawing billions of

36 • Corporate Knights • Spring 2020 billion in green investments, putting it F24. on track to reach its 2020 goal. The landmark initiative – and its success – should encourage other multinational development banks and financial institutions to shift their investments toward the low- carbon economy.

To Do: The bank stopped funding thermal coal and oil exploration but is still financing emissions-heavy natural gas.

Axa

2015 First major insurance company to begin withdrawing from coal

The French multinational insurance euros from the coal industry and depriving Catalyst: Ocean plastic crisis, Parley F24. company first announced that it would fossil fuel companies of financing (thus for the Oceans, Greenpeace, Ellen The 44-MW divest €500 million in coal assets by the increasing the cost of capital). MacArthur Foundation. Nanticoke Solar end of 2015, then in 2017 said it would farm in Ontario stop insuring any new coal construc- To Do: NBIM was recently told by Norway’s Impact: Adidas and Parley for the is a partnership tion projects, as well as oil sands and finance ministry to divest from oil explora- Oceans have stopped more than 2,810 between Ontario pipeline businesses. tion and production companies. However, tonnes of plastic waste from entering the Power Generation as of early 2020, the fund still owned 307 ocean by using plastic collected from and two First Catalyst: Unfriend Coal coalition of oil and gas companies valued at US$23 bil- coastal area cleanups. A number of other Nations. a dozen NGOs, as well as the broader lion (including a $1.7 billion stake in Exxon). large companies have followed suit. divestment movement.

To Do: Adidas now manufactures 400 Impact: Six months after Axa made its an- F25. million pairs of shoes annually; 28% of nouncement in 2015, two other European the polyester in its shoes comes from F25. insurers announced new coal policies. recycled sources. Adidas is racing to use The adidas Now, more than 35 insurers with combined 100% recycled polyester by 2024. prototype shoe is assets of US$8.9 trillion (roughly 37% of produced using the insurance industry’s global assets) plastic salvaged have adopted some form of coal divest- from the ocean. ment policies. “Insurers’ retreat from un- European Bank derwriting coal business has left coal-fired for Reconstruction generators with a significant reduction in and Development available capacity,” noted risk manage- (EBRD) ment firm Willis Towers Watson. Adidas 2015 Launched the Green Economy To Do: Axa has stopped insuring most 2015 First major shoe company Transition approach coal projects, but it will continue to to scale use of ocean plastic insure coal companies until 2030 in In the run-up to the COP21 meeting Europe and OECD countries, and by After a groundbreaking 2015 study chron- in Paris, the EBRD launched its Green 2040 in the rest of the world. icled the enormity of the ocean plastic Economy Transition (GET) strategy. Its tar- crisis, adidas partnered with environmen- get: that 40% of EBRD’s total investments tal organization Parley for the Oceans to be in “green climate finance” by 2020, Beyond Meat transform the waste into sneakers made boosting financing in projects that further with at least 75% recycled ocean plastic. the transition to a low-carbon economy. 2016 Launches plant-based burger It started with 7,000 pairs of shoes, scal- that “bleeds” ing up to 11 million pairs in 2019. In 2020, Catalyst: Climate crisis, market oppor- adidas aims to produce 15 to 20 million tunities for low-carbon leaders. Beyond Meat pioneered plant-based meat pairs of the revolutionary shoes, as well as alternatives that replicate the look and boost the recycled content of the polyes- Impact: To date, the EBRD has financed taste of “real meat,” leading to a string of ter in its clothing to 50%. 1,900 green projects and signed US$34 fast food and restaurant collaborations.

Spring 2020 • Corporate Knights • 37 Catalyst: Vegan founder Ethan Brown US$8.4 million into financial incentives Catalyst: President Xi Jinping’s call wanted to develop a “Prius for the for farmers to plant trees and develop for the development of “green finance” plate” that could convince fast food lov- organic agricultural products. Ant Forest in support of China’s goal of building ers to eat less carbon-intensive beef. has inspired similar initiatives in the an “ecological civilization”; the risk of Philippines. climate-related loan defaults, combined Impact: A University of Michigan study with the “green bankers” movement found that Beyond Burgers involve To Do: Maintaining planted trees will be kicked off by Mark Carney and Ma Jun; 90% fewer GHGs, 99% less water and key. Alipay could extend the platform to and the UN-backed Inquiry into the 46% less energy than beef burgers. By other countries and regions. Design of a Sustainable Financial System. shifting attitudes toward “veggie burgers,” Beyond Meat has fuelled a rise in Impact: This stress-test tool provides a “flexitarians” – and a stampede of res- SSAB, LKAB reference point for banking regulators taurant partnerships racing to put plant & Vattenfall to consider the impacts of environmen- protein on the menu (A&W, McDonald’s, tal factors on bank risks and better align Subway, etc.). Beyond Meat’s success 2016 Created HYBRIT initiative for capital flows with green development. has also prompted other large brands, fossil-free steelmaking technology such as Nestlé and Maple Leaf Foods, to To Do: Ensure that financing of China’s invest in plant-based protein. Together, the three Swedish companies Belt and Road Initiative, the world’s – an industrial steel conglomerate, an largest infrastructure program, is incor- To Do: Address health concerns over iron ore miner and an electricity pro- porating rigorous environmental stress the high levels of sodium in its products. ducer – created this initiative to develop testing to avoid locking in high-carbon fossil-free steelmaking technology with development. Currently, ICBC is the virtually no carbon footprint by replacing world’s largest underwriter of coal plant F26. coke and coal with fossil-free electric- development, much of it along the Belt ity and hydrogen. The construction of a and Road Initiative. pilot plant started in Sweden in 2018.

F26. Catalyst: Industry demand, looming Google More than 500 regulations, carbon-pricing projections. million users 2017 Purchased enough renewable have joined the Impact: Steel amounts to 8.3% of all energy to match 100% of global Alipay Ant Forest global CO2 emissions, so the technol- operations Alipay initiative. ogy could have a significant impact. If successful, HYBRIT could reduce Google has become the world’s largest 2016 Launch of the Alipay Ant Sweden’s national carbon emissions by corporate buyer of renewable power, Forest project (122 million trees 10% and Finland’s by 7%. reaching its 2012 commitment of pur- and counting) chasing enough renewable energy to To Do: Even though progress has been match 100% of its operations. It was The Chinese e-commerce and mobile pay- made, the technology is still under de- one of the first corporations to create ment platform launched a tree-planting velopment and a market breakthrough large-scale, long-term contracts to buy and conservation project on its mobile is years away. renewable energy directly. app, which earned it a 2019 UN Champions of the Earth award. The app rewards its us- Catalyst: Employee activism, ers with “green energy points” that grow Greenpeace. into virtual trees when users take steps to Industrial reduce their individual carbon footprints, and Commercial Impact: Google’s renewable energy such as biking to work or buying sustain- Bank of China commitment is driving the construction able products. Alipay matches these (ICBC) of renewable energy projects around the virtual trees by planting and maintaining world and, according to the company, real trees and protecting a conservation 2016 Developed the first will generate more than US$3.5 billion in area with the help of NGOs. comprehensive environmental capital investment by project developers. stress test It’s now one of 30 major companies that Catalyst: China’s worsening smog and are sourcing 100% of their energy from climate crisis. ICBC, the largest bank in the world, be- renewable sources and is one of nearly came the first bank in China to evaluate 200 that are 75% of the way to the We Impact: Since its launch in 2016, more the impact of environmental policies on Mean Business coalition’s RE100 pledge. than 500 million people have used credit risks for commercial banks, show- To Do: Google has made substantial the Ant Forest app and 122 million ing that environmental risks have be- contributions to more than a dozen trees have been planted in northwest come one of the most important factors organizations that campaign against cli- China. The company has also funnelled affecting the daily operations of banks. mate legislation. Employee activism has

38 • Corporate Knights • Spring 2020 otherwise buy from large packaged- F27. goods brands. (Loop’s partners include Procter & Gamble, Nestlé, PepsiCo, Unilever, Coca-Cola and Danone.)

To Do: Loop will need to scale up beyond pilot testing and demonstrate that carbon emissions, such as from trucking, don’t outweigh the environmental benefits of its model.

F27. F29. Google committed US$2 billion to new solar and wind projects in 2019.

also drawn focus to Google’s contracts with fossil fuel companies. F28.

F28. Caisse de dépôt TerraCycle’s et placement refillable product du Québec containers were Maple Leaf Foods piloted in New 2017 First major institutional York last summer. 2019 First major meat company to investor in North America to set bet big on plant protein targets for carbon reduction and climate solutions In the last few years, Maple Leaf Foods has plowed 40% of all new investments In 2017, managers of Quebec’s pension F29. into plant protein. In 2019, it announced fund announced three overarching TerraCycle Maple Leaf Foods’ plans to build the largest plant-protein climate goals: to factor climate change plant-based processing facility in North America, into every investment decision, to in- 2019 Creation of Loop, the closed- hotdog is part of doubling Maple Leaf’s capacity to pro- crease low-carbon investments by 50% loop refillable packaging service the company’s duce meat alternatives. The company has (by $8 billion) by 2020, and, between for large packaged-goods brands increasing acquired two plant-based protein brands, 2017 and 2025, to reduce the carbon commitment to Lightlife in 2017 and Field Roast in 2018. intensity of the overall portfolio by 25%. In early 2019, the global recycling firm offering meat . TerraCycle unveiled a new circular alternatives. Catalyst: Surging consumer demand Catalyst: Student and environmental cam- delivery service for consumers called for more protein alternatives; backlash paign groups and management recogni- Loop, a platform that replaces single- from climate-change, food-safety and tion of the upside potential of investing in use packaging with refillable packaging animal-welfare advocates. measures that address climate change. from major food companies. Impact: Almost overnight, Maple Leaf Impact: By the end of 2018, CDPQ had Catalyst: Greenpeace’s plastic pollu- became the largest plant protein com- linked portfolio manager bonuses to the tion audits put major packaged-goods pany in North America, setting the bar targets and added more than $10 billion companies in the hot seat. TerraCycle’s for other meat companies to expand into in new low-carbon investments while CEO approached those brands about more sustainable plant-based options and lowering the portfolio’s carbon intensity the Loop concept. feeding the growing flexitarian and vegan by 10%. CDPQ has demonstrated that market. The company is also investing in scaling ambitious climate commitments Impact: Although it’s still in the pilot environmental projects throughout North across a large portfolio can be an op- phase, Loop could reduce waste in America and recently announced that it is portunity rather than a sacrifice. landfills and result in less plastics use. the first major food company in the world To Do: CDPQ has established While independent zero-waste stores to be carbon neutral. an enhanced target to increase are popping up around the world, Loop its low-carbon investments by brings the idea of reusable containers To Do: Though more than 95% of its sales 80% between 2017 and 2020 to conventional consumers who would still came from meat products in the last

Spring 2020 • Corporate Knights • 39 quarter of 2019, Maple Leaf is aiming to build a $3 billion business on plant-based F30. products by 2029. While the company’s energy and GHG emissions are lower than they were five years ago, they’ve been inching back up in the last three years.

