Subjected to a carpet-bombing of dubious advertisements, the average person can make some bad choices during the chaos. Investors will frequently just hand their money over to someone they see prophesying on the business news about the direction of commodity markets or the next hot sector. Yet handing your retirement savings to a TV preacher hardly seems like a bright idea. So where does it all go wrong?

Unfortunately, the average investor does not have the time to penetrate the public relations sheen put on by many investment firms. Having personally met all the top-tier money managers in the country, it’s easy to see they fall into two camps—those serious about investing, and those intent on convincing others they are serious about investing.

The ones who make it a priority to thoroughly analyze the investments they purchase on behalf of mutual fund holders simply can’t get enough information when it comes to avoiding potential risks. A timely example is Canada’s recent switch to using International Financial Reporting Standards (IFRS). In essence, financial statements will now be written in a completely new language. Learning it should be a top priority for anyone who reads annual reports and makes investment decisions accordingly.

However, not all professional money managers are created equal. They naturally assume their investment stewards are completely up to speed on such a crucial issue. However, nothing could be further from the truth. Some fund managers do little groundlevel analysis in terms of assessing a variety of risks, including accounting issues. That function is farmed out to stock analysts and others, while money managers dedicate the majority of their time to polishing their sales pitch. Telling money managers their world is about to change because of accounting is the last thing they want to hear.

As a way of coaching themselves to deal with potential questions from their clients, the bad fund managers start to rationalize why nothing has changed, or why they won’t be impacted by a monumental revision to the financial lingua franca. Sometimes, bad managers are satisfied to consult someone who tells them they have nothing to worry about. Unfortunately, many consultants are as much in dark as the managers, or have conflicts of interest that make them more than happy to spread the message that there is nothing to worry about.

The head-in-the-sand mentality adopted by bad money managers is aided by the fact that investors don’t realize the risks being taken with their money. The average working guy can barely handle all the RRSP marketing nonsense, never mind follow up on risks their well-paid money manager might be grossly miscalculating.

Unfortunately, investors are the ones who will get taken to the cleaners when bad money managers severely underestimate the financial risks of IFRS. Such misses rarely come back to bite the managers themselves, especially when they can just plough ahead and get more assets under management by sounding smart and looking polished on TV.

To be blunt, you’re on your own here. Research the managers of the mutual funds you own. Get an idea of who they are. Are you giving your money to a pimped-out marketing machine, or to a hard-core, pencil-sharpening analyst who knows it’s not okay to take undue risks with other people’s money?

The post Hedge your bets appeared first on Corporate Knights.

When thinking of investing in your community, most think of money. But there is more to wealth. A wealthy community is rich with friends, time, beauty, and so much more. It all starts with relationships, so the next time you are out, take the time to mingle, say hello, and chat. Every new relationship is a sound investment in your community.

2. Support Locally-Owned Businesses

When compared, local business has two to four times greater economic benefit for the community than other business. They spend, employ, and donate more locally. So why not support them? By supporting a local farmers market, you will get healthy food, and help build local farms.

See www.livingeconomies.org and www.small-mart.org

3. Become a Volunteer

A community may be financially wealthy, but without volunteers it’s surely a “poor” community. Volunteering builds wealth, whether it’s picking up the trash and talking to your neighbours while you do so, planting trees, or joining your local community association. If you volunteer with Big Brothers Big Sisters, you will be investing in love and friendship for the next generation.

See www.bigbrothersbigsisters.ca

4. Invite Your Neighbours to Grow Food

In Vancouver, two women wanted to grow some food so they invited their neighbours to join them. Thirteen people showed up, and started a tomato sprouting station, built a greenhouse, and held weekend work parties in each other’s yards. Chickens and bees soon followed, along with a real spirit of community.

See www.bit.ly/twoblockdiet

5. Organize a Block Party

When my wife and I organized a block party on our street in Victoria, we knocked on everyone’s door and invited people in person. Everyone brought food and drink for a potluck, and we played an ice-breaker game to get people chatting. People loved it. The whole experience of living on a street feels friendlier once you have socialized with everyone.

See www.quezi.com/13238

6. Create a Public Space

Like the piazzas in Italy, a good public space forms the heart of a community, but many of North America’s cities are lacking neighbourhood hearts, especially in the suburbs. In Portland, neighbours have been investing time to create their own public spaces, re-designing local intersections with street murals, and building public seating and coffee-stands, often, using sustainable methods.

See www.cityrepair.org

7. Make Your Community More Walkable

People like to walk, but it isn’t easy in communities without sidewalks or walkways that are safe and beautiful. We need to invest in “walking audits,” a community process that informs the local council where improvements are needed, and where new walking routes can be created. And we need to organize local traffic calming.

See www.walkscore.com and www.walkableamerica.org/checklist-walkability.pdf

8. Invest In Community Bonds

In downtown Toronto, the Centre for Social Innovation used community bonds to buy a beautiful old 35,000 sq. ft. building that will be home to over 400 people and projects. They issued community bonds to raise $6.5 million to buy and develop the building. And it worked.

