By mid-March, the first stage of Ukraine’s newest renewable energy project – 19 turbines with a capacity of 114 megawatts – was completed. None of the workers had been killed or injured, and the turbines began to generate much-needed electricity a few weeks later. During a time of war, when Ukrainian infrastructure everywhere was being turned to scrap by Russian missiles, the achievement was nothing short of heroic. 

For DTEK, the Ukrainian energy company that owns the project, the launch of the wind farm – which officially opened this week – was not just an act of defiance in the second year of the Russian invasion; it was an act of strategic desire and necessity. 

DTEK in particular – and Ukraine in general – wants to play a role in the European Union’s clean-energy drive, whose goal is to achieve net-zero emissions by 2050. The company also wants to clean up its own act, since grubby old coal plants provide the vast bulk of its electricity generation. “I am more than confident that we can be one of the main providers of green energy to Ukraine and the EU,” DTEK chief executive officer Maxim Timchenko said in an interview in April in Rome, where he was trying to drum up financial support from international financial institutions at a Ukraine reconstruction conference. 

DTEK is Ukraine’s biggest privately owned generation company, producing about a quarter of the country’s electricity. It’s owned by Ukraine’s richest man, Rinat Akhmetov, who, like many Ukrainian and Russian oligarchs, made his fortune after the collapse of the Soviet Union by snapping up natural resources and heavy industries on the cheap. Forbes magazine put his worth at US$4.3 billion earlier this year, down from more than US$9 billion before the start of the war in February 2022. Many of his most valuable businesses, including the massive Azovstal steel plant in Mariupol, were seized or demolished in Russian offensives in the spring of 2022.  

The effort to keep the lights on has been cruel to DTEK and Ukrenergo, the government-owned national transmission company. (On one of my Ukraine stints in late 2022, while I was covering the war for The Globe and Mail, the electricity and heat in the Kyiv bureau apartment were off nearly half the time). By the end of last year, relentless Russian attacks, initially on the transmission system, then on the generating stations themselves, including a small DTEK solar plant, had cut Ukraine’s total generating capacity by more than half. 

I am more than confident that we can be one of the main providers of green energy to Ukraine and the EU.  

 

–DTEK CEO Maxim Timchenko 

Much of the lost capacity has been restored, though all six of DTEK’s main generating stations in Ukraine-controlled areas have suffered severe damage, and two others were overrun by Russian forces. In the first 15 months of the war, DTEK lost 173 employees on the front lines. Another 474 were injured, 37 missing and five in captivity. Three of them died at plants that came under Russian attack; one died when he stepped on a landmine while repairing a power line near Kyiv. 

The company’s renewables-and-decarbonization strategy began in earnest in 2009, when only about 3% of the country’s electricity supply came from renewable energy. By 2020, the share had increased to more than 12%, with solar leading the mix, followed by hydro, wind and biomass. A hefty feed-in tariff – a guaranteed above-market price for renewable energy delivered to the grid – propelled the rise of wind and solar, which together supplied almost two-thirds of Ukraine’s renewable energy before the war. Ukraine’s pre-war goal, still very much in place, is to raise the share of electricity from renewables to 25% by 2035. 

The war has set back DTEK’s renewable energy rollout by years – but has not killed it. 

As the Center for Strategic and International Studies, a Washington think tank, pointed out, the highest potential for wind and solar development is in areas that are now under Russian control. Ramping up Ukraine’s renewable energy program depends in good part on recapturing those areas, located in the south and the east of the country. At the same time, private financing for these projects dried up, since investors had no interest in supporting projects that could get destroyed by Russian missiles. That left DTEK begging for loans from the World Bank, the European Bank for Reconstruction and Development and other international financial institutions. “The key problem for us is financing,” says Oleksandr Selishchev, the chief executive officer of DTEK Renewables. 

Additional stress came from the Ukraine Ministry of Energy, which, under pressure from a government on financial war footing, froze most payments to wind and solar operators shortly after the war started. Those payments have since climbed, though are still short of normal, breathing some life into near-dead projects. 

DTEK’s first bit of good news came last November, when the successful Ukrainian counter-offensive liberated Kherson in the country’s south, allowing a 10-megawatt solar plant in the village of Tryfonivka to be returned to Ukrainian hands. At the same time, DTEK was well on its way to completing the Tyligulska wind project to the west, near Odesa. Using turbines supplied by Denmark’s Vestas, the project is one of the biggest of its kind in Europe, with a total cost of US$450 million. The second stage, to be completed in 2024, will take the capacity to 500 megawatts, when 83 turbines are scheduled to be in place. 

Tyligulska has great practical value to DTEK and Ukraine. The turbines will partially compensate for the loss of power in damaged DTEK coal plants and Ukraine’s off-line nuclear plants and should be reliable generators even in times of war. They will be hard to destroy en masse since they are spaced hundreds of metres apart on 200 hectares of land. Well-aimed missiles could take out one or two of the turbines but not the whole project. The symbolic significance is even greater, because it delivered the message to the EU that Ukraine is determined to become a green-energy export power. 

 

The key problem for us is financing.

 

– Oleksandr Selishchev, CEO of DTEK Renewables

 

Ukraine exported electricity to Moldova, Hungary, Slovakia and Poland before the war and recently resumed those sales as it rebuilt its transmission lines and power plants – its grid is now entirely detached from Russia’s and interconnected with Europe’s. The country has obvious competitive advantages to play the green game. Ukraine has ample land, meaning that it is unlikely to see the NIMBY campaigns that have stalled or crippled many wind projects in Europe. Certain parts of the country have high wind speeds, and the permitting process is faster than in Europe. Add in a relatively low cost of labour and energy production, and Ukraine will certainly have a seat at the export table. It also knows that certain European countries are setting themselves up for power shortages. Coal power stations are on their way out, and Germany in April closed the last three survivors of its once vast fleet of nuclear plants. 

