In the past few years, energy economics have flipped to the point where renewables are cheaper than fossil fuels. Companies have also discovered that happy, healthy employees, customers and communities create healthier markets – and happier shareholders.

More than ever, Canadian companies are getting this message. Since 2002, Corporate Knights’ ranking of Canada’s Best 50 Corporate Citizens has been tracing public and private companies as well as Crown corporations with more than $1 billion in revenues. Our researchers probe 25 key performance indicators (KPIs) to assess how firms manage their resources, employees and finances in comparison to their peer group, with 50% of each company’s score tied to the percentage of their revenue and investments that qualify as sustainable. For the Best 50, that percentage keeps climbing.

Tellingly, the 2023 list is dominated by renewable-energy players high in sustainable revenue. Topping the Best 50 this year (up from second place in 2022 and 20th in 2021) is a pure-play clean energy company: Innergex Renewable Energy. The Longueuil, Quebec–based renewable-power producer operates 40 hydroelectric facilities, 35 wind farms, 11 solar farms and one energy-storage facility in Canada, the U.S., France and now Chile. It has 11 more projects in the works (see page 52 for profile). In fact, Innergex is the only pure-play renewable-energy company on the Best 50 (giving it 100% sustainable revenue). The company has also continually improved on its disclosure of environmental indicators, which helped it climb to the top of the ranking.

In second place this year (up from third in 2022 and 14th in 2021) is Brookfield Renewable Partners, the renewable-energy platform of Brookfield Corporation, the former Brascan empire (which got its start providing electricity in Brazil). With a market cap of $20.2 billion, more than seven times Innergex’s $2.7 billion, Brookfield Renewable produces 25,400 megawatts of electricity through hydro, wind and solar facilities in Canada, the U.S., Colombia, Brazil, Europe and Asia. The company’s latest annual report says it’s also focusing on investing in “emerging transition asset classes” such as carbon capture and storage, recycling and biogas, “where our initial investment positions us for potential future large-scale decarbonization investment.”

In third place is Hydro-Québec, which was the top company in 2022, 2021 and 2018. While the company largely maintained its sustainable revenue from last year, competition is growing fiercer as more renewable-energy companies jump ahead.

The “most improved” company on the list is Canadian National Railway. It climbed from 35th place to seventh this year thanks to a notable increase in investments mainly aimed at rail network safety and integrity, as well as track infrastructure network resiliency and information technology initiatives. These investments totalled $2.5 billion, or 85% of CN’s total investments, in 2021.

Edmonton engineering firm Stantec scored highest on the Best 50 when it came to the percentage of its executives’ variable pay linked to sustainability targets. With 26,000 employees and 350 offices on six continents, CEO Gord Johnston says the fast-growing company has been focused on building better communities for more than a decade. Initially, “community” meant including parks or public artworks in urban projects or adding water parks to water treatment plants. But over time it came to encompass designing buildings for mental health, promoting accessibility standards far beyond those of local building codes, and partnering with Indigenous communities to stimulate economic development. Johnston says that “we scaled community” to include not just cities, but whole countries, the world and the climate.

How does your company or employer compare to the Best 50?

Here are a few indicators to consider. The average percentage of sustainable revenues achieved by 2023 Best 50 companies is 46.3%, up from 36.8% in 2022, and nearly 10 times the 5% earned by the average large Canadian company (ALCC). They’re sinking more investment money into the green economy, too: the percentage of total investment dollars put toward sustainable investments is just shy of 50% for this year’s Best 50, up from 33.8% in 2022 – and eight times greater than the ALCC’s 6%. Some 78% of Best 50 companies link executive pay to sustainability goals, versus just 40% of other companies.

On the diversity front, the numbers are still far from where they need to be, but the average Best 50 firm has achieved executive gender diversity of 26.8%, versus 21% for the ALCC. The boards of directors of Best 50 companies have a gender diversity rate of 39.3%, versus 31% for the ALCC.Companies are even further behind when it comes to hiring racially diverse leadership.Though board racial diversity among Best 50 companies improved slightly from 8.8% last year to 11.7% this year, executive racial diversity dropped from 12% to 10.6% this year.

Best 50 bring home higher returns

Overall, the data consistently show that shares of the Best 50 outperform their “less-best” industry peers. Corporate Knights researchers compared the stock performance of the public companies on the 2023 Best 50 versus that of the S&P/TSX Composite Index. Since 2002 (the year we published our first Best 50 list), Best 50 companies have rewarded their shareholders with 128% higher returns than the overall composite index. It’s evidence that the “triple bottom line” (profit, people and planet) doesn’t compromise the single bottom line – but expands it.