9. Join Your Community Association

If it’s well organized, fun, participatory, and positive, a good community association is the best investment. In community association people have a voice, and a way to make improvements happen. Imagine, an organization that inspired every street in the community to hold an annual block party, improve their streets’ safety, and created programs for all age groups.

10. Invest in Inspiration

The Project For Public Spaces (PPS) is an international nonprofit that creates and sustains public places that build communities. The organization has worked in 26 countries to improve parks, markets, streets, transit stations, libraries and countless other places. Jay Walljasper, a fellow of PPS wrote The Great Neighborhood Book, “a Do-it-Yourself Guide to Placemaking.” Treat yourself to some inspiration, and invest time in your public spaces.

See www.pps.org and www.newsociety.com/bookid/3943

Guy Dauncey is the author or co-author of nine books, including The Climate Challenge: 101 Solutions to Global warming (www.theclimatechallenge.ca). He lives in Victoria, BC.

The post 10 ways to invest in community appeared first on Corporate Knights.

The majority of senior executives have no idea if slashing large numbers of employees is a good strategy, argues Peter Cappelli from the Wharton School at the University of Pennsylvania, widely regarded as a leading expert on layoffs.

“They have no systematic way to calculate the net present-value of a layoff decision,” he says. What’s worse, layoff decisions are driven “by rules of thumb, and the most important one is, ‘what is everyone else doing?'”

More troubling still, the track record for layoffs as a recovery strategy simply can’t justify the extraordinary pain inflicted on workers, their families, and society. Many financial post-mortems on layoffs confirm this. “The larger the layoff, the less the chance of any resulting financial benefit,” says the Journal of Managerial Issues. Or this blunt assessment by the University of Paris-Sorbonne: “Layoff announcements have an overall negative effect on stock prices, regardless of country, period of time or type of firm in question.”

Are there options besides terminating a company’s most valuable assets? Consider this little-known example of a firm that formally rejects the idea of layoffs. Since the 1930s, Cleveland’s Lincoln Electric has remained the dominant global player in the rapidly expanding, highly competitive market for arc welding technology. A regular on Forbes 400 and Fortune 1000 lists, Lincoln keeps investors exceedingly happy. For decades, wages have been 20 to 30 per cent above industry averages. Yet this nearly $3-billion company has defied conventional wisdom by honouring a corporate promise to its American employees to never lay them off for economic reasons—not even in the recent recession.

Lincoln Electric’s “guaranteed continuous employment policy” isn’t driven by altruism. The firm believes a stable workforce generates an unbeatable long-term competitive advantage. In tough times, hours are reduced, people are reassigned and white-collar salaries are cut. In good times, everyone works long hours. But as long as workers meet the firm’s performance standards, no one worries about losing a home or ending up on welfare. History confirms their trust is justified.

“I don’t think of how we operate as a social responsibility,” says CEO John M. Stropki. “I think my philosophy and that of my predecessors is that we can perform in an economically challenging environment, and we can spread the pain in a way that long term will better represent our shareholders’ interests without crucifying our employee base. We think that is good business.”

By any criterion that a modern capitalist economy uses to measure success, Lincoln Electric is a winner. By any criterion ordinary citizens use to measure success for society, it’s also a winner.

That’s the gold standard for an updated definition of corporate sustainability—and shooting for gold is what good leadership is all about.

The post Lay off the layoffs appeared first on Corporate Knights.

The fund manager includes B.C.’s seven public sector pension funds and takes principles for responsible investment (PRI) further than simply considering environmental, social, and governance (ESG) risk factors when reviewing potential investments. Their commercial real estate group is looking to generate greater returns by seeking out energy-efficient commercial buildings that provide lower operating costs and higher rent.

It’s a strategy of investing in “energy productive” real estate that other Canadian pension managers, including the giant Canada Pension Plan Investment Board (CPPIB), have not pursued as aggressively.

Even with its $9-billion real estate portfolio, CPPIB may be leaving significant profits on the table by failing to invest in greening their buildings.

“We expect in the next three or four or five years, [green buildings] will become a bigger part of their real estate portfolio,” says Eugene Ellmen, executive director of Social Investment Organization, a non-profit group that represents ethical investors.

Despite several international studies done for the UN pointing to the attractive return on investments in building efficiency, there is a common impression among institutional investors that green buildings involve greater upfront costs and potential liability issues.

“The bigger risk with green buildings is not getting involved,” according to Washington consultant David Gardner. The number of green certified buildings in Canada leapt from 86 in 2005 to 1,100 in mid-2008, he notes, with a similar trend in the U.S. and around the world. In a report to a UN investors’ conference last year, he noted conventional buildings might be perceived as inefficient or even obsolete. As a result, they would attract lower rents, and fewer tenants than high-efficiency buildings.

CPPIB is a signatory of the UN Principles for Responsible Investment, and has appointed an executive team to implement that policy. But much of that activity still revolves around the research and inclusion of ESG factors in due diligence work prior to investing in publicly traded companies, as opposed to direct investments in the profit generating potential of green buildings.

Unlike other public pension funds, such as Québec’s Caisse de Dépôt et Placement, CPPIB has no mandate to pursue social or environmental objectives for their own sake.