KLM

2019 First major airline to invest in sustainable aviation fuel at scale

In 2019, KLM announced a 10-year contract with the aviation biofuel company SkyNRG for KLM to purchase 75,000 tonnes of crude biofuel per year, the largest such commitment by an airline so far. SkyNRG’s biofuels are notably palm-oil free and sourced mostly from used cooking oil.

Catalyst: Carbon Offsetting and Reduction Scheme (CORSIA), consumer pressure, the Microsoft has pushed the “flight-shame” movement in Europe. F30. President Brad idea of companies being Impact: SkyNRG is developing Europe’s Smith, CFO Amy first dedicated plant for the produc- Hood and CEO accountable for their entire tion of the fuel in the Netherlands. The Satya Nadella lifetime of carbon emissions production facility will use primarily preparing to regional waste and residue streams as announce into the corporate realm. feedstock and will, when operational in Microsoft’s plan 2022, be the first of its kind in the world. to be carbon SkyNRG says the fuel will deliver a CO2 negative by 2030. reduction of approximately 85%. (Jan. 15, 2020/ Photo by Brian To Do: Despite the environmental ben- Smale) energy consumption in 2018 compared emissions over the next 30 years, mak- efits of biofuel, it must be scaled up to to 2017, as well as improvements in ing it the first large corporation to do put a dent in aviation emissions. recycling and material reuse. In 2018, so. Microsoft had already gone carbon Mahindra challenged 500 other com- neutral in 2012 and pledged that its panies to commit to science-based CO2 emissions will become carbon Mahindra Group targets before that year’s Global negative by 2030. Climate Action Summit. Nearly 450 2019 One of India’s largest answered the call. Catalyst: Employee activism, the cli- businesses, joins Science Based mate crisis. Targets initiative To Do: The group has committed to carbon neutrality by 2040. However, Impact: Microsoft’s actions have The multinational manufacturing con- many of its companies are in the manu- pushed the idea of accounting for glomerate, one of India’s largest busi- facturing and industrial sectors, so the lifetime emissions into the corpo- nesses, took a leadership role in India challenge is significant. rate realm. If successful, by 2050 the by committing to align its operations company will remove all the carbon it with the Paris Agreement. Four of the has emitted (either directly or through Mahindra Group’s businesses have now Microsoft electricity production) since its found- been approved by the Science Based ing in 1975. Targets initiative. 2020 Largest company in the world by market cap pledges to To Do: Microsoft’s massive data centres Catalyst: Investor pressure, economic reverse lifetime CO2 emissions by operate in part on non-renewable interests. 2050 energy. However, the company has announced it will be able to power all its Impact: The Mahindra Group has Earlier this year, the tech giant data centres and buildings with renew- seen a 76% increase in total renewable pledged to “undo” its lifetime CO2 able energy by 2025. K

40 • Corporate Knights • Spring 2020 Advertisement

Spring 2020 • Corporate Knights • 41 GREEN RECOVERY

THE CANADA WE WANT: HOW A CLIMATE- FRIENDLY RECOVERY CAN HELP US BOUNCE BACK STRONGER AFTER COVID-19

By Toby Heaps The coronavirus is a whole different the federal government had earmarked to Editor-in-chief of Corporate Knights beast. Within 30 days of the first recorded address the climate emergency over the next death in Canada, on March 9 (an 83-year- 10 years – an amount that many considered his time last year, governments old man at North Vancouver’s Lynn Valley bountiful just a few months ago. around the world – including Can- Care Centre), the federal government rolled The difference is the new coronavirus threat- ada’s – began declaring emergencies. out direct new spending of $105 billion to ens all of our families today, whereas the climate Nothing to do with a virus, just a deal with the immediate fallout from shut- crisis is more of a distant danger – unless you live planet on fire. Meanwhile, we con- ting down vast parts of the economy in an in growing wildfire, flood, heat wave, hurricane tinued to pour kerosene on the fire, attempt to contain the virus. or drought zones. while somebody was off consulting Just the $71 billion emergency wage sub- The human tendency to procrastinate is stakeholders to find the telephone sidy to get Canadians through the next few strong, but when the bell tolls, our survival in- T number of the fire department. months was more than the entire $70 billion stincts kick in.

42 • Corporate Knights • Spring 2020 Illustration by Pete Ryan Historic job losses triggered by the pan- is politically viable has moved. It’s important to HSBC Global Research. demic, combined with collapsing oil prices, that our policies be grounded in the new real- This time is different: we have a govern- will plunge every province in Canada into ity. The sheer scale of expected stimulus over ment that was elected with a strong mandate recession this year, according to RBC fore- the next two or three years will likely cast the for climate action and a clear 2050 net-zero casts. As the conversation starts to shift from die of our economy for decades to come. carbon emissions target. Just don’t expect that, immediate crisis relief to economic recovery, The last time officials at the federal Fi- on its own, to have much sway on the finance Canada has an opportunity to recover stron- nance Department had to come up with a officials who will be crafting the stimulus. They ger than ever. stimulus plan was in the wake of the global will be preoccupied with a single objective: get While in the past it has been difficult to financial crisis in 2008/09. Just 8% of the the economy growing and people back to work make bold moves that would allow Canada to stimulus had a climate dimension, com- as quickly as possible. surf the clean economy wave rather than be pared to 12% in the U.S., 38% in China But there is a strong economic argument wiped out by it, the Overton window of what and 59% in the European Union, according that a conventional stimulus will not be

Spring 2020 • Corporate Knights • 43 GREEN RECOVERY good enough. Yesterday’s playbook puts us at risk of being left behind at a critical time of transition, as global demand and technology shift in favour of a more efficient low-carbon economy. r e v v i n g c a n a d a ’ s Applying a climate lens to the recovery package can identify some of the best opportunities to get people back to work in the short term while building a more resilient Canada for the long term, poised to capitalize on global e c o n o m y w i t h growth trends. One 2009 study by the International Monetary Fund on climate policy and recovery found that “environmental measures have z e r o - e m i s s i o n s been a valuable part of fiscal stimulus packages,” emphasizing that “energy efficiency investments are particularly well-suited to stimulus spending,” because they can be ex- f r e i g h t ecuted quickly. In April, leaders in Canada’s clean energy sector wrote to the prime minister calling for a clean-energy-focused stimulus in order to “build a better, more resilient economy,” By Carolyn Kim noting a special need to invest most in those Ontario regional director with regions that have been hit hardest by the collapsing oil price, such as Alberta. the Pembina Institute Encouragingly, there are signs that clean economy investments could take centre stage in federal economic recovery plans. Said a spokeswoman for Environment Min- ister Jonathan Wilkinson in April, “When the recovery begins, Canada can build a stronger and more resilient economy by investing in a cleaner and healthier future for everyone.” s we work to rebuild Canada’s econ- zero-emission heavy-duty vehicles can future- Inevitably, there will be pushback from omy in the wake of COVID-19, our proof Canada’s auto industry for electrification some of Canada’s more entrenched interests. investment choices will help deter- while growing the job market — including The response must be clear and unequivo- mine our success in a competitive, supply-side policies like research and develop- cal: a sustainable path is the only way for- 21st-century low-carbon economy. ment funding, loan guarantees and tax breaks ward if we want Canada to thrive long term. With transportation responsible for for manufacturing plants. As Canadians, this is our moment to a quarter of Canada’s greenhouse Canada has pioneered the development of think and act big. In that spirit, Corporate gas emissions, decarbonizing the hydrogen fuel cell technologies, and hydrogen Knights is providing space in our magazine, A sector is key. fuel cell trucks could play an important role. on our website and in a new weekly live se- A multitude of investments can be made to There is ample opportunity for continued gov- ries format to explore how Canada can use a help kickstart and encourage the greening of ernment support in developing and producing renewed climate-based approach to build a Canadian trucking in particular, which repre- hydrogen fuel cell technology – especially for stronger economy. sent 83% of our freight emissions, according to heavy-duty vehicles. Our coverage and conversations will re- the Conference Board of Canada (freight trans- To ensure that supply chain growth is volve around six themes: forests, buildings, port as a whole represents 10% of our national paired with investment in infrastructure, the power, transport, heavy industry and oil, emissions). government should identify major corridors starting in the following pages with contri- First, a mandatory federal zero-emission along which to invest in publicly funded zero- butions from some of Canada’s most inspired vehicles (ZEV) sales target would help increase emission heavy-duty refuelling/recharging sta- minds. We consider the capital requirements investments in production to get more elec- tions targeted at long haul operations, and cre- and the measures required to enable a fast tric cars, trucks and buses on the road. While ate a five-year investment plan. rollout and spur job creation, energy savings a number of zero-emission truck models and Finally, to encourage vehicle switching in and emissions reductions. components are being produced domestically, the trucking sector, the government should al- We hope this will embolden Canadian the transition to electrification in truck pro- locate funding and loan programs for low- and decision-makers to seize the opportunity to duction is still in the early stages. zero-emission heavy-duty vehicles to help shift build back better. K Targeted policy support for low- and gears for a greener future. K

