In 2002, the Republicans were running Washington and gutting the Clean Air Act. In Ottawa, Prime Minister Jean Chrétien, facing his last year in office, was just starting to think environmentally. Public concern over “global warming” was boiling over – but where were the leaders?

It turns out they were all around us. In early 2002, a newborn magazine called Corporate Knights formed an advisory committee of eminent Canadians to help design the first annual ranking of Canada’s most sustainable business leaders. Our thesis: despite the braying of conservative pundits and the indifference of many businesses, “at its best, the modern corporation can be an incubator for human progress and wealth creation.” Ranking Canada’s top public companies in six categories – community, employee relations/diversity, product safety and business practices, environment, international, and corporate governance – we recognized the 50 firms that best embodied the pro-social spirit of the new millennium.

In the two decades since, making the Best 50 list has become a sought-after award for ambitious enterprises. The best employees all know they have a choice of where to work, and they’re demanding to work for companies that have purpose, equity, integrity and sustainability baked into their DNA. Our ranking universe has grown, and our methodology has gotten tighter and more complex, making this list an ever-clearer representation of the most responsible corporations in Canadian business. Most importantly, the Best 50 are firmly committed to getting better every year.

Our 20th Best 50 ranking includes a compelling cross-section of Canadian public companies, private firms, co-ops, Crown corporations and publicly owned corporations with more than $1 billion in revenue. They hail from multiple industries and from coast to coast. The list includes eight banking/investing firms, seven power generators, six power-transmission companies, five mining firms (including the Royal Canadian Mint), five transportation giants (ranging from two national railways to Montreal’s public transit system), four insurance companies and three real-estate firms. It also includes household names like Telus, Cogeco, Canadian Tire and Canada Post.

“At its best, the modern corporation can be an incubator for human progress and wealth creation.”
— Toby Heaps, co-founder, Corporate Knights, circa 2002

What really matters is their work: their new sustainability initiatives, their campaigns to improve diversity and equity, their partnerships and pilot projects, their ever-higher performance targets, their breakthroughs and their well-intentioned failures. By studying the best practices of the Best 50, we believe any organization can chart a better, cleaner future.

How does a company make the Best 50 this year? Our ever-evolving rankings reflect multiple weighted metrics, ranging from clean revenues and clean investments to the proportions of renewable energy and recycled water used by each company. Other categories include emissions, waste productivity, business-related injuries, employee turnover, the ratio of CEO compensation to average employee pay, gender and racial diversity, sustainability of suppliers, taxes paid – and even the quality of the firm’s pension fund. By far the highest-weighted category, worth 42.5% of the score, is clean revenue, which Corporate Knights defines as revenue from all goods and services that offer clear environmental benefit – and in a few cases, social benefit.

When we compare the Best 50 against all other large Canadian companies with revenues of more than $1 billion, the Best 50 outperform on proportion of clean revenue (29.3% vs. 17.4%) and clean investments as a proportion of total investments (35% vs. 25.4%). They also pay their workers better (with a CEO-to-average-worker pay ratio of 18.47 vs. 89.59) and practise more diverse leadership (with 33.6% gender-diverse boards and 11% racially diverse boards, vs. 27% and 6.7% for run-of-the-mill big business). Although there is certainly more work ahead to meet the federal government’s 50-30 Challenge, which calls on companies to ensure gender parity and at least 30% representation of other under-represented groups.

Heading the list this year – as it also did in 2018 – is electricity giant Hydro-Québec. Sharing the Top 10 laurels are Montreal-based gas distribution utility Énergir (the former Gaz-Métro); Guelph, Ontario, insurance firm The Co-operators; Canadian National; Toronto-based electronics manufacturer Celestica; Edmonton design and engineering firm Stantec; Edmonton-based energy and water distributor EPCOR Utilities; Vancouver-based, values-driven credit union Vancity; municipal electric utility Toronto Hydro; and Montreal real-estate company Ivanhoé Cambridge, which in April announced its commitment to achieve net-zero carbon emissions by 2040 for its portfolio of 800 shopping centres, office buildings, hotels and residential communities. Its roadmap sets out a 20-year plan that proves companies can think ahead more than a few years at a time.

