Deborah: Welcome, good morning and good afternoon. Thank you for joining us today for our Women Get On Board virtual session that is hosted by Gowling WLG. So thank you, Gowlings, for being our national strategic partner and hosting us on this very topical discussion today. We are coast to coast. We have attendees from East to West coast and right through Canada so thank you all. I am Deborah Rosati, of Women Get On Board. I'm the founder and CEO. Women Get On Board is a member based company that connects, promotes and empowers women to corporate boards. We have over 500 members across Canada and we offer sessions like this to inform, to empower that next generation of women corporate directors or, if you're already on a corporate board, to be more effective or just to stay current on topical matters. A few administrative matters before we get started. This session will be recorded. You will receive a link to the recording early next week, and we'll post it on our Women Get On Board website, thereafter. We're excited to have a group of very knowledgeable and keen speakers today on a topic on ESG and the Role of the Board. There'll be a 45 minute discussion, facilitated, and then there will be a 15 minute Q&A and because we're on the Zoom platform you'll be using the question function to ask any questions to the panelists. That will be facilitated by our moderator. You will receive a thank you email following this session and we really will appreciate your feedback and then there'll be a follow on email you'll receive early next week with the link to the recording. So, without further ado, I'm honoured to introduce our moderator today, Caireen Hanert. She is a partner at Gowling WLG's Calgary office. Her practice is focused on insolvency and restructuring litigation and I imagine you're quite busy these days. I guess that's an understatement. She has an area of practice in commercial litigation. She regularly advises boards as part of her practice and has held board positions with various not for profit organizations during the course of her career. So, without further ado, over to the panelists and moderator. Thank you.
Caireen: Thanks, Deborah. We're excited to be hosting this webinar today with Women Get On Board and we have such great feedback from these sessions that we manage to do with you. Thank you to everybody who has tuned in to the webinar today and, just further to Deborah's point about the Q&A session, if you do have questions during the course of the discussion that come up, please don't hesitate to type them into the Q&A box. I will be keeping an eye on that as we go along. If you would like to direct your question to a specific panelist please let me know who you'd like to direct your question to. Now, we decided that rather than recite facts and figures about ESG, we thought we would bring this critical issue to life by engaging in a discussion as between our panelists. We hear from them on their views as to how ESG issues are impacting the discussions around the board table. So our three panelists today are Linda Hogg, Beth Burton and Geeta Sankappanavar. I apologize, Geeta. Can you say your last name for me again?
Geeta: Sankappanavar.
Caireen: Sankappanavar. I even practiced that beforehand and I apologize. So Linda is one of my partners in our Gowling Vancouver office. She practices corporate and securities law. Alongside her practice she's taught at the University of British Columbia and Simon Fraser University. She has served on the TSX Venture Exchange advisory committee and also has chaired the security subsection of the BC branch of the Canadian Bar Association. My partner, Beth, is the leader of our financial institutions and services group, in our Calgary office. She has an extensive background in financial services law, is an active member of our community here in Calgary and is also a member of the National Women's Strategy Advisory Committee of Private Work in Canada. Geeta is the founder of and CEO of Akira Impact, which is an essential assets investment firm. She's also been honoured as one of Canada's top 100 Most Powerful Women. We're glad that all of you could join us today and provide us with some insight on this issue. Just so that all of our viewers on the same page I thought that I'd start with a very brief overview of what ESG is and then we can launch straight into the discussion.
For those of you who may not be familiar with this term, ESG refers to environmental, social and governance issues, each of which creates risks and opportunities for both profit and not for profit corporations. Some specific ESG issues that boards are being asked to take a look at these days include, under the environmental category, climate change, sustainability, community environment , renewable energy, waste avoidance or diversion. In the social category, internal human capital management or diversity, external stakeholders, human rights issues in its business and also in supply chains, social licence to operate and with respect to governance, we're talking about the board processes that ensure board accountability and preparedness on these issues. With that I'd like to launch into the discussion. It seems, at this point in time, we're at a critical point in this discussion, at a global and a national level, with all the push for societal change and the various movements that are making that happen. We hear, in the media and elsewhere, that this is an important discussion at all levels in an organization. Geeta, I'm going to throw this first question to you. Why is it important for a board to be giving consideration to ESG issues?