44 • Corporate Knights • Spring 2020 Illustrations by Jack Dylan higher – but quickly falling – upfront costs. By 2030, an electric bus is expected to have the same sticker price as a diesel one. Add to that lifetime fuel savings in the hundreds of thousands per bus and it’s clear where the future of i t ’ s t i m e c a n a d a transit is headed. And yet, buses have lifespans of a decade or more. Without government support, transit authorities may be forced to buy more diesel buses, locking in obsolete technology c a u g h t t h e for years to come. Vancouver transit opera- tor TransLink has plans to electrify its bus fleet but has made it clear that doing so in a timely manner may be impossible without e l e c t r i c b u s additional funding. Last year, the Government of Canada signed the international Drive to Zero pledge, By Merran Smith and Sarah Petrevan a commitment to support zero-emission commercial vehicles like buses and trucks. The Merran Smith is the executive director and Sarah Petrevan prime minister also indicated support for 5,000 is the policy director at Clean Energy Canada zero-emission buses in a recent mandate letter to the minister for infrastructure and communities (as of 2017, there were 67,000 motor coaches, school and transit buses in Canada). While electric buses currently cost twice as irst, the good news. Globally, electric buses Canada has relatively few electric buses on much as diesel ones (roughly $500,000 more displaced an estimated 270,000 barrels of its roads, especially compared to the 16,359 per bus), independent analysis has shown that F diesel per day last year, according to a Bloom- fully electric buses in Shenzhen, China. There government rebates of roughly $250,000 could berg New Energy Finance study. That’s a real – are signs of leadership at home, however. help make them competitive when factoring and growing – dent in transportation pollution. Transit authorities in Montreal and BC have fuel savings. That amount goes down every year But even though Canada is home to four committed to providing 100% zero-emission as electric bus prices fall. prominent electric bus manufacturers, its transit transit by 2040. For now, many Canadian- Switching to electric buses is about more and school fleets have been slow to adopt this made electric buses are sold to California, lead- than just cutting pollution. It’s about saving climate-change-fighting technology. It’s a missed ing companies to open manufacturing facilities money in the long run, creating healthier com- opportunity both to cut carbon pollution and outside Canada. munities and helping our homegrown manu- support our electric bus companies (like Quebec’s Electric buses have many advantages, not facturing industry become competitive on a Lion Electric and Vancouver’s GreenPower) by the least of which are significant fuel, envi- global scale. So yes, it’s time Canada caught the creating a stronger market for them at home. ronmental and health cost savings that offset electric bus. K

p l u g g i n g i n anada can decarbonize its power grid by 2025, Canada’s housing stock can be kept to $100 electrify home heat and personal vehicles, and billion or less, perhaps much less, by doing so t o e n e r g y e f f i c i e n c y C drastically reduce greenhouse gas emissions – on a mass scale while modernizing an industry but only with energy efficiency at the centre of the that’s ripe for disruption. a t h o m e a n d o n strategy. Today, Canada’s largely clean grid sup- By way of context, Canadian investment in t h e r o a d plies less than 25% of Canada’s energy. The rest residential buildings runs more than $100 billion comes mostly from natural gas and oil, to heat annually, in addition to more than $30 billion in and power buildings and vehicles. That’s why ef- household heating fuel and electricity expenditures. ficiency is the key to electrification. If we drive demand down at the root – cut- Electric vehicles (EVs) are four to five times ting costs and creating green-building and EV- more efficient than today’s vehicle fleet and cost manufacturing jobs along the way – provinces less to own and operate than their combustion that now depend on coal and gas plants can in- counterparts. Average heat loss from existing stead import clean electricity from hydro-rich By Ralph Torrie buildings is 75% higher than from buildings provinces nearby. Enabling that shift with new An expert in the field of energy and that have been retrofitted using best practices, transmission lines – in addition to 40 gigawatts while heat pumps are three to five times more of new wind capacity – will cost roughly $85 environment and the president of efficient than the baseboard heaters and gas billion. In the interim, it’s the efficiency invest- Torrie Smith Associates furnaces they replace. The cost of greening ments that will keep the grid carbon-free. K

Spring 2020 • Corporate Knights • 45 GREEN RECOVERY

advantages and builds on and secures that edge. Three moves would accomplish that. First, in a carbon-constrained global economy, jurisdictions that produce goods and services with low embedded greenhouse gas emis- h o w b l u e sions will have an edge over those that don’t. For a glimpse of things to come, think of Apple’s recent first purchase of aluminum from Quebec. Federal leadership, and collaboration with the provinces and territories, should be focused on p o w e r c a n s p u r cleaning our electricity supply first and foremost. Provinces with significant hydroelectricity surpluses share borders with others still reliant on coal and diesel that are looking for cleaner c a n a d a ’ s g r e e n alternatives. Ottawa can facilitate the simple solution of stringing new “extension cords” from clean and renewable energy supply to demand (i.e. new transmission lines), as it recently did r e c o v e r y between Manitoba and Saskatchewan. Ottawa could also help waterpower generators looking to optimize the performance and longevity of their facilities. By refurbishing By Anne-Raphaëlle Audouin and redeveloping existing generation facilities, some producers could increase annual output President & CEO of WaterPower Canada by a quarter or more. These investments represent a win-win: they typically yield a lower cost of electricity than investments in any other supply options do, and they increase clean and renewable electricity supply with a negligible additional environmental footprint. Finally, like any savvy investor, Ottawa should be planning for the future. The falling costs of harnessing wind and solar energy means our electricity supply will be increasingly variable and weather-dependent. At the same time, Canada will need to significantly increase flexible and dependable generation and energy storage to balance supply and demand during periods of planned and unplanned wind and solar energy surpluses and deficits. Waterpower does this well. Augmenting our existing fleet with more energy-storage approaches, such as “pumped storage” and “green hydrogen,” will also be needed. Proposals for both are already being developed across Canada. For instance, five of the most promising pumped hydro projects could add up to 2,400 megawatts of installed generation capacity with an estimated capital cost of $6 billion. Canada needs more investment in green infrastructure. It’s only common sense to focus s I write this, the government is di- crisis has passed, the economy will need a seri- on both our green and our blue (waterpower) recting emergency support where ous boost. economy. Leveraging and building on our it is most urgently needed – to our Whatever that stimulus looks like, it will existing competitive waterpower advantages healthcare system and Canadians need to accomplish two things: get Canadians would add billions of dollars of investment and affected by COVID-19. Over a back to work and address the climate crisis tens of thousands of new jobs each year, to a million people have applied for as- with strategic infrastructure investments. The sector that already contributes more than $30 sistance. We are in the thick of it, smart approach would involve investing in in- billion to the Canadian economy and supports A but once the greatest danger of this frastructure that leverages existing competitive a labour force 130,000 strong. K

46 • Corporate Knights • Spring 2020 Illustrations by Jack Dylan last-mile delivery fleets and mass transit. It should all help meet growing charging and refuelling demand, but it’s a fraction of s o u p i n g u p t r a n s - what’s needed to roll out a coast-to-coast-to- coast ultra-fast charging infrastructure. ATCO c a n a d a h i g h w a y w i t h estimates that we could install 500 stations u l t r a - f a s t e v c h a r g e r s across the length of the Trans-Canada Highway, each with 10 ultra-fast five-minute chargers for cars and two ultra-fast chargers for heavy-haul By Corporate Knights staff trucks for $3.45 billion – and possibly cheaper, if new power sources don’t have to be installed at each station. The 5,000 ultra-fast car chargers would cost approximately $550 million and the 1,000 truck chargers $150 million, with the power generation installs running up to an additional $2.75 billion if new power is required at each station.* ome heavy-hauler truckers spend upwards bonizing our transportation sector and transi- Last year the federal government set a of $75,000 just on diesel, while the average tioning to a low-carbon future, but it’s mov- seemingly ambitious target of ZEV sales reach- S Canadian driving an F-150 pickup 20,000 ing at a snail’s pace. The federal government ing 10% of light-duty vehicles sales per year kilometres gets dinged for $2,000 at the pump. announced, through the 2019 budget, $130 by 2025, 30% by 2030 and 100% by 2040. If Imagine cutting those fuel bills by 75%, with- million over five years to develop a network we’re going to meet those targets, Canada needs out the range anxiety many Canadians current- of higher-voltage ZEV charging and refuelling to put the development of an ultra-fast Trans- ly have around electric vehicles or long waits stations in the places where Canadians live, Canada charging network in top gear. K for the vehicle to juice up. work and play. Support is also available to de- The Government of Canada is steadfast velop strategic projects for electric vehicle and *Costs are based on consultation with industry in its belief that electrification is key to decar- hydrogen infrastructure for corporate fleets, experts.

dows, and making buildings climate-proof, r e a d y i n g c a n a d a ’ s all while maintaining affordability to meet the urban housing crunch. New regulations, in- b u i l d i n g s f o r t h e cluding stiffer building codes and mandatory upgrades for existing buildings, are being de- c l i m a t e o f t o m o r r o w veloped. But we also need to increase demand for these measures – and incentives can help. For commercial buildings, retrofits can be -fi By Tom-Pierre Frappé Sénéclauze nanced through 10- to 20-year loans tied to property taxes. For residential buildings, the challenge Director for buildings and urban solutions lies in helping homeowners pay for the retrofits at the Pembina Institute and connecting them to qualified contractors who can do the work. Access to financing – a mix of loans and grants – would give millions of people the incentive they need to protect their assets. The necessary capital can be raised by the government through green bonds or other means and then distributed by commercial banks that already have the infrastructure in place and mortgage relationships with homeowners. magine a home that can stand up to extreme ly natural gas and oil heating – by reducing en- We need to ramp up all green-building fund- weather, be it heat waves or water surges, while ergy waste and heating homes with heat pumps ing models over the next five years, with the goal I bringing your gas bill to zero and keeping your powered by clean electricity or renewable gas. of retrofitting half of Canada’s building stock by electricity bill manageable. Considering that 2. Make sure buildings are ready for ex- 2030. It will take two decades to complete deep buildings are responsible for 12% of Canada’s treme weather, such as heat waves and flooding. retrofits of all buildings in Canada, but once greenhouse gas emissions, our building sector 3. Use building materials with low-embed- they’re done, Canadians will sleep easier know- needs to stop imagining and act. Three main ap- ded carbon to reduce upstream emissions. ing that their homes and businesses are ready proaches could halve those emissions: The key lies in switching fuel sources, in- for those heat waves and water surges – and that 1. Transition away from fossil fuels – name- stalling high-efficiency insulation and win- their utility bills are shock-resistant, too. K

Spring 2020 • Corporate Knights • 47 GREEN RECOVERY

t h e t i m e i s r i p e f o r a n i n d i g e n o u s c l i m a t e f u n d g r o w i n g c l i m a t e