In contrast, British Columbia Investment Management Corp.’s (BCIMC) chief executive Doug Pearce has highlighted his fund’s direct investments in green buildings. When assessing mortgage applications, BCIMC favours projects with environmentally-sound design principles that match clients’ risk-return requirements. As of March 2010, 35 per cent of the B.C. funds’ income-producing, domestic real estate portfolio was certified under LEED or BOMA BEST, with a target of getting that level above 50 per cent.

But there are a number of barriers in the way of more aggressive investment in green buildings by pension funds and other asset managers. Most leases now have split incentives—tenants rather than owners are responsible for utility bills leaving little incentive for owners to spend money to lower those bills in existing buildings.

At the same time, there is little unbiased information available that clearly defines the value of certified green buildings. Most research comes from ethical investing groups or the UN—organizations interested in the environmental impact of the investments over profitability.

Another hurdle to overcome is the short-term horizon of most investment managers. Most building owners demand payback from their energy efficiency investment within three years at most, says David Helliwell, chief executive officer of Pulse Energy, which installs energy-efficiency software systems in buildings.

Any investment needs to balance quick returns and steady returns. It’s not just about maximizing short-term returns, but balancing the needs of future beneficiaries against those of current retirees. Pension funds should be thinking long-term, making environmental and social issues more relevant because the future health of markets depends on them, says former Ontario Securities Commission head Ed Waitzer.

The post Profits left on the table appeared first on Corporate Knights.

Bananas belong in important conversations—in boardrooms, behind closed doors, in city halls.

In fact, your mayor should be thinking about bananas right now. Not because His or Her Worship doesn’t have more important things to consider, or because they might be particularly peckish, but because bananas are a symbol for something greater. Their existence north of the 49th parallel is a testament to globalization. They are beacons of the pre-apocalyptic marketplace, emblems of cheap fossil fuel economies.

In 2030, something as common as the contents of your morning smoothie will be determined by the economic, social, and environmental health of our planet. And the way our cities respond to the complex issues of today will affect the simple joys of its citizens for tomorrow.

Bananas are a thought experiment for the future of the sustainable city.

We asked the mayors of some major cities in Canada a few out-of-the-box questions to get them thinking about their broader visions for the sustainability of their city in the future. In addition to bananas, we asked mayors to think about tree-forts and transit.

Many Canadians take some things for granted—available food, green space, and accessible transportation. In many ways, these issues are influenced by municipal level decision-making. As the climate continues to change and the global population increases, Canadian cities are due for some major adjustments. Over the next few decades, municipal investment in sustainability will carry a lot of weight when it comes to securing something as plain and simple as the fruit on your cereal.

In the year 2030 …

Will you be able to eat bananas in your city?

“Yes. They are greatly appreciated and enjoyed, because they are a treat, much like oranges in the Christmas stocking during WWII. Prices for tropical fruits have increased significantly, but because of Whitehorse’s proximity to the Pacific, we are still able to get tropical fruits like bananas for a reasonable cost more often than other communities. However, Yukon agriculture has grown considerably in 20 years time, so while we may not be growing local bananas, we are growing a wide variety of fruits and vegetables and have a number of vibrant markets providing a diversity of locally-grown products year-round.”

—Mayor Bev Buckway, Whitehorse, Yukon Territory

“Of course. Not only will they be available from around the world, but having completed our Community Energy project in 2017 (drawing geothermal heat from a long-abandoned mine and supplementing it with biomass boilers from a newly established local wood pellet industry) locally produced bananas will be available from the recently established farms and orchards underground at another local abandoned mine*. The community, by 2030, will benefit immensely from the new community garden focusing on efforts toward sustaining our 100-mile diet opportunity.”

—Mayor Gordon Van Tighem, Yellowknife, Northwest Territory

*Mayor Van Tighem notes that the idea of a subterranean garden is, at this stage, purely an interesting concept in Yellowknife, but at least one is in operation in Tokyo, Japan.

Will the city’s children have tree-forts?

“I believe they will. The Halifax Regional Municipality (HRM) is so committed to the environment that we plant several thousand trees each year in our own right. As well, we require developers of subdivisions to deed green spaces over for public use and to plant at least one tree per new lot. And it doesn’t end there. We are preparing an Urban Forest Master Plan, which will be a blueprint for the conservation and promotion of a healthy urban forest on both public and private land in (HRM). We pride ourselves on being among the greenest communities in Canada and, somewhere in all that greenery, I’m confident you will always find youngsters busy playing.”

—Mayor Peter Kelley, Halifax, Nova Scotia

What will be the best way to get around the city?

“In 20 years, my hope is that we have an efficient, sustainable transportation network that combines excellent transit, safe cycling and pedestrian routes, and zero-emission cars and trucks. Our 2020 goal is to exceed 50 per cent of commutes by walk/bike/transit and we’re on track. We need ongoing investment in all green options: rapid transit, buses, separated bike lanes, pedestrian corridors, and electric vehicle infrastructure.”