Geeta: Thanks, Caireen. I'll take a step back here and share with you guys the lens within which I view the world, because if you don't understand the lens within which I view, you can't put my comments into context. First of all, I am a for profit corporate director. I'm a not for profit corporate director. I chair the Board of Governors for the University of Calgary. I'm an allocator. I service about $3 billion dollars of investment committee funds by endowments and foundations and I'm a direct investor myself, running an investment firm, and I'm also somebody who's lived and worked all over the world. So, I raise capital, I deploy capital and I advise on capital. As you think about this and what the role is of ESG in the national and international stage and why it's so important, it's because there are moments in time where movements are borne, and those movements could be globalization, they can be borne from deregulation or technical innovation. Then there are the movements that we've been having more recently due to a change in purpose and a rise in the collective consciousness in the use of people's voices. So we saw that with hashtag #metoo. We saw that with 'Black Lives Matter' and climate action and now we're seeing it with ESG. The reason why boards needs to care about this is because this, all boards, public, private, for profit, not for profit, if you're raising capital or not, it's because this affects everything that you do. It affects all of your stakeholders, your employees, your shareholders, your vendors, your community and your customers that you serve, and of course, your investors. It is the single biggest topic on today's agenda of capital. If you're not paying attention to it, it will pass you by.
Caireen: Beth, I'd like to throw it over to you. Do you have some thoughts that you could add?
Beth: Absolutely. I'm going to take a bit of a cue from Geeta because I think it was quite helpful. I'll give you the lens where I'm coming from as well. I work in financial services. My entire legal career has been either the restructuring side or the lending side in placement of funds. But I work from the perspective of both those providing the funding, whether it's an investor or more typically a large lending institution or group of lending institutions, but I also spend almost half my time acting for those trying to get those funds and have access.
Caireen: Beth, I think you froze there for a moment. Perhaps what we can do is we can move on. Linda, would you like to give us some thoughts on why it's important that boards start to consider these issues at this point in time?
Geeta: Caireen, I think they've both frozen. So give them a second to come back. I'll give you guys some context here. Beth has also served as counsel for us and she's amazing. I think that we she's going to say is if you're looking for funds today there is now a requirement to review ESG and your ESG disclosures and practices in getting credit, equity, subscriptions as well as from a public company perspective, also in terms of getting yourself reviewed and put on, say for example, the MSCI ESG Index. These are important topics. And there she is.
Caireen: Beth, you're on mute still.
Beth: I did stop speaking when I dropped off so hopefully we can get the momentum continuing along through here. What I have seen is the momentum of late has just completely changed from the start of things. That momentum has meant that each of the institutions that are either investing or lending in these businesses are asking the harder questions and, I think the good and timely questions, to the companies that they're looking in investing or lending to and saying, "Where is your ESG at? Where is your policy on ESG?" Then, frankly, from the lens of being a partner in a law firm, we're asked the same questions ourselves. So from a business perspective those are questions in a management role that I'm being asked to be accountable for and to advance and to put some effort into. That's something that you can see how the groundwork was done over the last few years but this is the time and place that you need to catch up, if you're behind, but if you're somebody who has been pushing this through, this is the time to push just a little bit harder and get that momentum through. You're going to see results on the investor and capital side. We've got Canadian institutional investors, some recent studies over the year, RBC Global Asset Management, but lots of others have done studies too where Canadian large institutional investors, and Canadian individual investors, are both highlighting ESG or ESG components in their decision making, and in performance metrics, it's starting to become a clear winner as well.
Caireen: Beth, if I could just build on your comments there. You were talking about how you're getting lots of requests and clients are getting lots of requests for this information, and Geeta had mentioned that this is a critical part about access to capital. Are there specific areas that are being highlighted right now and more emphasis placed on those particular pockets of ESG as opposed to others or are you seeing a broad spectrum?
Beth: I'll start off on that but I suspect that Linda and Geeta will also have some comments on that. We're seeing, for sure on the governance side, a look into who is on the board of directors and some opportunities to be on a board of directors from that. We're seeing questions as to who's in senior management and what the diversity makeup of a companies management consists of. We're also seeing environmental, for sure, some requests for what is the environmental plan? What is your carbon capture? What are you doing to address footprint? Whether it's an energy company or not. These are questions that are relevant as well for your flights and other policies within your organization. On the social side, we're certainly seeing in Canadian world, an emphasis on whether or not there is a reconciliation or other protocol or plan that is being implemented, and some better understanding and education in the current world as to what that means and how important is to go forward with. I'll flip it over to Geeta who I think can answer even more on this.