One significant change from our very first Best 50 list: six companies on the 2021 Best 50 are headed by women CEOs, versus zero in 2002. Clearly a work in progress.

Social responsibility comes in all forms. At its best, however, it comes packaged as opportunity. Consider the iconic transportation giant Canadian National Railway. For generations, CN has confronted a huge problem: disposing of two million worn-out railway ties a year. The easy solution was to toss them into landfills, out of sight and mind. Then CN developed EcoConnexions, a program that explored new ways to reuse and recycle waste. Today, the railway shreds old wooden rail ties and ships them to a long-time customer, Montreal packaging producer Kruger, which turns the wood chips into energy in its biomass cogeneration plants.

Too often, status quo is an excuse for bad habits and a failure of imagination. As CN demonstrates in this one tiny step on its sustainability journey, a little creativity can not only reduce pollution and waste, but invent new value, build stronger partnerships and save the planet.

As the world’s fourth-largest producer of hydropower, with 61 hydroelectric generating stations, Hydro-Québec enjoys a strong head start on top spot in the Best 50. But the provincially owned utility earns its No. 1 rank on merit. It established its first environmental protection committee in 1970 and now aims to be carbon-neutral by 2030.

“2020 was a paradigm-shifting year. Our focus on sustainability has helped us deliver our best while weathering the worst.”
— Gord Johnston, CEO, Stantec

To strengthen its position in renewable energy, especially wind, solar and battery storage, Hydro-Québec last year acquired a 19.9% interest in Longueuil, Quebec–based Innergex Renewable Energy (No. 20 on this year’s Best 50). Hydro-Québec is also working with Stantec (No. 6) to measure and mitigate climate-related risks to its operations and facilities. As with CN partnering with Kruger (the parent company of Kruger Products, No. 19), these win-win deals demonstrate that as more Canadian firms develop their sustainability expertise, the benefits will flow across the business landscape.

In fact, we may have already reached the tipping point where embracing sustainability is no longer a necessary chore but a genuine business opportunity. And as Hydro-Québec CEO Sophie Brochu notes, the COVID pandemic has exposed the fragility of today’s institutions and demonstrated the importance of creativity, agility, empathy and inclusion.

Stantec CEO Gord Johnston spoke for many of his Best 50 peers when he reported that “2020 was a paradigm-shifting year. Stantec’s long-standing focus on sustainability has helped us deliver our best while weathering the worst.”

Best 50 companies are building for the future. For example, nine of this year’s firms have joined either the Science Based Targets initiative, a partnership that helps companies set emission reduction targets, or the UN’s Business Ambition for 1.5°C commitment. Stantec, Telus, Cogeco and WSP have signed on to both. This year, we’re encouraging all Best 50 companies to sign on to these initiatives as a commitment to ongoing action and an example to other Canadian companies.

We’d also like to see all Canadian banks join Vancity as signatories of the global Net-Zero Banking Alliance, the industry-led and UN-convened alliance championed by former Bank of Canada governor Mark Carney.

The road to responsibility, sustainability and national prosperity is never straight, and the journey never ends. But by sharing the best success stories, we can all get there.

Rick Spence is a business writer, speaker and consultant in Toronto specializing in entrepreneurship, innovation and growth. He’s also a senior editor at Corporate Knights.

BEST OF THE BEST 50

Highest clean revenue:
Brookfield Renewable & Innergex Renewable Energy
These two renewable energy powerhouses tied for first place on the clean revenue front, with 100% of their revenue coming from green energy. Hydro-Québec came in a close second at 99.6%.

Top board gender diversity:
Vancouver City Savings Credit Union
Vancity has joined the 50-30 Challenge, which calls on companies to ensure at least gender parity and at least 30% presence of BIPOC (Indigenous, Black and people of colour), LGBTQ2S+ and people living with disabilities on boards and senior leadership teams. Today, 7 out of 9 (77%) of its board directors are non-males.