By Vicky Sharpe s o l u t i o n s i n Corporate director and former president & CEO of Sustainable Development Technology Canada f o r e s t s ,

quality translates into a civil society, one that acts cohesively in the interests of the many. Be- E sieged by division and inaction on the climate n o t o n t r e e s crisis, we need solutions that are far broader than technological fixes. A $1 billion per year Indig- enous Climate Fund (ICF), if established by the federal government, could offer some multifac- eted solutions. What would such a fund look like? Its first mandate would be to work with Planting 10 billion trees could help Indigenous peoples across Canada to build smart communities (appropriate, energy-efficient -in deliver a liveable future – but only frastructure in remote and urban communities that delivers smart buildings and amenities, clean energy, water and waste management alongside if we get it right health, education, training, communication and social services). This endowment part of the fund By Daimen Hardie would not be intended to generate standard fi- Co-founder, Community Forests International nancial returns; it would use Canadian clean technologies to amplify results of investments already made by federal and other governments. Its second mandate would be to set up an asset fund to co-invest in global infrastructure assets (together with pension funds and large planted more than a million trees with to make this happen. Planting trees is the most project developers) that meet strict investing my own hands and it didn’t really help popular natural climate solution right now and criteria. That criteria would integrate the UN the climate. is rapidly gaining investment from businesses Sustainable Development Goals and recommen- One of the most powerful ideas of and governments around the world. dations from the Task Force on Climate-related our time is that people can put things The Liberal Party of Canada has pledged $2 Financial Disclosures. right in the world by protecting and re- billion to plant two billion trees over the next Under this umbrella, Indigenous communi- storing Earth’s natural systems, includ- 10 years, which equates to reforesting a mil- ties may decide to raise additional capital for par- ing planting billions of trees to reverse lion hectares of land. To put this in perspective, ticipation in projects, such as power transmission climate breakdown. I believe deeply in that’s only 0.25% of the country’s total forest lines or planting forests for carbon sequestration, this vision – I’ve devoted my life to it area. It’s a start, but it’s an underwhelming thereby helping with Canada’s climate change by co-founding Community Forests target for a nation with such immense natural commitments. This part of the ICF would be the International – and this is exactly why landscapes and a capacity to deploy natural cli- long-term wealth generator, with some of the pro- I I’m so critical now. mate solutions at a globally significant scale – ceeds redirected to the “smart community” part of A pivotal study titled Natural Climate Solu- especially considering that we’re talking about the fund, hence increasing the endowment, with tions describes how combining deep fossil-fuel our best response to the sixth mass extinction the rest cycled back into the asset fund. reductions with equally ambitious ecosystem- event in roughly the last 443 million years, this The time is ripe for an Indigenous Climate Fund. restoration efforts globally gives us a solid one caused by people. If Canada gets this right it could support economic chance of keeping heating below the Paris lim- In New Brunswick and Nova Scotia alone, reconciliation and equality and address the climate it. There is still hope in the 11th hour, even as more than 100,000 hectares of forest are clear- crisis while serving as a model for the world. K the UN warns we have only 127 months left cut every year. All two billion trees could be

48 • Corporate Knights • Spring 2020 Illustrations by Jack Dylan planted within these two small provinces and it wouldn’t keep pace with the cutting. What’s more, replanting a hectare of land for every hectare of forest cleared is not equivalent, because it takes upwards of 100 years of ongoing protection and restoration to successfully I planted more than rebuild a healthy forest. Tree planting is often a million trees with treated as the final act of restoration, but putting a seedling in the ground is just the first my own hands and step. Crowther Lab, an ecosystem research group it didn’t really help whose work inspired the recent surge in tree- planting ventures, estimates that Canada could the climate. To make be planting 20 times more than the present target. Marc Benioff, the founder of Salesforce, tree planting work, announced at the World Economic Forum that we have to focus his 1t.org initiative will plant between 50 and 100 billion trees in the United States and one on natural forest trillion trees globally by 2030. Crowther Lab’s research suggests that achieving the trillion-tree regeneration. target would store about two thirds of all the carbon emissions produced since the Industrial Revolution. This is the level of ambition we need – something for the next generations to remember us by – but even so, all these targets are misplaced. Several scientists have pointed out flaws in the Crowther Lab model, including recom- mendations to plant trees in areas where they don’t grow naturally or where they might even heat the planet rather than cool it. But the most critical point missed in all this is that planting more trees doesn’t always grow more forests – and it’s entire forest ecosystems that store the lion’s share of carbon, not just trees. For example, an average of 70% of the carbon stored in healthy forests is actually stored in soil. The Canadian government will pursue a 50% cost-share to deliver its program, aiming to raise $4 billion overall to plant two billion widely across Canada. This checks out with the targets. Restoring Earth’s ecosystems is among trees – a $2 per tree budget. That $2 must go Liberals’ estimation that the program will sup- the most important work on the planet right a long way. It has to cover the costs of grow- port 3,500 seasonal jobs. These are extremely now, and the two-billion-tree program could ing a seedling, which takes at least two years demanding jobs though, and out of the $2 per go a lot further to acknowledge and remuner- of professional care. Then there’s readying a tree, workers themselves will likely receive only ate the worth of these jobs. planting site, and in the best models this in- 15 to 20 cents, or $15,000 to $20,000 gross Canada could reach for a much higher goal cludes securing legal land title or some com- per season. than two billion trees over 10 years. The coun- parable land covenant to ensure the trees won’t To make ends meet the rest of the year, try’s forestry industry already plants more than get cut down. Then comes transportation and tree-planters often work temporary service- 600 million trees per year – three times more caring for planting stock and, of course, the ac- industry jobs, and the unfolding COVID-19 than the output the government is targeting. If tual planting. Volunteers can help, but most of crisis now puts them in even more precarious Canada responded to climate breakdown like them tire after their first thousand trees (and employment. Anyone who has worked in a the emergency it is and invested proportionally, often plant those incorrectly, I’m afraid, result- tree-planting camp can tell you how tenuous the country could undoubtedly plant an addi- ing in low survival rates, like the 90% mortal- occupational health is, too, when all the work- tional 10 billion trees. Simply scaling up exist- ity reported in Turkey’s recent 11-million-tree ers live in tents, drink chlorinated lake water ing models will not bring about a transition to mass planting effort). and perform like professional athletes every day a fair, climate-smart economy though. We need A professional tree-planter plants around – without so much as duct tape to protect raw entirely new models. Besides, the opportunity 2,000 trees per day and 100,000 per season hands, or sometime faces when the blackflies cost of doubling down on this tree-planting on average, although the intensity of the ter- are especially bad. It raises the question of who pathway is potentially much higher than any rain and length of the planting seasons vary will actually bear the costs of achieving these cash outlay we can imagine.

Spring 2020 • Corporate Knights • 49 GREEN RECOVERY

Tree planting is charismatic and when done 99.75% of the country’s immense forests, in- tions at a historic scale and speed. effectively is definitely beneficial. Its broad ap- cluding industrial forests, could be transitioned Reducing a complex problem into a simple peal is invaluable, considering how politics to climate-smart management optimized for solution, like reducing a complex forest ecosys- have hindered climate action ever since the first carbon drawdown. Transferring land back to tem into a simple number of trees, is an effec- international climate treaty in 1992. In this cri- First Nations with ongoing reparations to sup- tive way to gain mass appeal but disappoints sis, the pace of our response is critical; the import forest protection could move us closer to when it comes to delivering real results. We’re pacts of a changing climate accelerate over time socially just solutions. literally at risk of losing sight of the forest for and if left unchecked will outpace our ability to Protecting existing forests in all these ways, the trees here – and the trees are good. They’re respond altogether. Planting more trees is be- unlike planting new trees, would have an im- just not enough. If we’re betting on natural cli- ing presented as a low-cost pathway out of the mediate impact on the climate. This is Canada’s mate solutions to secure a liveable future, we emergency, but it isn’t fast and it isn’t adequate real opportunity to deliver natural climate solu- really need to get this right. K on its own. A recent analysis from the Smart Prosper- ity Institute estimated that Canada’s two billion trees would deliver carbon sequestration at a rate of $20 per tonne, well below the $50 per tonne cost-feasibility threshold. The impact is achieved over the lifetime of the trees though, not immediately, because it takes decades for a tiny seedling to grow up and have a positive s e e d i n g c l i m a t e effect on the climate. Planting trees is always an investment in the future, and today it’s an invaluable investment in the future of our climate, but if we don’t match this with immedi- a c t i o n o n ate emission cuts we’ll lose by winning slowly. Prime Minister Trudeau stated that Canada will finance the two-billion-tree program with revenues from the Trans Mountain Pipeline, a c a n a d a ’ s f a r m s major piece of oil-and-gas infrastructure the government purchased from Kinder Morgan in 2018. This illustrates a fundamental and often overlooked point: investments in natural climate solutions stand a chance of working only Low-input sustainable agriculture is if they’re paired with sweeping reductions in fossil fuel extraction. We can’t do one without helping farmers store carbon underfoot the other and expect anything but failure. The climate responds to physics, not spin. Canada’s vast forests could be protected By Wayne Roberts and restored as some of the planet’s greatest Canadian food policy analyst and writer and the former manager climate safeguards, holding enough carbon to of the Toronto Food Policy Council help save the world. But that’s not the path we’re on. With intensive harvesting and natural disturbances worsened by climate change, Canada’s forests presently emit more carbon than they absorb. When trees are cut down or burned, they release emissions back into the atmosphere. That’s why the million trees I planted didn’t really help the climate: I planted them on industrial forestlands across Canada, lands ike everybody else, farmers talk a lot On February 11, Agriculture Day, a group destined to be clear-cut again on short rotation. about the weather without doing of these farmers, backed by the National To make tree planting count for the cli- much of anything about it – likely Farmers Union, Canadian Organic Growers mate, we have to focus on natural forest regen- because there’s not much they can do. and several food-related environmental groups, eration and durable improvements to ecosys- But after a decade of wild swings announced the formation of Farmers for tems, using proven strategies like legal rights to in weather patterns, crop prices and Climate Solutions. Indigenous and other collective communities farm debt levels, some Canadian They own up to the fact that agriculture that do a better job of keeping forests intact farmers are starting to look at ways is a significant cause of global warming. They over the long term – that’s what the science they can do something about the also insist farming can help solve the problem. supports. And Canada can go so much fur- climate while improving their farm “Canada can’t get to net zero without farmers ther than planting two billion trees. The other L business. pitching in,” says Gillian Flies. She co-owns