To be sure, there are obstacles. Ukraine’s power project will always have a higher cost of capital than those in Europe, and the country needs to institute a robust permitting process that would allow DTEK and other power producers to prove that their renewable energy truly comes from sustainable sources. Then there is the war, which could drag on for years, making it difficult for Ukraine to finance power projects of any kind. 

Still, U.S. Energy Secretary Jennifer Granholm said last year that Ukraine is determined to become “a clean energy powerhouse and energy exporter to the European Union.” The war has slowed Ukraine’s energy revolution. But the completion of the first phase of Tyligulska wind farm and the resumption of electricity exports to Europe, even as the bombs and bullets rained down on the country, showed that Ukraine’s direction is set and carries a distinct shade of green. 

Eric Reguly is the European bureau chief for The Globe and Mail and is based in Rome.  

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Then, of course, COVID happened. The day we announced to our staff that I would be the new CEO of the Canadian Council for Aboriginal Business (CCAB) was also the last day we all worked in the office together. On March 16, 2020 we began working remotely to help stop the spread of a new virus that had begun to sweep across the globe. Since then, I have seen businesses and communities pull together in formidable ways, but there’s no denying that the pandemic has been particularly hard on Indigenous businesses.

In May, we launched a survey in partnership with the Indigenous Business COVID-19 Response Taskforce to understand the impact of the pandemic on Indigenous businesses. The results were deeply worrying. Just under half (44%) of Indigenous businesses indicated that, without support, they were likely to fail after three to six months, while 10% of businesses predicted operations could not last more than a month without support; 2% said their businesses had already closed.

There were also some stark differences between demographic groups:

• 61% of women-owned Indigenous businesses reported a “very negative” impact compared to 53% of men-owned businesses.

• 38% of Inuit-owned businesses experienced a revenue drop of 50% or more, compared to 27% of Métis and 31% of First Nations–owned businesses.

While the federal government was quick to announce support for Canadian businesses last spring, Indigenous businesses were initially ineligible for some programs because of their unique business or tax structures. There was also no initial support for the more than half of Indigenous businesses that don’t use traditional financial institutions to access financing, in particular those owners who live on-reserve and lack the collateral typically used to get a loan. The pandemic has only highlighted that Indigenous businesses face distinct barriers. Limited access to financing, unreliable internet access, lack of adequate infrastructure, and limited personal net worth are some of the key issues that have been exacerbated over the past year. Economic reconciliation means addressing these barriers.

Understanding the unique ways that Indigenous business, and as a result the Indigenous economy, operates – much of which has been out of necessity – is a key element to ensuring equitable access to resources. And if Indigenous-owned businesses are to thrive, they’ll need more than just better access to loans, financing and COVID-response programs. In 2019, the Government of Canada committed to having “at least 5% of federal contracts awarded to businesses managed and led by Indigenous Peoples.” Though that figure has been as low as 0.32% some years, CCAB research demonstrates that Indigenous businesses in Canada could meet up to 24% of the federal government’s current spend.

Despite the barriers that Indigenous people have faced since contact, they have persisted. That determination was demonstrated last spring, when many Indigenous businesses pivoted their operations to supply personal protective equipment to help meet increased demand. Our survey identified 84 businesses providing PPE and 57 that could quickly retool to do so. However, there was little evidence of the federal government meeting its 5% target on PPE contracts.

Through our Aboriginal Procurement Marketplace, we already connect 72 Procurement Champions – Canadian companies that have committed to Indigenous procurement – with hundreds of businesses certified to be 51% or more owned and controlled by Indigenous people, through the Certified Aboriginal Business program. By increasing Indigenous procurement, corporate Canada can be part of moving the dial on economic reconciliation – a mutually beneficial opportunity that supports the Indigenous economy without affecting a corporation’s bottom line.

Initial results of a second survey to see how Indigenous businesses are faring nearly a year into the pandemic demonstrate that although things are more optimistic for business owners, they still report negative impacts, particularly on revenues and staff. They continue to face challenges accessing government support. Despite the odds, Indigenous businesses like media company Kejic Productions, cosmetic start-up Cheekbone Beauty and skincare company Satya Organic have seen impressive growth this past year. As economies recover from the pandemic, we want to build on that growth.

As our 2020 COVID survey showed, recovery will be a particularly volatile time for Indigenous businesses as they navigate additional barriers, but Indigenous businesses have demonstrated capacity, determination and innovative thinking in the face of the pandemic. It’s more important than ever that as we reopen and rebuild, we ensure that we build an inclusive, more equitable economy that benefits us all.

Tabatha Bull is president & CEO of the Canadian Council for Aboriginal Business.

This article is part of our Indigenous Economy Rising cover series from Corporate Knights Spring Issue, out April 21, 2021.

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There is an overwhelming body of evidence that demonstrates that women have faced the brunt of the pandemic, from unprecedented job losses to the impact of increasing unpaid care work and the devastating rise in gender-based violence across the country. As coined by economist Armine Yalnizyan, Atkinson Fellow on the Future of Workers, the “she-cession” has been relentless in reversing decades of hard-fought gains to advance gender equality in the workplace.

Young people have also faced disproportionate impacts because of the COVID-19 pandemic. Millennials and members of Gen Z have faced disruptions to their schooling, were often the first workers laid off because of COVID-induced lockdowns, were shortchanged in their earnings, and are experiencing higher levels of anxiety, depression and social isolation. Job insecurity is on the rise, and young people are unclear of where to take their careers in this time of economic uncertainty. The economic consequences of their departure from the labour market, including reduced lifetime earnings, atrophied skills and erosion of professional networks, could be felt for up to 10 years.