—Mayor Gregor Robertson, Vancouver, British Columbia

“Public transit will play a vital role in Calgary 20 years from now. Better transit is the answer to much of what ails the modern city including issues of pollution, congestion, and a lack of social inclusion.”

—Mayor Naheed Nenshi, Calgary, Alberta

“The year 2030 will no doubt call for significant change from current and past practices in terms of existing transportation habits such as the role of private cars. There will also be changes in design of our landscapes and transportation funding. In 20 years the fastest way to travel around our city will be a combination of existing and improved infrastructure that promotes inter-modal connections in Charlottetown and our neighboring municipalities.”

—Mayor Clifford Lee, Charlottetown, Prince Edward Island

The post The city’s gone bananas appeared first on Corporate Knights.

CK: How is Canada’s energy potential unique?

DOER: We start with so many natural advantages in energy. In terms of renewable energy— something that doesn’t get a lot of attention— we have one of the highest percentages of electricity produced. That’s something I think we take for granted. We’re close to 70 per cent renewable energy for electricity production and if you compare that to most other countries, including the U.S., we’re way beyond them. The public wants clean air and clean water, and by having renewable energy in such abundance, particularly hydropower, it’s a tremendous advantage for the country.

And then, of course, we have all the natural resources for traditional fossil fuels. Most Americans believe that the majority of oil that’s exported to the U.S. comes from Saudi Arabia. That’s not true: it’s from Canada. We’re also the largest exporter of natural gas.

CK: Accepting that there aren’t any silver bullets, what is one thing the federal government can do to help Canada deliver on its energy potential?

DOER: The decision the [federal] government made to implement new coal regulations provides a tremendous opportunity for Canadian energy providers, particularly in renewable energy. The fact that in 10 to 15 years there will probably be only two coal plants left in Canada—both of which have come on stream recently, and old coal plants will not be refurbished, but replaced—provides a tremendous opportunity for natural gas which emits 50 per cent less than coal, provides a tremendous opportunity for hydro, a debate on the opportunity for nuclear, and, of course, a complimentary energy source for wind. I believe coal-fired plants are the second largest emitter of greenhouse gases (GHG), which I think represents 17 to 19 per cent. [This decision] gives opportunity for more renewable energy policy in Canada.

CK: What is your vision on the development of a Canadian east-west grid?

DOER: When I was Premier I promoted the idea of an east-west grid. It remains to be seen whether that will happen. I never thought it would happen as a grand grid, but rather as pieces that would be put together to allow for greater energy integration east and west as well as north and south. And, since I made that speech in Toronto in 2006, there have been some modest improvements on east-west transmission—particularly when you look at the sale from Hydro-Québec to Ontario. There are negotiations going on in Western Canada. Those are long-term negotiations, but these decisions are longterm capital investments. Any time you connect or sell east and west I think it’s good for the country and it’s good for meeting our renewable energy targets.

CK: And how would an east-west grid fit into the coming U.S. energy crunch?

DOER: The U.S. and Canada have similar challenges in terms of the regulatory approval of transmission lines. And we just got a new line approved from Quebec through New Hampshire. Part of what we need is much more appreciation of hydropower here in the U.S. as renewable energy. But what’s absent in Washington (hydropower) is starting to be considered in [other] states which I think is useful for a) supplying energy, b) our capability in Canada to produce it, and c) every time you displace coal in either one of our countries you clean up the air in both.

CK: What is standing in the way of such a development becoming reality?

DOER: Getting predictability about coal. You can’t have an east-west grid without having customers, and the decision on coal can lead to more discussion on where the coal is going to be replaced and with what. A federal act on clean air and [regulating] coal will provide greater incentives, I think, for connections both east and west.

The post Gridlocked appeared first on Corporate Knights.

While I no longer have free reign in my friends’ photo galleries, being a digital outcast on Planet FB does have its advantages. For instance, my childhood friend who forfeited a certain reproductive organ after a seatless bicycle accident will now have more trouble tracking me down.

Of course, my symbolic act of excommunication does little to alter the age of radical transparency in which we live. Julian Assange will continue to operate the world’s largest unregulated drive-in movie starring naked Emperors. And half a billion people will collectively piddle away 700 billion minutes per month poking each other on FB.

We live in a world of web-enabled gawkers where everybody is fair game. Big Brother is watching us, but this time we are Big Brother, and we are watching “them” too. Outgoing Google CEO Eric Schmidt identified this reality when he told CNBC: “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.”

When it comes to our personal lives, I think privacy is a moral right and even a requirement for sanity, as long as it is not used as a cover to trespass against others.

With regard to corporations or governments, however, the more transparency the better because, to muddle Stan Lee’s phrasing: “with great power comes great transparency.” The social media boom has given a stronger voice to the public, and previously untouchable corporate entities are thrown swiftly in the hot seat if they mess up—especially if they do so in, say, the Gulf of Mexico. With the new virtual toolset consumers can speak a little louder, and businesses are sure to feel the punch if they don’t buck up.

Assange’s Wikileaks portends to Stan Lee’s dictum, but so far in an imprecise way, akin to fishing with dynamite. Advocates of transparency should instead go forth with ninja-like grace, equipped with exacting strategies of revelation to bring bad business and bad governance to light.