Top board racial diversity:
Vancouver City Savings Credit Union
This diversity and inclusion leader now has a board of directors that is 44% racially diverse, with a total of 26% of its senior leaders and managers identifying as BIPOC.

Biggest carbon reducer:
Toronto Hydro
Toronto Hydro cut its carbon footprint by 44% from 2018 to 2019, or more than 16,000 tonnes of CO2e by greening facilities, reducing line losses and releases of sulphur hexafluoride, as well as solar projects.

Best CEO-to-average-worker pay ratio:
Paper Excellence
The average large Canadian company CEO makes 90 times more than their average worker. Paper Excellence (formerly Catalyst Paper) has a fairer approach: their CEO was paid roughly three times their average worker.

Highest pension contribution:
Algonquin Power
Leading companies don’t just pay their workers
well; they also help them save for retirement.
Algonquin Power paid out the most of all our Best 50 firms, which works out to roughly $17,000 per full-time employee.

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After 30 years in the energy sector, including most recently as president and CEO at Énergir (formerly Gaz Métro), Brochu had planned to split her time between studying in Paris and teaching in Montreal. But it was the start of the global pandemic, and Brochu felt a civic duty to help her community in the best way she knew how.

“I don’t know much, but I know energy, and Hydro-Québec is a formidable organization,” she says. “For me, the call to go was very strong.”

It helped that Hydro-Québec was a sustainability leader and, Brochu believes, “a place where you can move the needle.”

She’s quick to point out that she wasn’t hired to “save” the organization. “Hydro-Québec doesn’t need a saviour, but this is where I can contribute. And I’m glad I did,” says Brochu, who started her position as president and CEO in April 2020.

She sees the utility playing a crucial role in advancing sustainability by providing renewable energy and working closely with communities, including Indigenous Peoples, and increasing gender and racial diversity across the workforce. “Every decision we make is constantly balanced through several filters, and we need to make sure those filters are the right ones from the ESG [environmental, social and governance] perspective,” she says.

The ongoing focus on sustainability earned Hydro-Québec top spot on the Corporate Knights 2021 Best 50 Corporate Citizens in Canada list, up from fifth place last year. Hydro-Québec also placed first in 2018, and came second in 2019.

For the latest award, the utility received top-quartile scores (75% or higher) in areas such as water productivity, cash taxes paid, executive and board gender diversity, clean investment and clean revenue (based on hydro, solar, wind and biomass generation and transmission revenue). Clean revenue may be a given since nearly 100% of its power is renewable, “but we need to keep it giving,” she says.

What’s critical, Brochu says, is how the organization invests its money, including in other renewables such as wind and solar, and in future means of decarbonization like green hydrogen. To take stock of its clean investment and revenue, Brochu created a vice-president position to map innovation across the supply and delivery chains and provide a benchmark for the organization to improve upon.

“When people tell you ‘you’re a leader,’ it forces you to keep doing the best you can.”
— Sophie Brochu, CEO, Hydro-Québec

The investment includes helping Quebecers with what Brochu describes as the “real-life energy transition” – for example, support with important customer questions such as: How do I plan and manage the recharge of a large electric fleet? What investment will be required above the cost of the vehicles? And, how will it affect my electricity bill?

The utility recently launched the Collective Energy initiative to consult Quebecers and get them involved in identifying and carrying out key projects that will benefit communities across the province. It asks Quebecers to reflect on three key areas: the green economy, sustainable mobility and responsible energy use.

“We are listening to what’s missing in the energy transition ecosystem to make real life happen and then investing in that,” Brochu says.

In terms of diversity, Brochu has added more women to the management team and about two-thirds of the board are women, but she’s also pushing to increase the number of women in roles across the organization. Today, about 30% of Hydro-Québec’s nearly 20,000 employees are women. “You need gender diversity and, ideally, parity to thrive,” she says.

More diversity also includes hiring more Indigenous people at Hydro-Québec, both in corporate roles and in communities where they are represented. A big part of Brochu’s mandate is also to improve the public utility’s relationship with Indigenous communities across the province. “Today Hydro-Québec is better than we were 10 years ago or five years ago, but my goal is that 2021 will mark the new era of the way we interact with our Indigenous communities,” she says.