These factors are further compounded for young women, especially Black, Indigenous and racialized women; women living with disabilities; and newcomer women. Statistics Canada highlights that young women are the demographic group that is furthest from pre-COVID-19 employment numbers. An RBC Economics report by Dawn Desjardins and Carrie Freestone found that while Gen Z women make up just 2.5% of Canada’s labour force, they represented 17% of the job losses.

Through my work, volunteering and participation in mentorship programs, I speak with young people across the country every week. They share their hopes, their fears and also their frustrations that their needs are not being considered in pandemic policy-making. I worry that if we don’t take the right steps now, young people will become a “lockdown generation” with limited opportunities to realize their full potential.

So how do we prevent that from happening?

First, it begins with recognizing that we need a robust intergenerational lens on all budgetary allocations. A prime opportunity to put this in action is the upcoming federal budget, slated for April 19. This will be the country’s first budget in over two years and the first one that Deputy Prime Minister Chrystia Freeland will put forward in her dual role as Canada’s Minister of Finance. I am hoping for a continued focus on an intersectional feminist approach to recovery, as the YWCA Canada and others have called for, and also an intergenerational approach.

Second, we need to address one of the most pressing challenges: employment precarity. We know that getting into the labour market during times of economic strife is difficult for everyone but especially for those with lower levels of social capital – like young people. We should look at implementing policy measures like a youth job guarantee, similar to what exists in the European Union: within four months of leaving education or becoming unemployed, every young person under 30 is guaranteed to have a good-quality job, continued education or free training.

This could build on the federal government’s investments in the Youth Employment and Skills Strategy. It will be vital for young people who are not in employment, education or training (NEET). During the pandemic, the number of NEET youth has grown to unprecedented levels – currently one in four young people in Canada.

Finally, beyond the workplace, we need the 2021 budget to include targeted solutions to address the other issues that are disproportionately affecting young people, including the pandemic-induced mental health crisis, housing insecurity, the staggering burden of tuition fees and post-secondary education debt, as well as the digital divide that makes it hard for everyone to be connected online.

This is just the beginning. Much more needs to be done, but it must start with the recognition that Canada won’t have an economic recovery without an action plan that addresses the immediate and long-term impacts of this crisis on young people.

The decisions made during this time, both good and bad, will be felt for generations to come. If we want an economy that works for everyone, we must prioritize and maximize opportunities for millennials and Gen Z. So let’s make sure we invest in younger generations to have a real shot at building back better.

Our collective future depends on it.

Anjum Sultana is the national director of public policy and strategic communications at YWCA Canada. She was recently named one of Canada’s Top 30 under 30 Sustainability Leaders by Corporate Knights. Sultana will be moderating a panel discussion to look at the 2021 federal budget through an intersectional feminist and youth equity lens on April 22.

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For the ocean community, this vision centres on the “blue economy,” defined in a recent Delphi Group report as referring broadly to economic activities that are both based in and actively good for the ocean. While “blue economy” remains an emerging and somewhat fuzzy concept, the report echoes a growing trend toward viewing a broad range of ocean-related activities – established industries, emerging technologies and environmental challenges – through a single blue-economy lens.

While we applaud this movement toward integrated management of ocean resources, we can’t help but notice that freshwater is missing from the conversation.

From a management perspective, freshwater and oceans have historically been distant cousins – clearly related, occasionally crossing paths, but largely living independent lives. But as our knowledge of planetary systems has evolved, the distance between these two worlds has narrowed considerably, and the number of connections between them has rapidly grown.

Take, for example, desalination technologies. The ocean-based blue-economy definition classifies desalination as an ocean activity (see the World Bank’s 2017 report). But Canadian water technology companies, such as British Columbia–based Saltworks, are successfully developing and applying desalination technologies to a range of industrial wastewater treatment applications.

Or let’s consider the “wicked problem” of plastic. Plastic pollution is a major issue facing the world’s oceans and is increasingly propelling Canada’s international commitments, from its founding role in the Global Plastic Action Partnership to its strong support for the Ocean Plastics Charter. But plastic pollution is not, at its core, an oceans issue. Of the more than eight million tons of plastic that ends up in the world’s oceans every year, most is carried into the ocean by rivers, with 90% of plastic pollution coming from just 10 river systems.

A recent map of Canada’s water-technology ecosystem highlights dozens of similar connections, from hydropower (emerging technologies harnessing both tidal and freshwater currents) to aquaculture (a rapidly growing sector including land- and ocean-based operations). These connections make it clear that there is no magic dividing line between freshwater and oceans, where one rule book ends and another takes over.

What do we stand to gain from bringing these two worlds together under a single blue-economy umbrella? In no uncertain terms: a lot.

Because of Canada’s size and the number of sectors that intersect freshwater, coordination in this space has always been a challenge. Freshwater simultaneously fits into a range of sectors, from mining and energy to agriculture and municipal services, and lives nowhere, with no dedicated agency advocating for its interests (the current conversation around the creation of a Canada Water Agency is a promising one, which we’re following with interest).

By extension, freshwater infrastructure and innovation, including around drinking water, wastewater, stormwater and environmental protection, does not attract attention or investment at the same scale as the ocean economy.

How, then, can we leverage the strengths of Canada’s ocean community to advance the interests of “all waters”? We can start by learning from and building on the successes of institutions such as Canada’s Ocean Supercluster, a multi-sectoral organization created by the federal government to support ocean innovation, which has provided a hub to coordinate activity around ocean technologies and solutions. An equivalent entity for freshwater could play a significant role in accelerating investment and innovation around water challenges.