FB might in fact be educated on the way of the transparency ninja, making its money by collecting personal information from users and serving it up to hyper-targeted advertising campaigns—in essence corralling the many for the few.

No one is forcing FB users to pony up their personal information, but most information is given up through default settings that people don’t take the initiative to change. As behavioural psychologist Dan Ariely has demonstrated, given the propensity of people to eat what is served up, the majority of people tend to choose the path of least resistance.

What if FB corralled the few for the many? Mr. Zuckerberg has pledged to invest $3 billion pot (half his fortune to date) in strategic philanthropy, and while it may not be as profitable as FB, the following idea could merit investment.

Consider a FB designed for large corporations where any of the entity’s direct stakeholders could make updates. The web of relationships of the company would represent the full experience of their stakeholders—warts and all. Maybe FB isn’t the venue for it, but the sentiment is there: open and unmitigated communication.

If corporations had to work around the clock for the transparent approval of the broader public, with the tenacity of an orange-tinted Jersey Shore wannabe tagging themselves in a group photo at 3 am, the world might be a little more legit. It’s up to the stakeholders to demand a higher standard of their corporate suitors. And if companies live up to the demands of the public through sound, transparent reporting and a profound engagement with environmental, social, and governance issues, they may find themselves with a lot more friends. All for one, or one for all? All I know is Zuckerberg has 473 of mine.

brb,

Toby A.A. Heaps, Editor-in-Chief

The post A knight’s tale appeared first on Corporate Knights.

Ironically, because of their urban “metabolism,” cities require only 85 per cent of the resources necessary to double in size, and they’re more energy efficient than rural communities.

A un-habitat report State of the World’s Cities 2010/2011 found that cities’ density and economies of scale provide more benefits to the environment than rural living— and could even reverse the impact of climate change by reducing per capita emissions.

This seems counterintuitive to the agrarian revolutionary who believes a return to rural communities is a solution to climate change. Urban living may increase our problematic reliance on destructive factory farming, but increased worldwide migration to cities is helping curb population growth because there is no need for large families for labour.

“When villagers migrate to the city, their family size drops, on average, by at least one child per family, often below the steady population rate of 2.1 children,” writes Doug Saunders in his recent book, Arrival City. “Without massive rural-to-urban migration, the world’s population would be growing at a far faster pace.”

As more people move to cities to find work, even though their family size shrinks, consumption rears its head. More people means a clamour for more food, energy, and products. According to West, the only way to keep the unsustainable urban machine going is the innovation produced by cities that constantly finds new resources to exploit.

The upshot is if we want to live in a sustainable world, we’ll need bigger cities, and more of them. As a physicist who applied his training to the study of urban environments, West believes we need more megalopolises.

But as we found in the fifth annual Corporate Knights Sustainable Cities ranking, not all cities are created equal.

We studied 28 indicators of sustainability in five categories—ecological integrity, economic security, infrastructure and built environment, governance and empowerment, and social well-being. Seventeen Canadian cities were surveyed, giving us a picture of the country’s urban sustainability.

Toronto, Vancouver, and Victoria won top honours in our Big, Medium, and Small city categories respectively. But many other cities boasted environmental programs that made them stand out, such as Edmonton and Whistler. While Whistler is not included in our ranking, the city deserves honourable mention for promising initiatives (see pg. 26).

Evaluating the complex 21st-century city is never easy. This is something University of Toronto civil engineering professor Christopher Kennedy knows all too well. Kennedy led a groundbreaking ranking of the greenhouse gas emissions (GHG) of ten global cities in 2009 called Greenhouse Gas Emissions from Global Cities. To help account for a city’s use of energy, Kennedy employs the idea of its urban metabolism, a framework that sees the modern metropolis as a kind of organism or ecosystem with flows of water, nutrients, and waste.

Gathering data from world municipalities, which are only beginning to request figures from energy companies, turned out to be a big challenge, he says. There are so many factors involved that it would be hard for anyone to simply say, “Hey, my city is better.”

For example, Toronto was the only Canadian city included in Greenhouse Gas Emissions from Global Cities, and it performed well against its North American counterparts, but only average overall because its cold climate drives up the use of its major source of emissions—natural gas.

Still, finding ways to compare cities’ sustainability is crucial, says Kennedy.

“When you look at a city’s metabolism, there are details that become apparent that you miss on a national level,” he says. “Many of the strategies for reducing environmental pollution or reducing greenhouse gas emissions more broadly come down to actions that have to be taken at some city scale, whether that’s at the metropolitan, municipal, or corporate level.”

Local programs, in other words, are the only way to have a national and global impact on carbon emissions. And our survey shows that Canadian cities are constantly seeking out new initiatives.

Vancouver stands out for its competitive commitment to sustainability, with its Greenest City Action Team initiative aiming to transform the city into the world’s greenest city by 2020. Victoria topped the Small City category, and matched Vancouver for highest numbers by developing its Victoria Sustainability Framework, making sustainability a guiding principle of all city business. For more on the winning cities, see page 29.