50 • Corporate Knights • Spring 2020 Illustrations by Jack Dylan The New Farm in Creemore, Ontario, and rep- scrappiest voice for farmers, but is presented by doubling since the turn of the century and resents Canadian Organic Growers on the new NFU leaders as “the beginning of a conversa- reaching $106 billion in 2018. climate action group. tion on the links between the farm crisis and On the positive side, Qualman also believes “Canada can’t grow enough trees to store the climate crisis,” Qualman says. that farmers can protect both the climate and enough carbon to get to net zero by 2050,” He says we shouldn’t blame agriculture for their family farms by moving away from high- Flies says. “We also need farmers who can store increased emissions; instead, blame what he petrol inputs. By cutting back on inputs, they carbon in the soil, where it will create healthier calls “petro-industrial inputs.” will dramatically cut down their costs and keep crops and more resilience in case of drought or In the NFU report, Qualman links both more of the money that people spend on food. storms.” crises to the push for farm exports that the fed- At present, farmers keep only five cents of ev- As well as rebuilding their soil, some mem- eral government has put on steroids since 1990. ery dollar of food sales. They need to adopt a bers of the new coalition say they can cut their To gird themselves for mass exports, Canadian more-from-less approach – higher margins on on-farm fossil fuel use in half by 2050. less volume. The combination of energy conservation The NFU report contains a catalogue of and carbon storage could make farmers a major “on-farm measures and government policies contingent in the green business community of that can, as a package, reduce GHG emissions 2050. from Canadian farms by approximately 30% Though the new coalition is anything but “Canada can’t get by 2030 and perhaps by 50% by 2050.” cash-rich, Flies is looking for help from the It lays out three ways farmers can cut costs federal government’s Canadian Agricultural to net zero without and global warming emissions: Partnership, which has a $3 billion budget to First, farmers can reduce their emissions partner with farmers and communities to boost farmers pitching in.” from energy use through changes such as agricultural competitiveness, prosperity and switching to electric cars and tractors and in- sustainability. — Gillian Flies, Farmers creasing their use of solar and wind power. Supporting Flies’s optimism is none for Climate Solutions Second, farmers can reduce their use of other than the UN’s normally gloomy nitrogen fertilizers by using “green manure” Intergovernmental Panel on Climate Change (cover crops rich in nitrogen), rotating peren- (IPCC), which published a report called nial crops and implementing other sustainable Climate Change and Land in August. techniques. Agriculture on its own is commonly held Third, farmers and ranchers can miti- responsible for 13% of all emissions – mostly gate the global warming impacts of livestock from methane gas and nitrous oxides from through various methods. They can reduce overuse of nitrogen fertilizers and animal ma- the absolute number of cattle and dairy cows nure stored in lagoons by factory farms. On a they raise, although Qualman cautions that more upbeat note, the IPCC identifies sustain- there are important carbon-storing benefits able land management as a positive force that to raising cows and steers mainly on pasture can lock carbon in plants and soil, not the at- and leaving their manure on the land, where mosphere. Farmers can plant more tree crops, it adds soil fertility – particularly in areas that reduce their tillage, keep their lands covered are too rocky to support crops. The global instead of bare during the winter, and feed warming impact of ruminant emissions could livestock on wild and perennial deeply rooted be offset or countered by solar panels and grasses, the IPCC notes. trees dispersed through the fields and by car- If such practices were applied to degraded bon stored in the soil covered by pasture. Such or eroded soil – about half the food-produc- strategies are commonly called low-input sus- ing lands on the planet – the IPCC suggests tainable agriculture. that farmers might store or sequester almost as All three energy conservation strategies much carbon in the soil as they release to the are a bold departure for protest groups, which atmosphere. normally protest governments’ failures to take The optimism that buoys Flies and Farmers action. Here they are calling for farmers and for Climate Solutions also draws on a November farmers upped their intake of fertilizers and ranchers to act, and for governments to support 2019 report for the National Farmers Union loaded up on debt to buy heavy machinery. As and enable that grassroots action. (NFU) by energy and agriculture expert Darrin inputs went up, emissions went up in lockstep, This is where the story circles back to Qualman, author of Civilization Critical: Qualman argues. organic farmer Gillian Flies’s hopes for the Energy, Food, Nature, and the Future. Use of nitrogen fertilizers (made primarily Canadian Agricultural Partnership (CAP). A Saskatchewan farmboy who’s a former from natural gas) doubled, leading to a major Flies hopes CAP will give a hearing to farm- researcher for the NFU, Qualman was asked to rise in nitrous oxides, some 300 times more ers keen on making their farms more sustain- present a think piece to the NFU conference in powerful in their global warming impact than able. She worries that too many of the grants November. The report, Tackling the Farm Crisis carbon dioxide. Overall global warming emis- require the farmers to pay 50%, which is often and the Climate Crisis, has not been officially sions from agriculture went up 20% in that not an option, given that the great majority of adopted by the NFU, traditionally Canada’s time period. All the while, farm debt load grew, farmers are losing money.

Spring 2020 • Corporate Knights • 51 GREEN RECOVERY

Flies also worries that the CAP program is multiple problems,” says Flies. In these “post-political times,” Dale worries, too tied to boosting exports and isn’t looking Whatever the government decides in the too many discussions zero in on one bad factor, for the multiple benefits that climate-friendly near future, University of Toronto geographer such as carbon, that can lead to a quick techni- agriculture can bring. When farmers plant Bryan Dale thinks the NFU report and the cal fix. “We need to open up a broader discus- more trees on their land, those trees provide Farmers for Climate Solutions initiative are sion,” he says, “maybe even talk about a Green shade for animals, raise nutrients from deep “a positive and deliberate provocation to get a New Deal for food and agriculture,” as is being in the ground, protect soil from erosion dur- new conversation going.” discussed south of the border. ing heavy rain and strong wind, and also store Dale, who completed his PhD on farming Qualman hopes his report “will start a heck carbon in their trunks and branches. and global warming in Canada in 2019, likes of a conversation. Farmers are paying attention All such benefits are public goods that can the way both groups talk about all the benefits because they know that either they come up create as much value for Canadians as the sale that good farming can produce, from more nu- with good solutions or someone else will im- of hogs to China. “The government is miss- tritious food to safer habitats for pollinators, to pose solutions on them. If farmers don’t lead, ing an opportunity to work with us to solve cleaner water, to reduction of greenhouse gases. bureaucrats will.” K

the industry’s effort to cut its carbon footprint or rely on tougher regulations and a rising carbon price to achieve the same end. Prior to the current pandemic crisis, com- d o e s i t p a y panies were investing more than $1 billion annually to develop technology that lowers their costs and reduces the greenhouse gas emissions per barrel of crude oil produced. That effort reduced the GHG emissions from each barrel of t o g r e e n o i l ? crude – but not enough to offset the increase in production that made the oil sands sector Canada’s fastest-growing source of GHGs. With the recent crash in prices – which saw Canadian heavy oil drop to US$3.82 a barrel Fuelling innovation in the oil and in March – the industry will be hard pressed to invest in GHG-reducing technology, even when that spending would cut costs. gas sector, while contentious, could However, there may be a heightened role for government. The International Energy generate significant GHG payback Agency in March called on governments around the world to ensure that promised stimulus spending supports climate action, calling By Shawn McCarthy the crisis a “historic opportunity . . . to reduce Sustainable finance and climate journalist and senior counsel dirty investment and accelerate the transition.” Al Reid, an executive vice-president at for Sussex Strategy Group Cenovus Energy, said that producers will require substantially more government support if they are to accelerate the effort to reduce GHGs per barrel. Cenovus said in January that it aims to reduce that GHG intensity by 30% by 2030, though total emissions would remain flat due to rising production. The company said it aspires to virtually eliminate carbon emissions from its operations by 2050, via solvent-based technology and CO2 capture. Last September, Suncor said it would invest eck Resources’ decision to shelve its proposed Canada needs “a framework in place that $1.4 billion in a cogeneration facility that will Frontier oil sands mine prior to a federal per- reconciles resource development and climate produce steam and electricity, a move it says mitting decision in February is seen by many change, in order to produce the cleanest possible would provide an attractive return and reduce as a clear signal to the country that a strategy is products,” wrote Teck’s CEO, Don Lindsay. emissions by 2.5 million tonnes per year. With needed to ensure the oil and gas sector contrib- Essentially, the federal government will have to the price crash, that project was shelved; federal T utes to Canada’s climate change goals. decide whether to provide financial support for support could help revive it.