We can also draw inspiration from the ocean economy to generate new sustainable business models and investment for the freshwater sector. Hosted in 2018, the first global conference on the sustainable blue economy explored how to harness the potential of our oceans to improve the lives of all and leverage research and innovation to build prosperity. Building on this theme, Canada’s emerging Blue Economy Strategy (currently focused exclusively on oceans) aims to align economic growth in the ocean sector with job creation and climate action, as well as greater participation of Indigenous Peoples, women and under-represented groups in the ocean economy.

Building back better requires us to take a holistic view of water systems and understand the numerous and complex interconnections between freshwater and ocean sectors.

The prime minister’s Speech from the Throne in September 2020 recognized that “investing in the Blue Economy will help Canada prosper.” Reframing the blue economy as “economic activities that are based in and actively good for all water systems” will better position Canada to tackle the complex environmental challenges that water systems face and harness emerging economic opportunities at the interface of freshwater and ocean sectors.

Melissa Dick is a program manager with Aqua Forum, a non-profit organization whose flagship program is the AquaHacking Challenge.

Alan Shapiro is the director of waterNEXT, Canada’s emerging water-technology ecosystem, and principal at Shapiro & Company.

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The financial crisis was only 12 years ago, but it seems almost everything has changed since.

At that time, policy was myopically concerned with two things. First, restoring liquidity in financial markets; central banks took unprecedented steps to do that. Second, bolstering aggregate demand through very large fiscal stimulus packages.

The crisis was devastating. But it and the policy responses did not seem all that complex. The fiscal stimulus was mostly of a conventional form. Lots of shovels-in-the-ground sort of thing. And it was almost all focused on the near-term. Indeed, Canada, like almost all other countries, dramatically swung to austerity just 24 months into the crisis aftermath, when the economy was still far from recovered.

Governments should, and appear to, have a lot more on their minds today.

Yes, there is some need to bolster aggregate demand for goods and services. But the pandemic has also hit aggregate supply hard, and that requires different approaches.

The focus is much longer-term now. There is a realization, at least in Canada, that we are slipping into a path of much lower potential growth, jeopardizing the well-being and the sustainability of the country’s finances as well as their ability to deliver needed public services.

There is also a realization that the historical sources of growth for Canada may not be there in the future. In 2008, Canada was years into a resource boom. It was dented by the crisis, but prices became strong again until 2014. Now we are in the sixth year of a depressed resource sector, and prospects for the future do not look so bright. Talk of peak oil supply has been replaced in this brief period by talk of peak oil demand. Canada’s powerful manufacturing sector had started to shrink by 2008, and it has continued on that downward trend, taking well-paying jobs with benefits with it.

Since the last recession, talk of peak oil supply has been replaced by talk of peak oil demand.

Even the environmental movement has become more sophisticated since 2008. An almost singular focus on greenhouse gas emissions has evolved into broader considerations of well-being, or the quality of life. And tangible evidence of the effects of climate change has heightened concern. There is less dogma around the idea that you can have growth or the environment but not both. Many now realize that with smart strategy both can be enjoyed.

These changes in context require a new perspective. We must find new sources of economic growth in Canada that promote or at least are compatible with environmental objectives. If this perspective can be put in the context of recovery from COVID-19, so much the better. But it goes much further than that. It is a perspective to deliver longer-term benefits to Canadians.

With our close economic relationship and physical proximity to the United States, a dark cloud of fatalism has hung over Canada the past four years, with many convinced that attempts at clean growth were futile given the apparent lack of interest in all things environment at the White House, even though actual developments were not as unfavourable as the rhetoric.

But now the clouds have been lifted, and our major trading partners in both the United States and Europe have adopted clean growth as their North Star.

Canada has all the ingredients to prosper in the clean economy, but it will take a lot more tangible action on the part of government and business if we are going to seize the opportunity.

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Just maybe, however, 2020 will go down as the year we started getting things right. Science broke all speed records for developing effective vaccines. The United States elected a president with the greenest agenda ever. Solar emerged as the least expensive energy source in history. And more political and business leaders are recognizing that society’s vulnerability to COVID-19 is rooted in longstanding inequities and harmful behaviours that are finally being addressed.

All these trends, unexpectedly, helped make 2020 a banner year for Corporate Knights – and for anyone who cares about sustainability and social justice. As we continued our reporting and advocacy, we’ve seen several major advances this year:

• Our Building Back Better roundtable series last spring – masterfully moderated by the unflappable Diana Fox Carney – brought together a host of leaders in business, labour, science and government to explore innovative ways to spark a “green recovery.” The ideas put forth by our numerous experts – in energy, manufacturing, agriculture, construction, transportation and so much more – coalesced into an ambitious summary report whose proposals were endorsed by business leaders across all major sectors and are now seeping into policy agendas on both sides of the Atlantic. A short video of the Canada we could have by 2030 if we act boldly in the coming months and years can be viewed here.
• This fall we launched a follow-up roundtable series, Building Back Better Together, in partnership with the Embassy of the Federal Republic of Germany in Canada. This alliance demonstrates the growing international interest in collaborating on climate issues, and we can’t wait to see how this trend grows as the United States rejoins the Paris Climate Agreement. 
• To commemorate the 50th anniversary of Earth Day, we worked with Earth Day Canada and the Earth Day Initiative in the U.S. to produce the first-ever Green 50: Top business moves that helped the planet. Our list celebrated such game-changing events as Toyota’s launch of the first mass-produced hybrid car and Ontario’s decision to ban coal-fired power plants (still the world’s single largest GHG-reduction measure). Our goal parallelled that of Earth Day itself, as described to us by the movement’s founder, Denis Hayes: “To try to create enough pressure on governments and companies around the world to be aggressive in their [climate action] leadership.”
• The lockdown also opened a door for us to launch virtual Corporate Knights roundtables, building up a community of more than 5,000 engaged citizens, business leaders and public policy leaders who invested thousands of hours to explore and define the “angel in the details” of what it will take to build back better as we emerge from the pandemic pause. This year’s roundtables culminated in a fireside chat featuring Margaret Atwood, Sheila Watt-Cloutier, and David Suzuki, who offered a rousing call to action to take a moonshot at being the first to land a net-zero-emissions economy. 