But we’re not just praising our top cities. Saint John deserves applause for its Green Thermal Utility plan, a multi-building project that would make use of renewable energy sources, such as waste energy from Irving Pulp and Paper. Looking to the future, with two phases to be completed in 2014 and 2017 respectively, the project aims to reduce emissions by over 16,000 tons of carbon dioxide.

Edmonton stands out in the biodiversity field. They joined the international Cities Biodiversity Index in 2010 and city staff is proactively monitoring hazard trees and invasive species. Montréal and Québec score points for retrofitting old buildings to make them accessible. They also stand out for developing “ecodistricts,” which aim to sponsor sustainable development within neighbourhoods. Considering Montréal’s 19 boroughs with separate councils and mayors, this is important.

Ideally all Canadian cities would have ecodistricts, and with the support of Partners for Climate Protection they just might. The Partners are a network that unites 211 municipalities (and counting), works on local sustainability initiatives and connects cities with funding from the Federation of Canadian Municipalities’ Green Municipal Fund.

Many city governments have positive sustainability initiatives, but municipal elections can complicate matters, to say the least.

Toronto’s new Mayor Rob Ford has proposed a subway scheme that Toronto Environmental Alliance (TEA) suggests would cost three times as much and serve half as many riders as former mayor David Miller’s Transit City. TEA’s findings stem from the Pembina Institute that states light rail would reduce carbon dioxide emissions by 200,000 tonnes by 2031, compared with only 75,000 for subways. The Globe and Mail questioned whether the studies exaggerated Transit City’s benefits, but acknowledged the subway scheme was a step backwards.

Meanwhile, in a giant leap forward, Calgary and Hamilton have elected more progressive mayors. Traditionally conservative Calgary elected Naheed Nenshi, a Harvard grad whose platform was based on limiting urban sprawl and environmental protection. Likewise, Hamilton’s new mayor, Bob Bratina, has maintained the reputation he gained as a city councillor for supporting urban core development by increasing downtown density. These developments leave many people asking if today’s underdogs could leave Toronto behind next year?

With so much at stake, should we be waiting for government to lead the way on sustainability? Our cities are taking initiatives to explore renewable energy and sustainability frameworks that are far beyond Canada’s anemic national commitments. Yet the uncertainty over Transit City is a good example of how even well-intentioned, longterm municipal projects are at the mercy of regime changes.

Indeed, Vancouver writer and consultant Sanjay Khanna, Corporate Knights’ choice representative for social well-being, believes that resilience in the face of environmental collapse begins not in council, but deep within the self.

Our cities will need all kinds of innovation—especially the unconventional sort—if they are to come up with solutions that will allow them to grow sustainably in the long term. Cities are our most environmentally- friendly places to dwell, as well as our biggest cause of rampant consumption and waste. But it doesn’t have to be that way. With dedication and implementation, Canada’s cities can help resolve the urban paradox and make our urban metabolisms healthy.

Click here to go back to the ranking landing page. 

The post The metabolic metropolis appeared first on Corporate Knights.

Yet, the Canadian image overseas, especially in Europe, is the environmental laggard, a climate fossil where the prevailing symbol of a clubbed seal has been replaced by a ruinous oil sands operation.

The reality, of course, is much more complex.

But as long as Canada lacks an integrated national strategy to leverage our abundant natural capital, we will continue to be vulnerable to the profit-oriented trends that make us fritter this privilege, testing our ecosystems’ tolerance and the bonds of national unity, further degrading our image.

With the right choices and a change in political mindset, Canada can legitimately stamp itself with an enduring brand—call it the “Maple Leaf Seal of Approval”—and in the process, enhance both the state of the planet and its own reputation over the long run.

Tar sands of time

The core problem is a prioritization of short-term benefits at the expense of long-term opportunities. This is ironically manifested in an area where planning takes decades—the oil sands.

Oil sands are projected to take up an increasing share of Canada’s carbon emissions, threatening our country’s ability to meet its goal of reducing emissions by 15 per cent by 2020. In response to criticism, the federal and Alberta governments have reacted defensively, attempting to explain their environmental record rather than change it, touting the product as an “ethical” option compared with oil sourced from more suspect regions. This is a multipartisan phenomenon. When the National Geographic ran a damning article and photoessay on the ecological impact of Alberta oil sands operations in March 2009, Liberal Party of Canada leader Michael Ignatieff was one of the first to cry foul.

In terms of policy, Canada and Alberta have gone “all in” on carbon capture, sequestration (CCS) and storage, providing over $1 billion in subsidies or commitments while letting support for other green projects, notably wind energy, lapse.

It is, in effect, another bet on the oil sands, and on coal-fired power in Western Canada.

In addition to those risky bets, lack of liability for CCS, and a carbon tax versus a cap and trade system must be considered.

Carbonated taxes and rewards

The Conservatives are advocating for lower corporate taxes. The Liberals are opposed, saying they want to spend the surplus funds (if, indeed, stopping the tax cuts yields more revenue) on needed social programs. A showdown over the budget, and a possible election, could result.