2023 Best 50 ranking table

*Indicates a tie as a result of a formula correction
**Revised rank due to a formula correction

Winding road to sustainability

But for billion-dollar corporations in particular, sustainability is a journey, and progress is rarely predictable. Rogers’ (no. 29) recent takeover of Shaw Communications, for instance, has been roundly criticized for reducing competition in Canada’s telecom industry. (And Rogers’ decision to pay CEO Tony Staffieri $31.5 million during his first year pretty much blows up the company’s CEO-to-employee pay gap). Rogers’ arch-rival, Telus (no. 10), has been embroiled in a recent labour dispute that left its unions bristling. And Teck Resources (no. 32) has recently been in the news for its controversial plan to splinter off its carbon-heavy coal mines, which have become an ESG liability for investors. Though the Vancouver-headquartered company has installed $1.2 billion worth of water treatment technology in the Elk Valley, “chronic toxicity impacts” persist in Elk Valley waters, according to the B.C. government.

Nonetheless, all three of these companies earned their Best 50 rankings. Teck scored highly in relation to its peers in part because 6.8% of its revenue comes from recycled minerals and minerals needed for the low-carbon transition. Rogers secured the 29th position because 55% of its investments involve improving telecommunications infrastructure, a key component of the energy transition. Rogers also earned points for its energy-efficient data centres and its refurbishing and recycling of used devices. Telus earned 10th spot, as it scored highly against its peers on sustainable revenue and sustainable investment as well as on all four diversity metrics. No company makes the right decision every time. But two decades into the Best 50, the ranking proves that a large number of Canadian companies are willing to evolve and invest in a cleaner, more equitable future.

The real bottom line is that business and the planet constitute a closed ecosystem – in this fragile biosphere the smartest companies know that putting sustainability first is the ultimate key to lasting success.

Rick Spence is a business journalist and senior editor at Corporate Knights.

Climate commitments legend

1.5°C: Business Ambition for 1.5C

SBTi: Science Based Targets initiative

FCCA: Fashion Charter for Climate Action

NZAM: Net-Zero Asset Managers Initiative

NZAO: Net-Zero Asset Owners Alliance

NZBA: Net-Zero Banking Alliance

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Now the Quebec government has announced that wind energy will become a larger piece of the province’s energy puzzle – as it will for the rest of the planet. One Longueuil-based company, betting big on wind and solar, is well positioned to fill the rising demand, at home and abroad. And that company has risen to the top of Corporate Knights’ 2023 ranking of Canada’s Best 50 Corporate Citizens. 

Three decades of renewable energy

For more than 30 years, Innergex Renewable Energy has developed, owned and operated clean electricity facilities in Quebec. The company was founded in 1990 after the provincial government called for private sector bids to develop small hydro-generation facilities. A decade later, Innergex began scouting out locations for wind turbines in the Gaspé region, partnering with TransCanada Corporation (now TC Energy) on its first wind energy bid.  

Having acquired B.C.’s Alterra Power Corporation in 2018 and Chile’s Energía Llaima in 2023, Innergex is now the largest independent renewable-energy company in both Canada and Chile, with expansion plans in the U.S. and France. Today, the $870.5-million company has a gross installed capacity of 4,244 megawatts (MW) of wind, solar and hydro – that’s more installed renewable capacity than the entire province of Ontario. And it plans to double that by 2025.

The ambitious energy transition plans of both the U.S. and Canada will require a lot of new clean energy. The U.S. government has committed to reducing greenhouse gas emissions by 50 to 52% by 2030 from 2005 levels, and Canada is aiming for a 40 to 45% reduction. Innergex CEO Michel Letellier plans to take advantage of these greening trade winds. 

“There are few gains to be expected from hydroelectricity,” says Letellier at his Longueuil office on the South Shore of Montreal. Although a third of its facilities rely on hydroelectricity, Innergex plans for a diversified future. “The best sites for dams are occupied. And we won’t get more than 1.5%, maybe 2%, additional output from [existing hydro facilities]. In Quebec, wind power is the most promising.” 

Decarbonization, energy security and independence will translate into growth for renewable-energy producers, confirms Anne Perreault, senior portfolio manager at Desjardins Global Asset Management. “Investors like that Innergex is diversified [solar, wind, hydro and batteries] and operates in several countries. But they have questions about financing growth. Currently, 84% of the credit line is used. So partnerships will need to be formed.”