52 • Corporate Knights • Spring 2020 Illustrations by Jack Dylan Advertisement

Spring 2020 • Corporate Knights • 53 GREEN RECOVERY

A Corporate Knights analysis released last fall, the Capital Plan for Clean Prosperity, concluded that supporting innovation in the oil and gas sector would generate significant payback in GHG reductions per dollar invested. The plan, a collaboration with industry, government and academic experts, calls for a massive federal capital-spending g e t t i n g program to drive the low-carbon transition in five sectors (buildings, transportation, electricity, heavy industry and oil and gas). It calculated that a $21 billion program over t h e c a r b o n o u t six years would make 30% of oil and gas operations 50% more energy/GHG efficient. It would result in a 30-megatonne reduction of oil and gas emissions at the end of that period, from 183 megatonnes in 2017 to 153. o f c o n c r e t e (Assuming that companies don’t respond by increasing production, so that total emissions either rise or flatline.) However, the notion that the Canadian a n d s t e e l government should provide financial support for oil industry innovation is contentious, particularly when it has committed to ending fossil fuel subsidies. By Chris Bataille In February, a report from Calgary’s Energy economist who serves as a lead author Pembina Institute, The Oilsands in a Climate for the Intergovernmental Panel on Climate Change Constrained Canada, concluded that higher carbon prices and tougher regulations are necessary to provide incentives to deploy game- changing technology. Tzeporah Berman, international program hen it comes to tackling Canada’s carbon for net-zero CO2 emissions the Canadian Steel director for Stand.earth, says the industry is emissions, the fuels that power our cars Producers Association has set for itself. “not moving fast enough because they don’t W and heat our homes garner the most at- Here’s a breakdown of how a $1 billion fed- want to spend the money . . . Either you design tention, but the steel and cement that go into eral investment per year through 2025 could a high tax that supports the cleanest projects or those vehicles and buildings are also highly help bring these climate game-changers to scale: you regulate and require CCS [carbon capture carbon intensive. Concrete and steel together • $100 million per year to develop mea- and storage].” account for 14.7% of global carbon dioxide surement and verification systems to allow Industry supporters insist they can be emissions, which cause most global warming. carbon pricing and regulations to operate more part of Canada’s climate change solution. Most of the technologies we need to drastically effectively, and allow already lower emissions Three of the biggest producers – Cenovus, reduce these emissions already exist: in patents, producers to capture market share; Canadian Natural Resources and MEG in some engineer’s lab or in commercial use • $200 million per year for research and de- Energy – have said they aim to eventually where conventional technology doesn’t work velopment; and produce crude with no net GHG emissions as well. • $700 million per year in smart, dynamic from their operations. Critics say Canada Another way to cut emissions is by encour- subsidies to help emerging technologies and should not be subsidizing increased produc- aging design that uses less steel and cement approaches prove their effectiveness for broader tion when the world must wean itself off fos- altogether – and uses them more strategically use (the less GHG-intensive the technology, sil fuels entirely. Global investors are increas- combined with other materials, like wood and the greater the subsidies). These would apply to ingly demanding that those companies show sustainable plastics. Updated building and ultra-low-emissions steel, cement and chemical they can prosper in a carbon-constrained infrastructure codes or regulations that put a products and their substitutes for public infra- world. price on carbon would encourage builders to structure, buildings and vehicles. The subsidies Adding to the challenge is the impact of try out alternatives. could go toward making all new and retrofit the COVID-19 pandemic, which has gutted Other game-changing technologies are government buildings and infrastructure low demand for oil. The debate is on over whether within reach, but they need developmental emissions in both materials and energy use. the federal government should spend billions support or guaranteed early markets to build With this $1 billion green jolt to the steel, ce- bailing out Big Oil. One way forward: tying economies of scale: primary steel made with ment and other materials sectors, the government that funding to cutting the industry’s carbon hydrogen and electricity instead of coal, and could stimulate the economy in the short run, footprint could help transition the sector to- new cement chemistries and processes that are reduce Canada’s emissions and improve our long- ward a lower-carbon future. K virtually carbon-free, in line with the 2050 goal run competitiveness in a low-carbon world. K

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56 • Corporate Knights • Spring 2020 CALL TO INVESTING HEROES & KNIGHT REBALANCE IN CRUELTY ZEROS BITES SOCIETY Which pensions Philip Morris Jump-starting Henry Mintzberg’s are lagging and clears the air, Canada’s clean Declaration of leading on animal while Siemens economy Interdependence welfare? banks on coal p 66 p 60 p 64 p 58 FINAL WORDS

HENRY MINTZBERG hopes to recruit influencers to mobilize his cause of rebalancing society.

Spring 2020 • Corporate Knights • 57 role of galvanizing the population. On the other side are those countries where the gov- WFP/Mohammed Nasher Mintzberg’s Declaration ernments have been starved for funds, businesses are inclined to profiteer, and people are inclined to ignore requests to self-isolate.” Famine of Our Interdependence Mintzberg has been thinking about the politics of imbalance for decades. In 1991, he was in Prague to witness the fall The rebel of management theory issues of Communism, where Soviet-dominated states still call-to-action to rebalance society crumbled after centralizing power at the expense of local communities and the private sector. By Jennifer Lewington Today, he argues that Western democracies are similarly out of balance, but for a different reason: too much power held by private inter- threatens ests at the expense of vibrant communities and a well-functioning public sector. Jennifer Lewington is an intrepid reporter The declaration’s opening lines make clear The declaration, says Mintzberg, is a and writes regularly on many topics, the urgency for action: “Now our world has bottom-up “call to action, not to arms” to pro- millions including business school news. reached the limits of growth driven by the mote collaboration among private, public and pursuit of individual rights at the expense of community interests for society’s benefit. His shared responsibilities. Faced with the threats quarrel is not with capitalism “in its place,” enry Mintzberg, an award-winning of warming, weapons and waste, and the lop- he emphasizes, but with “capitalism out of its in Yemen academic, contrarian thinker and Order of sided distribution of wealth, we must declare place and controlling government.” Canada recipient, is not afraid of big ideas. our interdependence.” Along with its lofty goals, the declaration Described as “the rebel of manage- lays out suggestions for “next steps” by indi- H ment theory” by Forbes magazine in viduals, communities, governments and the 2019, Mintzberg is a tart critic of business private sector to reframe beliefs, reverse wrongs The UN World Food Programme schools that teach graduate management edu- “WE ARE MAKING THE and renew rights. For example, individuals cation as if it were a science like engineering should call out socially irresponsible practices is feeding over 12 million people and medicine. Instead, the management studies CASE THAT PROBLEMS by companies. Speak up instead of remaining professor at McGill University’s Desautels Fac- silent, says Mintzberg. a month. ulty of Management believes managers become Those unaffiliated with the declaration successful leaders through practice and experi- WE FACE, WHETHER praise its lofty ambitions. Our support has so far saved Yemen ence. As faculty director for McGill’s Interna- “[It] is wishful, hopeful and necessary,” tional Masters for Health Leadership, Mintz- writes retired Ryerson University political sci- from the brink. It must continue. berg leads a program to equip global healthcare CLIMATE CHANGE OR entist Myer Siemiatycki in an email. “At a time professionals with tools to become thoughtful when polarization, marginalization and ‘other- Money alone won’t end hunger in leaders, not number-crunching technocrats. INCOME DISPARITY, ing’ seems rampant, it is important to promote Yemen. Yemen needs lasting peace. Now Mintzberg is tackling a very big idea a counter vision. Our environment, economy – a global power imbalance he sees as tipped in and politics urgently need to be recalibrated But until the weapons fall silent, your favour of the private sector at the expense of HAVE A COMMON CAUSE: with a message of local, national and global in- democracy, civil society and meaningful action terdependence and equity.” contribution could keep a child alive. on the climate crisis. IMBALANCE IN SOCIETY.” Mintzberg has no illusions about the effort In January, with nine like-minded allies, to recalibrate the status quo. Every donation helps. he published a “Declaration of Our Interde- But it takes only one spark to start a flame, he pendence” to mobilize a global movement to argues, citing examples from history. In the 16th Please give now: wfp.org/food “restore balance in a lopsided world.” Since its century, he says, Martin Luther challenged the release, more than 800 people have signed the teachings of the Catholic Church, setting off the declaration inspired by the 16th-century Refor- Protestant Reformation, while 1960s-era black mation movement and the American Declara- activist Rosa Parks refused to give up her bus seat tion of Independence. to a white passenger, igniting a national boycott “The Reformation was about the corrup- against racial segregation of public services. tion of the Pope and the corruption of the Over the next few months, Mintzberg higher authorities, and [reform] did not start hopes to recruit social influencers – columnists at the top,” says Mintzberg, whose 2015 Re- The global coronavirus pandemic illus- and opinion leaders – and mobilize those now balancing Society helped lay the foundation for trates, for good and ill, what is at stake, he says. on the sidelines to recognize what’s at stake for the “interdependence” declaration. “Countries seem to be reacting in two ways. them, their children and grandchildren. “We are making the case that the problems One [group] functions in balance, where the “My [concern] about rebalancing society is we face, whether climate change or income dis- sectors cooperate, with governments serving about decades of regress,” he says. “The issue SAVING parity and so much else, have a common cause: the role of protection, businesses serving the now is whether we have reached an inflection LIVES an imbalance across the sectors of society,” he says. role of supply, and communities serving the point [for action].” K CHANGING LIVES Join us @WorldFoodProgramme Follow us @WFP_Canada

58 • Corporate Knights • Spring 2020 Advertisement

Famine WFP/Mohammed Nasher still threatens millions in Yemen

The UN World Food Programme is feeding over 12 million people a month.

Our support has so far saved Yemen from the brink. It must continue. Money alone won’t end hunger in Yemen. Yemen needs lasting peace. But until the weapons fall silent, your contribution could keep a child alive.

Every donation helps. Please give now: wfp.org/food

SAVING LIVES CHANGING LIVES Join us @WorldFoodProgramme Follow us @WFP_Canada

Spring 2020 • Corporate Knights • 59 ANIMAL WELFARE

Japan’s NH Foods (US$64 million), Mexico’s Industrias Bachoco ($US34.3 million) and Dean Foods in the U.S. (US$0.1 million). An NBIM spokesperson states the fund has no specific policy regarding animal welfare.

Canada and California pension plans also clued out on cruelty

The Canada Pension Plan Investment Board holds a total of US$24 million in potentially cruel companies, including US$13.7 million in NH Foods, US$10.2 million in Sanderson Farms and US$0.1 million in Dean Foods. The fund takes no position on animal welfare and makes no mention of it in its 2017 or 2018 Sustainable Investing Reports. The California State Teachers’ Retirement System and California Public Employees’ Re- tirement System both have holdings in Sand- erson Farms, US$5.6 million and US$7.9 million respectively. Neither has a specific policy Is your pension regarding animal welfare. invested in animal cruelty? Some funds are starting Few financial institutions are banking on animal to consider cruelty welfare, but investors are pushing for change A spokesperson for Caisse de dépôt et placement du Québec (CDPQ) says that animal- By Jessica Scott-Reid welfare issues are studied as part of their fund’s pre-investment ESG analysis, and “if concerns arise, we proactively engage in dialogue with companies we’re invested in.” Jessica Scott-Reid is a freelance writer and However, CDPQ has three holdings in po- animal advocate. She writes for major Norway’s pension at back of pack tentially cruel companies, including US$9.2 media across Canada and the U.S. million in Industrias Bachoco, US$1.7 mil- At the top of the list of funds with holdings in lion in NH Foods and US$18.5 million in JBS potentially cruel companies is Norges Bank S.A., the largest meat-processing company in ocially responsible investing is undoubt- Investment Management (NBIM), with the world, which slaughters 13 million animals edly a rising trend. Globally, there is four holdings of concern worth US$159.7 every day. now more than $30 trillion invested in million. Of that, $61 million is invested in JBS S.A. has also not signed on to the ways that take companies’ environmen- Sanderson Farms, a Fortune 1000 company Better Chicken Commitment, an initiative S tal, social and governance (ESG) records that, according to its website, has the ca- supported by major animal protection groups into consideration, including 25% of total pacity to “process more than 13.65 million around the world. And according to the 2018 assets under management in the U.S. alone. chickens per week.” While the company does Business Benchmark on Farm Animal Wel- However, social responsibility can mean dif- have an animal welfare policy of sorts, it re- fare, though the company appears to have ferent things to different investors — and one fers only to antibiotics and does not address an established approach to animal welfare, it sector of growing interest is animal welfare. stocking density, painful procedures, breed- “has more work to do to ensure it is effectively For investors with public pension funds who ing or other important animal welfare issues implemented.” are concerned about animal welfare, knowing a pertaining to chickens. New York’s pension fund claims to use fund’s involvement in potential animal cruelty is A 2017 report by the Animal Welfare Insti- more of a shareholder engagement rather crucial, though not always easy to discern. tute found that one Sanderson farm had been than divestment approach. The proxy voting According to recent research from animal cited 20 times in the two preceding years for guidelines of the New York State Common welfare experts, at least six top global pension not complying with humane handling stan- Retirement Fund state that “the Fund will funds have holdings in potentially cruel com- dards. One USDA inspector determined that support proposals asking a company to report panies that slaughter animals for meat, produce the plant’s slaughtering process was “out of on its animal welfare standards.” In 2018, other animal products or fall behind in animal control.” fund managers wrote to McDonald’s, request- welfare standards. The other contentious NBIM holdings are ing information on what the company was