“The whole idea is to be sophisticated enough to be nationally ambitious but regionally tactical, and very, very smart,” Brochu says of the company’s sustainability journey. “There’s so much to do … but I believe we’ll get there.”

Hydro-Québec’s current goals are driven by its Sustainable Development Plan for 2020 through 2024, which includes three pillars: governance, community and the environment. The plan lays out 12 strategies linked to specific improvement targets and performance indicators. Hydro-Québec also has a target to be carbon-neutral across its operations by 2030.

To Brochu, it’s more than a target – it’s a mandate, as a renewable energy provider. “The challenge of an organization like ours is to say, ‘There are areas where we can’t fail, we have to be reliable.’”

So while most people see Hydro-Québec’s role as simply providing reliable power, Brochu believes the mandate is broader: to help Quebecers transition to the low-carbon economy and be a leading corporate citizen. Despite topping the 2021 list of the Best 50 Corporate Citizens in Canada, and regularly appearing in the top five in recent years, Brochu believes the utility needs to continuously improve.

“When people tell you ‘you’re a leader,’ it’s great. Then the work starts,” she says. “It forces you to keep doing the best you can, understanding that nothing can be taken for granted.”

Brenda Bouw is a freelance writer  and editor based in Vancouver.

The post Top company profile: Hydro-Québec appeared first on Corporate Knights.

*companies assigned a tied position

For complete scores across all 24 key performance indicators, download our free Excel datasheet below. 

Download Full Best 50 Corporate Citizens Scorecard

Performance indicators

Clean Revenue: Percentage of total revenue derived from products and services that are categorized as “clean” under CK taxonomy

Clean Investment: Percentage of total investments in assets that are categorized as “clean” under
CK Clean Economy Taxonomy

Board/Executive Gender Diversity: Percentage of non-male board members and executives

Board/Executive Racial Diversity: Percentage of racially diverse board members and executives

Sustainability Pay Link: At least one senior executive’s compensation tied to sustainability-themed performance targets

Percentage Tax Paid: Taxes paid in cash, as a percentage of EBITDA (operating income for financial services)

Financial Sanctions: Total fines, penalties and settlements as a percentage of revenue

Paid Sick Leave: 10 or more paid sick-leave days per year

Pension Fund Status: A series of calculations assessing the generosity/viability of defined contribution/defined benefit plans

Energy/Carbon/Waste/Waste Productivity: $ revenue per unit (gigajoule/tonne/cubic metre/tonne of waste) of non-renewable energy consumption, direct/indirect CO2e, freshwater withdrawal, waste produced

VOC/NOx/SOx/PM Productivity: $ revenue per tonne of VOC, NOx, SOx and particulate matter emissions

CEO–Average Worker Pay: How much more CEO gets paid (expressed as multiple compared to average worker)

Supplier Score Sustainability: score of a company’s largest supplier by spend

Fatalities: Fatalities per total employee count

Injuries: Lost-time injuries per 200,000 work hours

Turnover: Number of departures divided by the average total employees

*For complete methodology, click here.

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Please see answers below to the most common questions about the Corporate Knights Best 50 ranking.
Sections:

General Best 50 Questions
Best 50 Methodology and Data Submission Questions
Indicator-Specific Questions
Clean Revenue and Clean Investment Questions
Corporate Knights Data Portal Functionality Questions

General Best 50 Questions

1.What are the eligibility requirements for the Best 50 ranking?

Size: Publicly-traded, privately-owned or Crown corporations with gross revenue of at least $1B (unless otherwise stated; based on most recent financial data) and evidence of sustainability reporting*.

Other inclusions: credit unions with more than $10B in assets, top 10 largest Canadian coop organizations by revenue, companies included in TSX / S&P Renewable Energy and Clean Technology Index (all revenues), and 2020 Best 50 companies.