Enough about us. I’d like to thank you for your support of Corporate Knights. Your engagement with our magazine, our events, our website and YouTube channel, and with our partners and advertisers is what enables us to go out every day and fight for sustainability and prosperity for Canada, the world and our children’s children. As the race to a zero-emissions economy speeds up and the climate threat grows, the perspective that government and science and business are all in this together is more timely and relevant than ever. We thank you for your support in 2020 and look forward to a more prosperous 2021 – the year we all begin to Build Back Better.

Happy New Year,

Toby Heaps

Founder and Publisher, Corporate Knights

The post My favourite year appeared first on Corporate Knights.

Alberta Innovates – a Crown agency – says the biggest opportunity lies in the production of carbon fibre, a high-strength material that can be used in wind turbines, automotive applications and the aerospace industry. The agency has launched a $15-million “Grand Challenge” in which 20 laboratories around the world are participating in research to commercialize the production of carbon fibre from the heavy asphaltenes contained in bitumen, in the so-called bottom of the barrel.

“We are finding new ways to use bitumen not as transportation fuel but as value-added non-combustion materials that are worth more than transportation fuel but with a low GHG emissions – products like carbon fibre,” said John Zhou, vice-president of clean resources at Alberta Innovates.

Zhou participated Wednesday in a virtual roundtable hosted by Corporate Knights and the German embassy in Canada, part of a series on rebuilding a cleaner, more sustainable economy as we recover from the COVID-19 pandemic.

He said that while technological challenges remain “very, very significant” to a commercializing bitumen-derived carbon fibre industry, progress is being made.

There are skeptics, however. Wolfgang Seeliger heads up Leichtbau BW, a German consortium of companies developing and deploying lightweight materials that reduce costs and greenhouse gas emissions in transportation and industrial processes. He said that carbon fibre production cannot compete with other lightweight materials on either cost or environmental footprint, noting that it takes more energy to produce auto parts from carbon fibre, for example, than is saved by the use of the lighter material.

Alberta Innovates estimates that diverting 30% of oil-sands production to industrial uses would reduce GHG emissions by 126 megatonnes (Mt) a year. That’s because the carbon from the thick, asphalt-like component of the bitumen would be locked in the industrial material, rather than combusted as transportation fuel or petroleum coke.

It also estimates the industry could earn $84 billion by 2030 from those industrial markets – including $44 billion from carbon fibres – while reaping $27 billion from the sale of the remaining crude.

However, the “bitumen beyond combustion” strategy would not lower emissions from oil-sands extraction and processing in Alberta. The sector currently produces more than three million barrels per day. It accounted for 77 Mt of GHG emissions in 2018, or 10.5% of the country’s total.

Canada has pledged to reduce GHGs by 30% from 2005 levels by 2030, and the federal Liberal government now says it will introduce an even-tougher 2030 goal along with its commitment to get to net-zero emissions by 2050.

Seeliger said carbon fibre will be relegated to a niche market for some time because carbon fibre is expensive and its introduction into markets like automotive, construction and aerospace will require complicated changes to certification standards. However, Zhou said the opportunities will expand dramatically if the province succeeds in driving down the cost and the environmental footprint of producing it. Alberta Innovates believes industry can reduce the cost of producing carbon fibre by more than 50% below that of current methods and reduce the carbon intensity of production by up to 90%. It estimates that a 50% cost reduction in carbon fibres would boost demand tenfold.

Suncor’s Carrie Fanai said Wednesday that Canada’s largest oil and gas producer is focused on the “need to transition to a greener economy.” Suncor has pledged to reduce the emissions intensity of its oil and petroleum products by 30% by 2030, while other companies, notably Cenovus Energy and Canadian Natural Resources Ltd., have set “aspirational” goals to have net-zero emissions at their oil-sands plants.

“For us at Suncor, that has meant not only focusing on improving the GHG intensity of our existing production but looking at new products, energy sources and related lines of business,” said Fanai, who is the company’s lead on bitumen value-chain optimization.

She noted that it is still early days in the journey to commercialization and that producers will have to work with chemical companies and manufacturers to ensure they maintain focus on potential customers.

Marcelo Lu, president of BASF Canada, said the opportunities for carbon fibre “are very large if we can crack the innovation to take the impurities out of the bitumen stream,” which is heavy in sulphur and metals. He said the massive bitumen resource represents a high concentration of low-cost feedstock for carbon fibre that could drive market developments in a way not seen before.

Alberta Innovates hopes to see a commercial-scale demonstration plant for producing carbon fibre from bitumen by the end of 2024.

If it succeeds in reducing the cost of production, the province could produce 326,000 tonnes per year of carbon fibres from the asphaltenes contained in one million barrels per day of bitumen, which would be worth an estimated $44 billion annually in today’s prices, the agency estimates. It says there is also potential to produce activated carbon and asphalt binder from the asphaltenes in another two million barrels per day of production.

The total value of the “non-combustion” products would be $84 billion. At the same time, industry would sell higher-quality crude, “de-asphalted” oil for $27 billion. Total value: $111 billion a year, compared to the $27 billion a year the sector expects to earn by selling three million barrels a day at $25 per barrel.

As part of its Build Back Better series last spring, Corporate Knights recommended that the federal government provide $1.4 billion in funding over five years to help the industry commercialize carbon-fibre production. Environmental groups have called for an end to subsidies for the fossil fuel industry, arguing that government efforts should be focused on the transition off oil.