When it comes to sustainability, these are important, but ultimately limited, debates. If Canada wants the Maple Leaf Seal of Approval, it needs to re-orient the conversation towards rewarding positive outcomes.

On tax, the pro-sustainability approach would re-jig our corporate tax regime altogether. Those companies that lower their carbon emissions as a proportion of revenues the most over a single or multi-year period would get an extra reduction in their corporate taxes.

This could be done in every industry, which allows for special care in extractive industries, which have royalties and rebates layered over the existing corporate tax regime.

All of these proposals, incidentally, would have the effect of putting an implied tax or price on carbon—something that a large proportion of economists agree is necessary to tackle climate change. But imposing a tax right away was rejected at the polls in October 2008, after being proposed by then-Liberal leader Stéphane Dion, and pure subsidy approaches are also politically divisive.

New systems that focus on rewarding good behaviour are more politically attainable, especially when the financial and environmental long-term bottom lines are so intertwined.

Breath of fresh energy

If we had a long-term vision in mind for Canadian sustainability, particularly the integrity of the Canadian airshed, we might proceed differently.

For example, there has been little coordinated investment in a visionary project that would bring energy prosperity to the entire country: a national electricity grid. The $1 billion currently on the table for CCS could instead be used to attract those utilities and provinces that take the first steps in building it.

The money could alternatively be used to create an international competition on developing Canada’s considerable geothermal electricity potential. Geothermal is perhaps the one renewable energy source in which Canada has a demonstrable competitive advantage in terms of supply, and we could develop a similar technological advantage.

That kind of lateral, grand thinking will likely be required to supply the demands for electric car infrastructure in both Canada and the U.S., an undertaking that would have the ultimate effect of displacing some oil-sands-source-fuel.

These two initiatives would demonstrate internationally that Canada was serious about sustainability, invite more foreign investment into our country, bring meaningful reductions in carbon emissions, and help unify Canada around sustainability.

At home and abroad, fiscal policy changes could redefine the Canadian approach to sustainability, and help Canada get the Maple Leaf Seal of Approval. But not everyone gets excited about taxes.

Successes unrecognized

Two other efforts, already underway but not yet appearing in climate change politics, can help Canada brand itself around sustainability. The problem is politicians don’t seem to recognize them for their international cachet, or embrace them as truly Canadian.

The first is one of the great Canadian environmental successes of the last generation, the 2010 Boreal Forest Agreement, brokered between 21 forestry companies and 9 environmental non-governmental organizations.

In any other country, the protection of 72 million hectares of forestland—the size of Germany and France combined—in an effort to preserve large corridors for use by the endangered woodland caribou would be a signature political event.

In Canada, government and its politicians were relatively absent in promoting the agreement, and as a result, Canadians missed out on the deal’s significance.

The Boreal Forest Agreement effectively creates of one of the planet’s great carbon sinks (as long as all of the forests are protected over the long-term—some are only protected for an initial three-year period). It should be a core part of Canada’s international branding. But even at home, many Canadians still haven’t heard about it.

The second effort comes packaged in consumer plastics. Bisphenol-A was a substance that most people in the developed world dealt with every day in water bottles. After research showed that the substance

could be toxic, especially in young children, Canadian activists and journalists jumped on the issue. In September 2010, Canada was the first country to declare bisphenol-a a toxic substance.

Maple leaves not plastic trees

Trees, plastic, water, and wildlife: these are not esoteric, hard-to-understand ideas. They are not matters of tax policy, but concrete things in our daily lives. They relate to the safety of our children and to the icons on our icons. And on two major issues that touch on things that people everywhere value, Canadians are leading by example, showing that the more sustainable solution is the better one.

This sense of stewardship—as large as Western Europe or as small as a baby’s bottle— could be integral to the Maple Leaf Seal of Approval.

But Canadian leaders have failed to communicate.

At the micro and the macro-levels, the conditions to create an internationally recognized brand of Canada as a sustainability champion, exist.

It’s time to summon the political will to get there.

The post Maple leaf manifesto appeared first on Corporate Knights.

Take the Deepwater Horizon Oil disaster. Suddenly the idea that “sunlight is the best disinfectant,” as stated by Supreme Court Justice Louis Brandeis became every investor’s personal motto when it comes to transparency, due diligence, and good governance.

What does oil have to do with responsible investing? Almost all Canadian responsible investment (RI) funds have stocks in oil sands, mining, and various other resource industries that comprise Canada’s worst greenhouse gas offenders.

“Counterintuitive, isn’t it? We hear from folks who are quite surprised to hear that socially responsible funds invest in oil sands because they don’t necessarily understand the lack of diversity in the Canadian market,” says Dermot Foley, Strategic Analyst with Vancity Investment Management.

It’s a necessary evil—for mutual funds to be as risk-free, or as financially secure as possible, all financial institutions with RI mutual funds must invest in “dirty fossil fuel production.”

Canada is a resource-heavy index. Trying to steer clear of oil is “obviously a preposterous investment strategy since oil runs the world economy,” says Doug Morrow, Senior Associate at Toronto ICF International. However, as a result of that necessary evil, “responsible” investment becomes relative, according to Foley.