60 • Corporate Knights • Spring 2020 doing to align its chicken welfare policy with tethering of sows, individual sow stall housing widely accepted best practices like those of the throughout the entire pregnancy, individual Investor network pushing for change Royal Society for the Prevention of Cruelty pen housing for veal calves beyond the age to Animals and the Global Animal Partner- of eight weeks, forced feeding of geese and One global network of investors with $20 ship. However, it still holds US$3.6 million ducks.” The agency will not make investments trillion in assets under management has been in Sanderson Farms. “that substantially involve any of these systems encouraging investors to consider the financial or practices.” and climate risks of investing in animal cruelty. Other financial institutions notable for Jeremy Coller, executive chair of London-based Which financial institutions making animal welfare a priority include Al- Coller Capital and a well-known name in pri- lianz, CDC Group (the UK’s development fi- vate equity, developed the Farm Animal Invest- are taking the lead? nance institution), Rabobank, Standard Char- ment Risk & Return (FAIRR) initiative five tered and Triodos Bank. years ago “to put animal welfare on the ESG While pension funds may lag behind when Australian Ethical wealth management agenda.” The Coller FAIRR Protein Producer it comes to animal welfare, other financial outright excludes any investment “in current Index assesses the 60 largest global meat pro- institutions are stepping up, providing ex- systems of commercial animal agriculture in- ducers for investors. FAIRR also pressures cor- amples of how to approach animal-friendly cluding meat, dairy, eggs and seafood.” porations like Kroger, Walmart and McDon- finances. Another option for investors concerned ald’s to consider the risks to investors of relying Bank Australia, for example, states on its with the treatment of animals: the VEGN exclusively on animal proteins within their sup- website that it does not lend to “organizations ETF, managed by Beyond Investing and listed ply chains – and to consider alternatives. that use intensive animal farming systems like on the New York Stock Exchange. The fund With the widespread rise in interest in battery caged hens and sow stalls, or organiza- “excludes from consideration companies that meatless products, veganism and animal wel- tions that export live animals.” harm animals, screening out companies that fare, the treatment of animals is quickly be- The Netherlands Development Finance are involved in animal testing, animal-derived coming an important issue in that realm of Company (FMO) has a three-page position products, as well as animals in sports or en- socially responsible investing. If large pension statement regarding animal welfare that in- tertainment.” Top holdings aren’t so much funds and financial institutions want to keep cludes recognizing animals as sentient beings in, say, plant protein companies like Beyond up with this trend, they will need to become capable of experiencing pain. FMO consid- Meat, but in corporations like Apple, Mi- more aware of their involvement in potentially ers unacceptable farming practices to include crosoft and Mastercard that don’t engage in cruel companies and take steps to keep cruelty “non-enriched battery cages for chickens, the screened practices. out of their investments. K

7th year recognizing Canada’s top RIResponsible Investment funds Learn more at www.fundgradeawards.com

Spring 2020 • Corporate Knights • 61 GREEN BUILDINGS

To get there, provincial building codes and municipal planning departments should re- Five planet-saving building quire developers to produce life-cycle analyses as part of the permitting process, with the goal of using regulations and incentives to promote ideas we need to nail down in 2020 the use of low-carbon concrete, mass timber or mineral-based insulation, like Rockwool. California and Washington State are both From heating offices with sewage energy to experimenting with “buy clean” laws that re- fast-tracking timber buildings, axing carbon must quire construction firms building public projects be the decade’s top trend to use carbon-reduced construction materials. While energy-efficiency measures such as solar panels and triple-pane windows can be By John Lorinc added to existing buildings to reduce emissions, a structure made out of concrete and steel will never reverse recoup the carbon used to make those materials. As Adams points out, it’s better to embed less carbon at the front end.

Toronto journalist John Lorinc writes Chop down embedded Get creative about cities, sustainability and business. 1. carbon in new builds 2. about retrofits fter years of inaction on climate change, the decade ahead has become The latest generation of energy-efficiency regu- With ambitious new building codes in juris- the bracket in which humanity gets lations laid out in provincial building codes is dictions like British Columbia, the City of one last opportunity to at least contain aimed at decarbonizing the long-term operations Vancouver and the City of Toronto, most new A the warming crisis. While mitigation of a building – heating systems, insulation and buildings will soon achieve or approach net- efforts targeting transportation, industry and other measures to cut energy consumption. But zero emissions. And climate-oriented reforms the energy sector remain mired in conflict, given the critical importance of stabilizing global to the national building code, including new the world of buildings – responsible for temperatures by 2030, Drew Adams, an associ- resilience standards to protect buildings from about 40% of all carbon – offers vast and ate at LGA Architectural Partners, says develop- flooding, for example, are now in development. relatively uncontroversial opportunities to re- ers and regulators need to refocus their efforts on The more intractable problem, says Scott duce emissions, create new jobs and produce reducing the carbon embedded in building mate- Kennedy, a partner at Cornerstone Archi- more livable built environments. Here are rials. Concrete, steel and plastic foam insulation tecture in Vancouver, involves unlocking the five solutions that should be on every policy- together can account for 50 to 75% of a building’s financial incentive for homeowners and land- maker’s radar. total emissions in its first decade. lords to invest in energy retrofits.

62 • Corporate Knights • Spring 2020 Photo by Doublespace Photography The next generation of incentive programs, LEFT he says, should always begin with straight- Ontario’s first mass timber THE FACT THAT WASTE WATER IS forward “building envelope” improvements: commercial triple-pane windows, insulation, ventilation. building in But to go deeper, we’ll need to find ways to more than a APPROXIMATELY ROOM TEMPERATURE encourage Canadians to invest in more cut- hundred years, ting-edge technologies. For example, to get designed by Quadrangle. homeowners to reduce natural gas consump- MAKES IT AN ATTRACTIVE SOURCE tion, there are now relatively affordable electric heat pumps, including one from a firm called OF HEATING AND COOLING. Sanden. With a highly efficient compressor, it concentrates external ground heat and uses a carbon-dioxide-based refrigerant to rapidly transfer that energy to a hot water tank. “These are important products coming into the marketplace,” says Kennedy. He also points to emerging approaches to commercial efficiency retrofits, such as “portfolio energy optimization.” The idea is to develop a business model around energy retrofits by aggregating savings across a larger portfolio of commercial buildings. Landlords get better-performing buildings, while the aggregator pockets energy savings created by the improved systems.

than any other place in North America. The temperature of sanitary sewer water to help More modular or problem, however, is material supply, which heat and cool larger buildings. Noventa holds is more than a little ironic in a country with the North American licences for a technology 3. prefab construction as much wood as Canada. There are only a developed and commercialized in Germany few manufacturing facilities for tall-timber about 15 years ago and marketed by Huber While buildings shoot up in high-growth cit- components – cross-laminated beams, for ex- Technology. ies like Toronto, the construction industry still ample – and they can’t produce nearly enough According to 2017 UN statistics, 300 bil- uses many traditional approaches, some of supply to sate all that demand. “There’s a lot lion litres of waste water are dumped into sew- which contribute to unnecessarily high emis- of chatter” about investment in large-scale ers in Europe and North America each day. sions caused by leaks or insulation gaps. Some engineered-wood plants, Witt says, but so far Based on average waste-water temperatures of green-building advocates want developers to nothing more. 20 degrees Celsius, that’s the equivalent of 150 rely more on prefabricated components, such He argues that Ottawa and the provinces billion kWh of energy – almost twice the an- as wall or window panels that are preassembled should create economic development incen- nual daily demand in the U.S. in a factory with better quality controls that en- tives for investors to build such facilities. The The fact that waste water is approximately sure any gains from higher-performing materi- government, he notes, invests in other indus- room temperature makes it an attractive source als aren’t squandered due to hasty installation. tries (automobiles, fossil fuels), so why not tall of heating and cooling. Huber’s technology ex- A recent market study by Frost & Sul- timber? To contain the risk to investors, the tracts the thermal energy from the waste water livan projected 6.3% annual growth in the federal government could kick in R&D grants, and uses it to replace natural-gas-fired indus- global modular construction sector, with that while municipalities could tweak building- trial chillers, for air conditioning. “There are a expansion driven by reduced costs as well as permit fees and development charges to favour lot of buildings that become attractive for heat an increased emphasis on sustainable building projects that use engineered wood compo- recovery,” explains Noventa CEO Dennis Foti- techniques. As the report noted, “Prefabricated nents. Municipal planners could also fast-track nos, citing hospitals and hotels. buildings are increasingly being perceived as tall-timber building projects, which can be Noventa is working on a handful of pilot sustainable solutions for construction proj- constructed more rapidly than conventional projects in Toronto approved last summer. ects due to a growing usage of materials, such structures, as a means of priming the pump. Using Huber’s business model, the company as timber and aluminum composites, that are supplies and maintains the equipment, pays more energy efficient than concrete.” a portion of the energy savings to the build- Look for renewable energy ing owner and the city and keeps the balance in, um, unexpected places to finance capital and generate a return for its Give mass 5. investors. What’s clear is that cleantech, green build- 4. timber a boost Environmentally conscious architects and ing technology and the right combination of renovators now install heat-recovery devices incentives can cut the carbon in our built form According to architect Richard Witt, a prin- that can capture and recycle energy lost when without significant economic or industrial up- cipal at Quadrangle and designer of one of hot water goes down the drain. But a Toronto heaval. It behooves policy-makers to rapidly Toronto’s first tall-timber projects, the city has start-up, Noventa Energy Partners, is look- find ways to spur all the pent-up innovation more such projects in the approvals pipeline ing to double down on this idea by using the and investment in this space. K