Shawn McCarthy writes on sustainable finance and climate for Corporate Knights. He is also senior counsel for Sussex Strategy Group.

With the support of the Embassy of the Federal Republic of Germany in Canada.

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The recent cabinet shuffle in Ottawa has placed an intensifying focus on a green and caring recovery, one that will likely tie stimulus support and investment to corporations meeting climate goals and contributing to society. This will be a bold move. If there is a time to do it, it’s now. But how can we objectively measure and monitor what companies are doing and give them the incentive to move in the right direction?

For almost 60 years, the core of accounting principles has remained unchanged. Basically, it captures the revenues and costs of a company’s direct economic activity. It does little to account for, in monetary terms, the company’s societal and environmental value contributions and impacts, namely jobs created, wages paid, climate impact, water usage, et cetera. 

At this point, companies disclose these components differently, with varying measures, focus and metrics. To capture the “true” value contribution of business to society, environment and the general economy, this needs to change. Corporate impacts need to be measured and valued using standardized methodologies. Putting a dollar value on impacts on water, air, workers and more (both positive and negative) and stating it in a financial report, would unlock billions in potential sustainable investment. Most importantly, it will make accounting for environmental and societal impacts part of the fiduciary duty of companies’ boards of directors – thereby rewarding measured decision-making, bold actions and accountability.

BASF recently became a founding member of the Value Balancing Alliance (VBA), a non-profit organization whose goal is to change the way company performance is measured and valued. Under the directive of the European Commission, the VBA has been mandated to draft a new set of green accounting principles to support the implementation of the EU Green Deal. More specifically, it will standardize a common method to assess the value a company brings to society, provide a framework for comparability within sectors, enable scalability of adoption, and incentivize a “triangular” approach to business steering and decision making. 

With the convergence of these new management accounting principles, companies will be driven to define and measure their often otherwise abstract statements of purpose and disclose progress on them. These principles will also benefit companies that have had difficulty communicating their positive impact under current financial reporting. This includes energy companies in Canada that are among some of the most innovative and heavily invested in communities and, surprisingly to some, the environment. These new standards will help lure a new generation of investors who will reward companies for considering their total value and impact on society, the environment and the economy, rather than just their profits. 

While many believed that climate change and ESG (environmental, social and governance) metrics would be dismissed during the pandemic-induced downturn, a large number of companies have doubled down on their commitments. COVID-19 has reminded the public and investors what it means to be a company for the good of society. That means protecting and ensuring the safety and jobs of employees, meeting tax responsibilities and responding to crisis with actions, not words, and having purposeful strategies that can weather societal, environmental and business uncertainties.

What’s also clear is that companies that have successfully tied their mission statements to the 2030 UN Sustainable Development Goals agenda have a lot to gain with the transparency that will emerge out of a triangular-shaped recovery.

In the wake of the pandemic, a major reset is coming to all businesses. We need a formal departure from the old ways of accounting. We need companies to work closely with the federal government and international standard setters to align on a new reporting standard that shows a company’s real total contribution to society. Europe has a model that’s worth considering. We should embrace this time of change to leapfrog beyond old norms and adapt quickly to the new challenges we face ahead. It’s time to put numbers where numbers are due, weighing impacts on society and the environment at par with a company’s bottom line. 

The new finance minister may be surprised by how open businesses are to making this change. If it is done in a collaborative way, we may truly see a seismic shift in reporting and decision making that puts Canadian businesses back in the global lead.

Marcelo Lu is president of BASF Canada.

Christian Heller is CEO of Value Balancing Alliance.

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The landscape in which they operate has been similarly impacted. Trends that existed prior to the pandemic have accelerated and evolved, challenging businesses to keep pace and refocus their strategies. That new reality is driving transformative advances in technology, data digitalization and communications across a range of industries. The lockdown phase of the pandemic fuelled explosive growth in online commerce, video and electronic communications technology, and innovative healthcare research and applications, to name a few.

How business leaders address the strategic challenges before them will determine the success of their organizations for years to come. They will need to continue to be innovative, nimble and ready to act in real time to address new and emerging realities.

Greater government involvement is here to stay

Throughout the pandemic, governments have played an unprecedented interventionist role. They have imposed wide-ranging public health measures, enacted new regulatory responses and provided massive stimulus, all in a manner without parallel since the Second World War. The effectiveness of these measures has been critical in shaping the ability of countries to protect their citizens and economies.

The degree of government intervention to date has met with relatively little public criticism. Increased regulation across the economy will likely be sustained, and governments will likely need to continue to provide financial and regulatory support to key businesses and industries. Businesses should anticipate and understand evolving legislative and regulatory changes and factor them into their strategic calculations. Accordingly, government relations capabilities will become an even more important aspect of the corporate strategic toolkit.

Capital raising will remain a critical concern

Access to sufficient capital on reasonable terms remains essential for businesses to preserve their viability and strengthen their balance sheets for what is likely to be a long and uncertain recovery process ahead. Government stimulus programs and low interest rates are fostering favourable debt capital market conditions for corporate issuers. Debt issuance transactions are proceeding at a healthy clip across a wide range of industries. However, the return of equity markets is needed to restore balance sheet equilibrium and allow issuers a more traditional suite of financing options to support growth projects and acquisitions. When and how equity capital markets will reopen in a broad-based manner for new issuances remains uncertain.

Acknowledging the limits of globalization

The pandemic has profoundly challenged widely held assumptions that globalization is a beneficial, continuously advancing process.

Open international travel accelerated the spread of the virus, businesses experienced major disruptions in offshore supply chains and countries faced a shortage of domestically available personal protective equipment (and witnessed an international bidding war to obtain scarce supplies). As a result, governments and businesses are now considering how to diversify supply chains and strengthen domestic capacity for key industries, including through the growth of national procurement strategies. Meanwhile, the pre-pandemic trend toward less free and open global trade and investment flows continues.