Investors are more aware of how integral environmental, social, and governance (ESG) factors are to the financial bottom line—and the triple bottom line, people, planet, profits is gaining momentum, but who’s keeping tabs?

“Investors are becoming increasingly concerned about inadequate disclosure of liabilities. The recent sub-prime mortgage crisis, as well as the Enron and WorldCom scandals are all evidence of the dangers of not having thorough disclosure policies. For oil sands investors to make wise decisions and minimize uncertainties, financial reporting of assets and liabilities must be accurate and transparent,” says Toxic Liability, a report assessing oil sands reclamation by the Pembina Institute.

In Canada, companies are required to report on asset retirement obligations, such as mine closure plans, and land and water rehabilitation. But, the environmental information currently provided by companies is not necessarily complete, reliable or comparable, and it isn’t integrated into financial reporting, according to the Environmental Reporting Guidance notice issued by the Canadian Securities Administrators.

While all the major banks say they do third party due diligence in their risk analysis when assessing the ESG factors at various extractive companies, it’s difficult to compare companies and different funds when assessment styles “vary from analyst to analyst,” says Don Roberts of CIBC. Some analysts will hire third parties to review the claims made by companies, and some simply won’t.

“Are companies reclaiming land at the rate they said they would?” is a question Jason Milne, Governance Analyst at RBC Global Asset Management Inc., asks when considering various risk factors.

However, as Corporate Knights’ Responsible Investment Guide explores later, there is a $10-15 billion shortfall in the financial planning for rehabilitation of total lands used by the oil sands thus far, and this is but one extractive industry wherein RI invests. Do risk managers account for reclamation liability? According to Canada’s big five banks—RBC, BMO, CIBC, TD Bank, Scotiabank—this is risk management 101.

Part of classic investment or classic investment risk management are the 4 Ms—materials, markets, management, and money. So to the extent that reclamation liability is material, yes, it is assessed, according to Ula Ubani, Corporate Responsibility & Sustainability, BMO Financial Group.

Some financial institutions value the 4 Ms in different order, further complicating comparisons. For instance, of Canada’s 5 big banks, TD Asset Management is simultaneously the only bank that manages its own RI funds and is a signatory to the UN Principles for Responsible Investment (UNPRI), which are considered the “gold standard” for financial institutions to manage environmental and social risk. The responsible investment funds created by RBC, BMO, and Scotiabank are managed by signatory companies.

As evidenced by multiple countries, signing a UN document and implementing it are two different things.

While TD has some of the best performing funds, the management of those funds, like any fund, is weighted more heavily on the financial aspect than any other.

“Governance on the financial sector is a much more important component [for TD’s Global Sustainability fund], whereas in materials and mining, the environment is much more important relative to the other pieces,” says Thomas George, Vice President of TD Asset Management referring to the creation of a TD Sustainability Index which is helping TD define what sustainability means across each sector.

Ironically, while RI is performing relatively well as investments recover from the financial collapse, a misconception about the performance of RI funds is what’s hindering advancements in the field.

There is a fairly widespread belief that by concentrating an investment strategy on companies that meet certain non-financial criteria—like best-in-class or environmental impact—you’re going to limit your financial performance, according to Doug Morrow, Senior Associate at Toronto ICF International.

“It’s difficult for any mutual fund to outperform the market, but it’s a double standard. I know Jantzi underperformed in terms of the TSX benchmark, but that’s not unlike 90 per cent of all mutual funds,” says Morrow.

The fact of the matter is the TSX is home of the largest number of cleantech companies in the world (even though many of them still have relatively small market caps). And the launch of S&P/TSX Clean Technology Index to measure the performance of companies listed on the TSX whose core business is in the development and deployment of green technologies puts Canada in the forward-thinking category.

But, “the transition to a cleaner economy can’t happen overnight because of the need to invest in cleaner technologies,” and that is exactly what Scotiabank is doing according to Kim Brand, Director of Environmental Affairs at Scotiabank.

One thing that many agree stands in the way of the development of a cleaner economy is government.

“The lack of action in Ottawa and the gridlock in Washington D.C. prevents or restricts the capacity of governments to put a price on carbon, which is what we really need for clean technology to take off,” says Robert Walker, Vice President, ESG Services, Northwest Ethical Investments.

Do the stress test—does a carbon tax make sense? asks Don Roberts, Vice Chairman Renewable Energy and Clean Technology, CIBC.

Whether it be an assessment of “dirty fossil fuels,” signing documents, or financial performance, there’s a lot more than meets the eye when it comes to Canada’s big banks, RI, and Cleantech. The investment pool from which major banks draw is murky at best. For instance, RBC is currently the only major bank in Canada with specific policies not to invest in cluster bombs.

So what’s the moral of the long and convoluted story of “responsible” investing? It’s really still in its nascence. Nothing is fully established, regulated or standardized. When you’re thinking of investing your hard-earned dollars, do your research or you may end up funding something that could blow up in your face.

The post Putting the R in responsible appeared first on Corporate Knights.