Corporate Knights Industry Group (CKIG) and geography: All industries and geographies are automatically considered before screening out companies from certain industries or with identified egregious practices (see Appendix III, Exclusionary Screens)

2. Is participating in the ranking free for companies?

There is no cost associated with participating in the ranking.

3. Our company is private. Is it eligible to be part of the Best 50 universe?

Yes. Private companies with gross revenues of at least $1B (unless otherwise stated; based on most recent financial data) and evidence of sustainability reporting (determined from the Global Reporting Initiative database) are eligible.

4. What data sources were used to collect the research?

The fiscal 2019 data (2021 Best 50) was collected by looking through annual reports, sustainability reports and company websites and in some cases was supplemented with data from third-party providers.

5. How are Corporate Knights Industry Groups determined?

The Corporate Knights Industry Groups (CKIGs) is a classification system developed by Corporate Knights that groups companies according to clean revenue characteristics and resource intensity. You can download the full universe of companies with their CKIG classification here. Please email research@corporateknights.com if you feel there is a strong case for your company to have its classification changed.

6. We have data that Corporate Knights is requesting that we have not made public. We are, however, willing to provide it to Corporate Knights. Can that be accepted?
We prefer data that has been made public at the time of submission or that will be made public in advance of the Best 50 release. If this is not possible, Corporate Knights can accept the data for ratings purposes, provided the company gives Corporate Knights permission to make the data public. Please provide as much detail as necessary for our analysts to properly vet the submission.

7. Does receiving a data-verification request mean that my company has been shortlisted for the ranking?
If you have received a data-verification request, it does not mean that you have been shortlisted. It means that your company is considered part of the eligible research universe we analyze to determine the shortlist.

8. How can I get more details on my company’s performance compared to our peers?
Contact research@corporateknights.com to obtain a scorecard for your company.

Best 50 Methodology and Data Submission Questions

1. In cases where we have restated historical values, should we keep the data as it was published in the previous years or the pro-forma/restated figures?

Pro-forma/restated figures.

2. If my company recently completed a merger, what values should we provide for historical results?

Provide the values for the larger company per market capitalization unless consolidated results are available for the fiscal year for which we are collecting data.

3. Our sustainability report, which includes the requested data, will be published after the Corporate Knights ranking comes out. Is there a way for me to provide such data and add that comment?

Yes. Please include a link to the section of your site where the report will be posted and clarify in the notes section when the report will be publicly available.

4. Our company reports in different units than specified on the Corporate Knights portal. How do we convert our metrics into the units specific to the Corporate Knights portal?

To convert metrics you can either add Google’s conversion extension – https://chrome.google.com/webstore/detail/unit-converter/igjeajmonjofckmiheidpmebpmdbbiam?hl=en – to your Chrome browser. NOTE: Please do not convert currencies in your submission; use the reporting currency indicated for your company.

5. Is there a way to identify that a particular metric doesn’t apply to our business?

Please look at the weights (to the left of the value box in the data portal). Anything with less than 1% weight is relatively unimportant. You can also see the list of weights per CKIG and per indicator here.

Indicator-Specific Questions

Fines and Sanctions

1. Is there a “size threshold” to consider in our answer? (i.e., should we aggregate all fines/sanctions/settlements, no matter how small, or take into consideration only the most significant?)

Please ensure you include all fines over US$100,000.

2. Should we construe settlements to include amounts paid to settle civil litigation matters?

Yes, unless they have not been paid AND are being appealed.

Greenhouse Gas Emissions

1. Should we be reporting market-based or location-based Scope 2 GHG emissions?

Location-based.

Employee Costs

1. Should the amount reported as employee costs include social contributions as stipulated by law, such as state pension, social insurance, health insurance, etc.?

Yes. Please include all contributions made by the company for employee compensation and benefits.

EBITDA

1. Regarding EBITDA: are you asking for “pure” EBITDA or adjusted EBITDA?

Pure EBITDA.

Board of Directors and Executive Leadership/Diversity

1. Regarding the board of directors: who should be included?

All voting members on the board should be included. Non-voting members should not be included.

2. For the board of directors (and the executive committee), do you use data as of year-end 2019 (e.g. 31/12/2019) or at the time of review?