A solid partner: Hydro-Québec

Since February 2020, Innergex has had a solid partner: Hydro-Québec. The Crown corporation (which topped the Best 50 ranking three of the last four years) paid $661 million in exchange for a 19.9% stake and committed to investing $500 million in joint projects. “The absence of reference shareholders made us too vulnerable to predators. We needed a shareholder who, without necessarily holding a majority stake in the capital of a company, has a stake large enough to influence its decisions,” says Letellier. “Every public company wants to maximize shareholder value. However, in our industry, value is not measured per quarter. We look at the long term. Hydro-Québec protects us from stormy weather.” 

So far, this strategic alliance has resulted in one joint venture: acquiring the 60 MW Curtis Palmer portfolio of run-of-river hydroelectric plants in New York State. “We definitely want to establish other partnerships with Hydro-Québec, both in the U.S. and Quebec,” Letellier says.

On both sides of the U.S.-Canada border the future looks bright: governments are adopting policies and tax credits to encourage the rapid deployment of renewable-energy projects. Through the U.S. Inflation Reduction Act and budget measures announced in Canada, governments have trumpeted new incentives for renewables. But tax credits are only part of the equation to transition to renewable energy; transmission lines are critical to move the electricity generated to where it’s in demand. 

“Our biggest challenge, in Canada and the U.S., is the interconnectedness of projects. All the developers aim for the same locations, creating bottlenecks. We desperately need more pipes,” says Letellier, referring to the need for more transition lines. The U.S. Midwest, for example, could be a Klondike for solar and wind power, but the majority of potential customers are in urban areas on the coasts. 

No renewable-energy company will reach its targets without greater distribution capacity, Letellier explains. “Who will build those new transmission lines? Public utility companies? Private sector? This complex ownership structure and construction costs explain the lack of lines.” 

Agreements with 31 Indigenous communities

Also critical to renewable-energy projects are community relationships. Innergex prides itself on its close ties with the communities that live near its projects. Things have changed since the big hydro projects of the 1970s, says Fred Vicaire, CEO of Mi’gmawei Mawiomi Business Corporation, Innergex’s Indigenous partner in Mesgi’g Ugju’s’n wind farm, in Gaspésie. “For many decades, we were just a box to check for companies to say, ‘We can do the project, we consulted with First Nations, and we will give them some royalties.’ We don’t want royalties from companies installing infrastructure in our territory. We want to own the projects 50/50 and get operating revenue from them.” 

The Mesgi’g Ugju’s’n (MU) wind farm, located on public land in the regional county municipality of Avignon in Quebec’s Gaspé Peninsula, is indeed a 50/50 partnership between the three Mi’gmaq communities (Gesgapegiag, Gespeg and Listuguj) and Innergex. The first phase of MU is a 150 MW project. The second phase will add 102 MW.

Innergex has signed agreements with 31 Indigenous communities. “They go beyond financial terms,” says Vicaire. “These agreements take into account our way of life, including respect for hunting territories and lands used for traditional medicinal plants, for example.” 

There are agreements, and there are agreements, cautions the Innergex CEO. “Unfortunately, over the years, too many renewable-energy companies have lacked transparency, negotiating with two different financial models: one designed for First Nations, showing no profitability, and one for the board and shareholders, which was profitable. An unequal relationship dating back to the fur trade era.” 

“Since the early days, Innergex has believed in the three Ps: people, planet, profit,” he adds. “Every company aims for a return, but we’ve always believed it should be reasonable and never at the expense of the other two Ps.” 

Partnerships can be challenging, especially when the partners don’t have access to the same equity. For the first phase of the MU wind farm, Innergex brought in more equity, says Vicaire. But the second phase “is different,” he says. “We have access to the First Nations Finance Authority. It finances projects at rates below prime, as municipalities would for large infrastructure projects.” 

The green and the greening

Innergex’s relationships with Indigenous communities contribute to a strong “S” in the company’s ESG ratings. They also helped secure its spot at the top of the Best 50 ranking. As a pure-play renewable-energy business, the company scored top marks on sustainable revenue and sustainable investment, which were both at 100%. It also scored in the top quartile on energy productivity and carbon productivity.

Like Premier Legault, Letellier sees batteries in his future. He says that the next frontier for renewables is energy storage – keeping electricity flowing when the wind doesn’t blow and the sun doesn’t shine. Becoming an expert in deploying energy-storage technologies is part of Innergex’s strategic plan for 2020 to 2025. One battery project is already operational near the Yonne wind farm in France. Two others are under development in the Atacama Desert in northern Chile. 

“We need all the help we can get to manage consumption,” Letellier says. “And it is clear that one day not so far away, every house will have its battery.”

Diane Bérard is an independent-solutions journalist based in Quebec. 

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