Since the installation of the Trump administration in the United States in 2016, we have grown accustomed to the “America first” refrain. Here too, a “Canada first” sentiment is gaining momentum, with public support pivoting toward self-interest, protectionism and a preference for domestic sourcing and investment. Many cross-border mergers and acquisitions and investment transactions will become more politically sensitive and challenging to complete.

At the same time, the relationship between many Western countries and China has come under increasing strain. This is posing a major challenge to Canadian and U.S. businesses that are now balancing the need for access to and growth in the Chinese market with the need to mitigate the growing risks of supply chain over-reliance, China’s increasing restrictions on the activities of foreign firms and increasing trade and political friction.

The need for higher government revenues will drive ongoing tax changes

In order to pay for the massive fiscal stimulus unleashed during the pandemic, governments will be looking to raise taxes and identify new sources of revenue. They can be expected to discourage companies from moving to lower tax jurisdictions, challenge offshore tax structures and maximize tax revenues from e-commerce and other “new economy” activities within their borders. As a result, business leaders are likely to reformulate their offshoring and supply chain strategies in favour of diversification, redundancy and reduction of tax and political risk.

Focus on the individual and social concerns

The COVID-19 crisis has heightened focus on the individual and key social concerns. Unlike the 2008 financial crisis, the primary focus of government intervention – from both a public health and economic aid perspective – has been on individuals rather than businesses and the economy as a whole. There has also been intensified and sustained public focus on key social issues, most significantly on civil rights, anti-racism and reconciliation with Indigenous Peoples.

Business leaders will need to find ways to ensure their corporate strategies reflect these trends, lest they end up on the wrong side of them. These factors will likely encourage a broader stakeholder view of corporate legitimacy, where corporate directors’ and officers’ attention will shift toward embracing broad principles of stewardship, sustainability, employee well-being and long-term value.

Confronting new risks

Businesses will need to prepare to address emerging risks in data security, litigation and employee misconduct.

The pandemic has brought on heightened awareness of the importance of data security issues, such as developing corporate best practices around digital platforms for payments, privacy and cybersecurity. These matters have become pressure points for organizations as they navigate the accelerating shift to digitization of business services.

With contractual relationships around the world disrupted by COVID-19, litigation is on the rise and likely will be for the foreseeable future as consumer class actions and other litigation commences across Canada and the United States.

Employee misconduct/white collar crime (alleged or actual) is an ever-present risk for organizations. When it comes to internal risk mitigation, organizations will want to assess their current compliance and investigations infrastructure to address vulnerabilities and be ready to respond.

Lessons for the future

While the COVID-19 pandemic continues to pose a fundamental challenge to our economy and society, a number of key lessons have become apparent. In navigating the unprecedented economic and social disruption, most businesses have exhibited a significant degree of resiliency and ingenuity. The crisis has accelerated major changes already underway in markets and facilitated critical changes within organizations. It has also exposed flaws in the architecture of globalization and social structures, which can now begin to be more effectively addressed. If heeded, these lessons can help businesses harness new opportunities and respond to other inevitable challenges that they will face.

Robert Prichard is the non-executive chairman of Torys LLP.

Michael D. Amm is co-head of Torys LLP’s Mining and Metals group and a member of their M&A and Capital Markets groups. 

 A version of this article first appeared on Torys.com.

The post How to craft your business strategy for a post-pandemic world appeared first on Corporate Knights.

Dear Minister Bill Morneau,

As leaders of major corporations in Canada, we are focused on our country’s safe road to recovery. Canadians are experiencing significant economic hardship because of the COVID-19 pandemic – challenges that will continue for months and possibly years.

Around the world, countries have adopted unprecedented policies during this crisis. Canada’s federal and provincial governments have acted boldly and creatively with their emergency relief measures, with positive results. However, for a full-scale recovery, even bolder action will be needed.

We have the opportunity to emerge from this moment with a resilient economy that creates prosperity for more Canadians. We will get there by working together with all the industries that have led us to where we are as a nation today — from natural resources to telecommunications, manufacturing and financial services. We must build on and reinforce that foundation to set us up to thrive in the future. To get there, we must leverage our strengths and invest in our most promising assets that align with growing global markets. Canada already has a competitive advantage in four of them: low-carbon natural resource commodities, zero-emissions vehicles, smart buildings, and sustainably produced food. All are poised for explosive growth going forward.

On the natural resources front, Canada is a treasure trove for the low-carbon commodities that the world needs to decarbonize, and we are among the most carbon-efficient producers of those commodities. It’s well-known that we are the fourth largest oil producer in the world. It’s less well known that our vast supplies of bitumen are uniquely suited for producing carbon fibre for strong, lightweight materials that would be the top choice for manufacturing electric vehicles, and a host of other applications if we can crack the cost nut. Canada also generates more renewable electricity than any country except China, which creates a path for us to be a supplier of choice for the growing clean hydrogen market. In addition, Canada has an abundance of bio-based natural resources, the waste residues of which are ideal feedstock for renewable jet fuels, a market which is taking off.

On the vehicle front, we are a top-five exporter by value globally and a top-five producer of the minerals that are essential for battery production. We have the resources and industrial ecosystem to be a North American hub for battery production and zero emissions vehicles, including freight trucks and buses.

Looking at buildings, Canada is one of the world’s largest commercial landlords. Twelve of the top 50 real estate investors in the world are based in Canada, and we are recognized as global leaders in green building. With green renovations taking centre stage in recovery packages across the globe, Canadian real estate investors possess the know-how and property tech required to surf this long-term wave.