Time of review.

3. Regarding the racial-diversity indicator for board and executives, local laws do not allow us to monitor individuals based on their race and ethnicity. What should we do?

If it is not possible to provide the aggregate number of racially diverse board or executive members (note: we ask that you do NOT reveal any individual information), please indicate this in the notes section and Corporate Knights will calculate this number independently based on careful consideration of pictures, names and bios.

Total Acquisitions

1. Which figure should be reported here – the cash amount paid for acquired companies or the effect on P&L?

The cash amount.

Clean Revenue and Clean Investment Questions

1. How do we know what qualifies as Clean Revenue or Clean Investment?

Any revenue segment/CAPEX/R&D/acquisition that corresponds with any of the Clean Taxonomy segments included in the Corporate Knights Clean Taxonomy qualifies (subject to scrutiny and/or change by our analysts).

2. What does Clean Investment mean?

For non-financial companies, Clean Investments (which include Clean CAPEX, Clean R&D, Clean Acquisitions and Other) refer to any investments that align with the Corporate Knights Clean Taxonomy.

For financial sector companies, Clean CAPEX refers to investments that improve operational sustainability such as greening bank branches or buying EVs; Clean R&D refers to R&D into sustainable finance solutions such as new wealth-management platforms to enable values-aligned investing; and Clean Acquisitions and Other refer to any acquisitions of sustainable finance companies.

3. Can you provide more information about the weightings applied to “*” criteria, especially Clean Investment?

These share the same weight. Clean CAPEX, Clean R&D and Clean Acquisitions and Other are weighted as 7.5% in total as the Clean Investment indicator. The calculation is (Total Clean Capital Expenditures + Total Clean R&D + Total Clean Acquisitions and Other) divided by (Total Capital Expenditures + Total R&D + Total Acquisitions).

4. What is the relationship between the Clean triad (Clean CAPEX/R&D/Acquisitions and Other investments) of the Environment section and the similar triad (CAPEX/R&D/Acquisitions and Other of the Economic section?

The former is the numerator and the latter is the denominator.

5. We are a financial institution and would like to calculate the percentage of our AUM and/or corporate lending to publicly traded companies according to their percentage of clean revenues. Can Corporate Knights provide us with a list of publicly traded companies, showing each of their clean revenue percentages?

Yes. Please email research@corporateknights.com and Corporate Knights will send the clean revenue percentages for all companies with coverage in our database.

6. How do you calculate the Clean Revenue for pharmaceutical companies?

It’s the percentage of revenues earned from equitably priced products for the list of 77 diseases, conditions and pathogens included in the Methodology for the 2018 Access to Medicine Index (p. 27).

Corporate Knights Data Portal Functionality Questions

1.Is it possible for us to create user accounts on the platform for additional colleagues?

Yes. To add users to your company profile, log in to the portal and select “Users,” then select [+] to enter a new user. Be sure to complete by clicking “Send password email” so your new user can create login credentials.

2. Can I change my company’s data point values?

Yes. Please also provide additional information in the notes by clicking the “i.”

3. I have updated (rewritten) a numeric field and – even after saving – instead of turning light green it changes from blue to a grey background. Is this correct?

After entering new data, please select the green check mark beside the box to confirm that you approve this added data. Once you do so, the box will turn light green.

4. Can I upload images as supporting documentation?

Not at this time. In the future, it will be possible to upload supporting documentation. In the meantime, in exceptional circumstances where the image file cannot be linked to via a text-format URL, you can email the file in question to research@corporateknights.com.

5. We are unable to view the .CSV file of the download. What do we do?

Try the below:
Download the .CSV file.
Open a new Excel document and navigate to the Data tab.
Click on “From Text.”
Navigate to the CSV file you wish to open and click on “Import.”
From the newly opened window, choose “Delimited,” then click on “Next.”
Check the box next to the type of delimiter – in most cases this is either a semicolon or a comma.
Click on “Finish.”
If that doesn’t work, email research@corporateknights.com and we will send you a copy by email.

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