Spring 2020 • Corporate Knights • 63 H&Z HEROES & ZEROS By Bernard Simon

an this possibly be true? A respected climate-change watch- iemens has been no stranger to controversy over its 173-year dog praised the maker of Marlboro cigarettes for cleaning history. up the air we breathe? Like many other German firms, the maker of electric gear True it is. For the sixth year in a row, Philip Morris In- came under fire for employing tens of thousands of forced ternational (PMI) is one of 180 companies on the climate labourers during the Second World War. Three decades later, change “A-list” compiled by CDP, a UK-based charity that monitors it defied international sanctions to entrench itself as one of the top for- how businesses around the world are cutting greenhouse gas emissions, eign investors in apartheid South Africa. In November 2006, a police safeguarding water supplies and protecting forests. raid on its Munich head office uncovered a global network of bribery CDP (formerly the Carbon Disclosure Project) has also recognized and corruption that culminated in more than US$1.6 billion in penal- PMI for leadership in managing water resources and for pressing its ties, including the stiffest fines ever imposed under the American For- 36,000 suppliers around the world to adapt to the climate crisis. eign Corrupt Practices Act. PMI is among a growing band of companies in beleaguered in- Now, Siemens finds itself at the centre of a firestorm over an €18 dustries that are coming to terms with shifting attitudes and lifestyles million contract to supply rail signalling equipment for a big new coal and acknowledging the need to change the way they do business. It mine in Queensland, Australia. The A$2 billion Carmichael project has trumpeted its transformation at a “social innovation and global ethics drawn fierce criticism from climate activists at a time when bushfires forum” in Davos in January, promoting itself with such once-unlikely have ravaged vast swaths of the country. slogans as “Delivering a Smoke-Free Future” and “Unsmoke Your A recent Rolling Stone article described Carmichael as possibly “the Mind.” The number-one player in an industry that for decades dis- most insane energy project on the planet.” The mine’s export terminal puted the link between smoking and lung cancer now proclaims that will be located at the edge of the 2,500-kilometre-long Barrier Reef, “quitting altogether is best” and “if you don’t quit, change.” perhaps Australia’s most famous natural wonder. Accusations have A recent report on the Unsmoke Your Mind campaign asserts that swirled that politicians involved in approving the project have been “no company in the 21st century should assume it can simply carry on bought off by deep-pocketed fossil fuel lobby groups. with the same products, the same business model and the same ethos Furthermore, most of the mine’s coal will be shipped to India, a it had in the past decade, let alone in the past century . . . That applies country especially vulnerable to damage from global warming. An especially to companies in controversial industries, including tobacco.” Indian conglomerate, Adani Group, is the main shareholder. Last year, a PMI factory in Lithuania was certified carbon neutral. The broadsides against Siemens are not confined to environmental The company has pledged to do the same for all its production plants activists. In a move that highlights the financial community’s growing over the next 10 years. awareness of the costs of climate change, BlackRock, the world’s biggest Much of the reform effort centres on its USB-charged vape alterna- fund manager, has publicly rebuked Siemens. “While the company fol- tive – a new “IQOS” (which stands for “I quit original smoking”) system, lowed its internal review process for the project, it is nevertheless clear which heats tobacco up to 350 degrees C without fire, ash or smoke. that it requires a more thorough review of the potential risks, including “It’s the burning, not the tobacco or nicotine, that creates the vast environmental, social and governance risks, presented by future proj- majority of the harmful and potentially harmful chemicals that are the ects,” BlackRock said. primary causes of smoking-related diseases,” PMI claims. Siemens CEO Joe Kaeser acknowledged at the annual meeting in As of last fall, the company that churns out 800 billion cigarettes February that the company “did not see the whole picture correctly and a year estimated that about 8.8 million adults in 51 countries had in time” when it signed the Carmichael contract. switched from traditional cigarettes to IQOS. Nonetheless, he said, Siemens had become a victim of “agitation,” PMI’s sincerity in turning over a new leaf has yet to be fully tested. saying “those who persist in rejecting dialogue and cooperation on solutions Even so, its drive to cultivate a cleaner, healthier image should at least lose the moral right to discredit” advocates of action on climate change. mean fewer unsightly cigarette butts on our streets and sidewalks, help- Kaeser added that it “would be an insult to the working people of ing it inch closer to its goal of net-zero deforestation of natural forests Australia and the growing needs of India to bow to the pressure of anti- across its supply chain by 2025. K Adani protestors.” K

64 • Corporate Knights • Spring 2020 Illustration by Joren Cull Rolland_Corporate_Knight_2020_Final.pdf 1 20-02-25 15:21

LABELCRAFT’S RECYCLABLE ENVIROLINER IS AN ECO-BREAKTHROUGH FOR THE LABEL INDUSTRY

Labelcraft and Recyclable Enviroliner – the first label release liner that is both 100 per cent recyclable and made of 100 per cent post-consumer recycled paper.

Brian Tomlinson, President, and Brandon Gomes, Sales The main challenge was doing something no one had ever considered and Marketing Manager, talk about their innovative – using uncoated recycled paper rather than virgin. We also had to be competitive with traditional liners, in terms of release properties and alternative to generally unrecyclable release liners (also press performance. known as label backing or backing paper). HOW HAVE CUSTOMERS RESPONDED? LABELCRAFT IS A LONGSTANDING INNOVATOR IN CUSTOM Great response for a very good reason. Many companies are trying to PRINTED LABELS be 100 per cent zero waste to landfill, and haven’t been able to get • One-stop printing plants near Toronto, Ontario (Pickering) and there, because the last two or three per cent consists of traditional Dallas, Texas (DeSoto). release liner which has limited recycling options. We offer the only • Recyclable Enviroliner is made in Toronto and Dallas will also sustainable option. make it in late 2020. • Recyclable Enviroliner is an eco-breakthrough for the label Also, customers can use their current production equipment with industry as North America landfills 1.2 million tons – 30,000 trailer Recyclable Enviroliner, so it is easy to switch from their old release loads – of label release liners every year. liner. This is unlike some environmental solutions, where end users must invest in new equipment or machinery. WHAT’S THE DIFFERENCE BETWEEN RECYCLABLE ENVIROLINER AND TRADITIONAL PRODUCTS? WHAT LED YOU TO USE ROLLAND FOR RECYCLABLE Traditional label release liner is made of virgin paper treated with a ENVIROLINER? heavy coating of silicone. It allows the label (printed on face stock) to Rolland performed well with sticky notes and has great environmental release from the liner. But release liner with a heavy coating of silicone properties so we naturally turned to them as a partner for this product. cannot be processed at most recycling facilities, so it generally goes to landfill. Virgin paper is used because it provides a super smooth We use 100 per cent post-consumer Rolland Enviro Print and Rolland surface that stops the heavy layer of silicone from sinking into the Enviro Copy to produce the stock (face stock and liner together), then sheet. print the finished labels on the stock using either flexographic or digital presses depending on the job. With Recyclable Enviroliner we use a proprietary process that allows us to use uncoated 100 per cent post-consumer recycled paper as the Rolland’s Eco Calculator makes it very easy for customers to establish release liner. It can be recycled at standard facilities. the environmental benefits of using Recyclable Enviroliner. It calculates the trees saved and water saved and so on, per ton of paper, and they SO, BY INNOVATING ON TWO LEVELS, YOU HAVE CREATED can apply those numbers toward their sustainability targets. TWO ENVIRONMENTAL BENEFITS? Yes. We are diverting release liners from landfill, and using recycled HOW DOES ROLLAND PAPER MEASURE UP, IN TERMS OF post-consumer paper from Rolland that has much lower environmental EASE OF USE AND QUALITY? impacts than virgin paper. We have zero issues with Rolland. It’s important to remember we are using the paper for an application Rolland never considered – as WHAT LED LABELCRAFT TO CLOSE THE LOOP, AND DEVELOP backing. We are not really printing on it, except for the occasional A RECYCLED AND RECYCLABLE RELEASE LINER? timing mark, but do need very specific performance characteristics. It started with requests from two customers who were looking for For example, with laser applications, where stay flat properties are sustainable solutions. Our first idea was shipping used release liners to critical, Rolland is excellent. specialized recycling facilities that can process silicone-treated paper. But after calculating the environmental impacts – like carbon WHAT MAKES LABELCRAFT AN INNOVATOR? emissions – of shipping and storage that approach had a zero to We’re a small to mid-sized business and have to be innovative, relying negative footprint! That pointed us toward a recyclable solution. on technology and know-how to stay competitive. Other innovations include a waterless temporary tattoo sold worldwide. Even with sticky WHAT WAS THE LIGHTBULB MOMENT? notes we coat and print paper in one step rather than using multiple The manufacturing process for sticky notes, where we also use presses. And Recyclable Enviroliner makes up for the innovations that uncoated recycled paper from Rolland, led us to think about adapting didn’t pan out over the years! that technology to make a recyclable release liner with recycled paper. The adhesive on sticky notes peels away from the sheet beneath – DO YOU SEE LABELCRAFT AS A GREEN CHAMPION? which serves much like a release liner. We have never strived to be a green champion. It has happened indirectly with Recyclable Enviroliner, which solves a huge landfill WAS THERE AN EXTENDED R&D PROCESS? problem with traditional release liners. It also helps us be greener We had workable products after two or three years. But it took five because we can recycle all of our manufacturing waste from this years to launch a fully marketable product, with a full spectrum of product. All these environmental benefits are a really a by-product of adhesives and face stocks, usable for virtually all types of labels. being more competitive.

Spring 2020 • Corporate Knights • 65 KNIGHT BITES

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