In food, Canada is the world’s fifth-largest agricultural exporter and is number one in pulses. By restoring soil carbon, we can feed a growing global appetite for sustainably sourced food, including plant protein.

If we invest in these tangible markets, it would also be a shot in the arm for Canada’s financial services and technology sectors. Toronto Finance International estimates there’s potential to grow annual revenues in low-carbon banking, insurance and investment by $110 billion in the next five years.

All of these markets are fast-growing but in a state of flux. Whether Canada becomes a supplier or a buyer in the coming decades depends on our decisions today.

Doing this will not be easy. It will require a significant burst of investment in the first couple of years buttressed with complimentary policies over the next five. Some will raise concerns about the costs, but if we learned anything from the last economic crisis, it’s that austerity is not a growth strategy, rather it leads to lost opportunities for people and businesses alike. Other countries have learned this lesson, and Canada’s industrial competitors will be investing boldly: South Korea is structuring its economic recovery plan as a “Green New Deal,” and the European Union is allocating 25% of its proposed €750 billion recovery package to green projects and strengthening connectivity networks.

We also recognize that building back better is an opportunity for all Canadians to work together. We need to engage broadly. This means forming meaningful partnerships with Indigenous communities in terms of equity ownership, employment, and procurement, and it also means breaking down systemic barriers that for too long have disproportionately held back women and people of colour.

Now is the time to be courageous and bold. We encourage governments to lead a collaborative and bold economic recovery building on the strengths of our existing economy and talent to capture the growth markets of the future.

As corporate leaders, we are committed to doing our part to build back better towards a more resilient — and inclusive — economy.

Sincerely,

Mike Andrade, CEO, Morgan Solar

Céline Bak, President, Analytica Advisors

Brian Bentz, CEO, Alectra Inc

Guy Bourbonnière, Vice President Trane Commercial HVAC – Eastern Canada, Trane Technologies

Christine Bergeron, Chief Member Services Officer, Vancouver City Savings Credit Union

Erica Brabon, Director, Energy & Sustainability, Black & McDonald

Kim Caron, President, Executive Mat Group

Jim Colthart, Chairman, C³ Global Technologies, Inc.  &  EnerSysNet Canada Inc.

Guthrie Cox, President, View Canada

Mike Crawley, CEO, Northland Power Inc

Darren Entwistle, CEO, Telus Corp

Jason Fitzsimmons, Chief Corporate Affairs and Customer Care Officer, Hydro One Ltd

Sabrina Geremia, Country Manager, Google Canada

Mike Gerbis, CEO, The Delphi Group

Michael Gonsalves, President, Carrier Enterprise

David Grinstead, CEO, Signify Canada

Anthony Haines, CEO, Toronto Hydro Corporation

Toby Heaps, CEO, Corporate Knights Inc.

Gord Hicks, CEO, BGIS

Matt Jamieson, CEO, Six Nations of the Grand River Development Corporation

Gord Johnston, CEO, Stantec Inc

Philippe Jetté, CEO, Cogeco Communications Inc

Faisal Kazi, CEO, Siemens Canada

Melissa Kennedy, EVP, Chief Legal Officer & Public Affairs, Sun Life Financial Inc

Laura Kilcrease, CEO, Alberta Innovates

Mark Little, CEO, Suncor Energy Inc

Marcelo Lu, President, BASF Canada

Karn Manhas, CEO, Terramera

Alex Lau, VP, Golden Properties Ltd

Don Lindsay, CEO, Teck Resources Ltd

Michael McCain, CEO, Maple Leaf Foods Inc

Carol McGlogan, CEO, Electro-Federation Canada

Dermot McMorrow, General Manager – HVAC Division, Mitsubishi Electric Sales Canada Inc.

Paul Mertes, CEO, Circuit Meter

Terri Lynn Morrison, Director of Strategic Partnerships, Indigenous Clean Energy

Thomas Mueller, CEO, Canada Green Building Council

Derek Nighbor, CEO, Forest Products Association of Canada

Nathalie Palladitcheff, CEO, Ivanhoé Cambridge

Josipa Petrunić, CEO, The Canadian Urban Transit Research & Innovation Consortium (CUTRIC)

Gregor Robertson, EVP, Nexii

Bill Strohecker, Country Managing Director, ABB Power Grids Canada

Sandra Stuart, CEO, HSBC Bank Canada

Ralph Torrie, President, Torrie Smith Associates

Susan Uthayakumar, CEO, Schneider Electric Canada

Nadeem Velani, EVP & CFO, Canadian Pacific Railway Ltd

Annette Verschuren, CEO, NRStor Inc.

Anthony Viel, Managing Partner and Chief Executive, Deloitte Canada

Tamara Vrooman, CEO, Vancouver City Savings Credit Union

Rob Wesseling, CEO, The Co-Operators

Dan Wicklum, CEO, The Transition Accelerator

Casey Witkowicz, CEO, RYCOM

Mary Ann Yule, CEO, HP Canada

Supportive quotes from business leaders

“The notion of ‘flattening the curve’ with coronavirus has taught us a valuable lesson when faced with a serious risk: act now or face dire consequences. It’s a similar warning with climate change, a seemingly slower moving problem when compared to COVID-19, but just as urgent for the present and future health of people and the planet.  This is why I believe investing in a bolder green initiatives is important.”

–Susan Uthayakumar, president, Schneider Electric Canada

We believe this crisis is an opportunity to reset our country’s assumptions, and to build a lower-carbon economy that also provides jobs and wealth for more people. That’s why Vancity is supporting Build Back Better. We believe a strong, prosperous economy requires strong local communities. As a member-owned, values-based financial institution, we’ve always put the needs of people and communities first. We believe that’s more important now than ever before.

–Christine Bergeron, incoming Interim CEO, VanCity

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