Geeta: I think there's, look, each of the pieces people are taking and making it their own. So let me just take a step back. 3 years ago this was barely a word on people's lips. This was predominately started in Europe. It came out and the first discussion around it was decarbonization. Climate impact. The next piece that came out was diversity of boards. So all the sudden it emerged into this entire ESG concept of environmental, social and governance, and it became about sustainable, long term transparency and trust in boards and the company's that are executing. The reason it's so important is because people are voting in this time. With their voices, their votes and their wallets. The way that this has manifested itself, although this is quite, quite, quite nascent it is the topic on everybody's agenda in the board room, and if it's not it should be. The way it's manifesting is people are starting to look at, almost layer by layer, what's going on. I'll tell you without a doubt the Europeans are substantially more advance than we are. But here, the way I've seen it impact in Calgary, or in Canada specifically, is it started about 3 years ago where we heard the phrase, we understood it, we understood it was important, why it was important, and has allocator we started to ask GP's, "Tell us about what you do for ESG?" The answers were a gamut because it was a cottage industry. It was a gamut. It ranged from we give back to our community to we support the environment to we're transparent in our governance processes. Fast forward a year, so 2 years ago, and then the question became we became signatories for the UN principals responsible investing. We started tracking diversity on RC Suite and our Board Suite, and then fast forward to today, and it has become literally a framework. That framework seems to have coalesced around three things. One, on the governance side, it seems to be coalescing around diversity. Show me your board, your C suite and how you are making decisions and who are the people making those decisions. Number two, on environmental, it seems to be coalescing around carbon tracking. So tell me you impact to the environment from the start of your supply chain, when your product is just a nascent idea, all the way to the end when it's in your customer's hands. Then on the social piece, doing for your community. That has, of course, a substantially different impact for not profits then it does for for profits.
Caireen: Linda, now you're out on the West Coast.
Linda: Yes.
Caireen: The other three of us are here in Calgary. Are you seeing anything different out in Vancouver?
Linda: I am and I should start with my lens. I'm a corporate finance lawyer for years have predominantly being Vancouver based. I've worked in the mining industry. It's an interesting dialogue as we get to ESG and Geeta is very correct. It's at every conversation at every board level. What has to be communicated, and hasn't been communicated as we move into these new economies, is if you're building wind turbines, solar panels, electric cars, cell phones, computers, the batteries that operate them all, bicycles, you are dealing with extracts of minerals and it's mineral resource. So the mining industry, in its own way, is a part of this future economy. It cannot be separate itself from. But in dealing with the ESG to that we know that the government permit, the environmental permit, doesn't get you there. You have to have the social licence to operate in the communities in which you're in. You have to finance, and if you were not addressing these issues through the environmental, the social and the governance, you will not get there. We find when we're putting together mining plans and jurisdictions you have a real life long plan and mine has a life. 30, 40 years, whatever its fixed time is, and in these days, before you can put a shovel in the ground you have to define the infrastructure, the power, the transportation, the water production facilities, the employment of the local community. The building of schools, housing. You have to define all of that and you have to define at the end of the life of the mine, how you will reclaim the land. How you will put it back. How you will leave the people in a better position than when you came. Those things are critical to even starting. You can't even start. So you have to look in those frameworks.
In the 1990's I was on the board of Ecojustice Canada and I know people looked at me and said "But you do predominately mining law. Where does ecojustice?" Ecojustice is smart. They were then and they are today. They said, "We are screening from the outside. We want you to be in the board room and then come to our board room and tell us how can we rephrase our position so it's better heard and it's better understood." I like to think that in 25 years we've made that jump in that we've made that voice move over so that ESG now exists. It did not happen 25 years ago with that. Certainly the diversity on the boards is critical. In the mining industry, and I must tell the women in this grouping, that there's a true opportunity for you here, in diversity. This grouping is my daughter who came to one of the conferences with me, smiled, and said, "You are here, Mom, but the rest of it appears predominantly old white men." And we do need diversity here. Diversity of opinion gets better decision making and I see that at every moment. On the mining boards I've served on, if we have people of different ages, different ethnicities, different educational backgrounds and geologists, accountants, engineers, financers, we just get to better places. One of the issues that's come out this year, in terms of our planning, is COVID. I act for a mining company and we had a COVID outbreak at the mine. Where we prepared? I'm going to say no. It was not something, we certainly had a medical plan in place, but we did not have a pandemic plan in place. We had to shutdown the operations. We had to do risk assessments. We had to work with the country, with the government officials, with the medical community and build a full plan. I will not be caught in that again. We will have a pandemic plan. That will be a part of my future plans. But boards will be held accountable for their preparation and their management of all of these crises. They must have. I sort of set it out in terms of climate, COVID, governance, strategy, risk management. You really need five things. You need to define for your investors, your community, your commitment, what is your plan? Who oversees the plan? What are the strategic opportunities in that plan? Have you identified the risks? What is your disclosure? How is that done both regulatory and to shareholder? How do you disclose these things?
Caireen: They're all really interesting points and it sort of brings me to my next question. Because all panelists are from Western Canada obviously we are dealing largely with an economy that's very driven by the recourse extraction industry. Linda, you've touched on that and, Geeta, you did as well. We've got oil and gas predominately in Alberta. Mining in BC. These are really critical pieces of the economy, and yet they're subject to plenty of criticism, specifically about environmental impact and that they appear to ignore ESG issues. We hear a lot of chatter about that in the media. We also hear a lot about how that perception, that they're ignoring these environmental and other ESG issues, isn't really based on the science or what's happening on the ground for these companies. Geeta, I'm going to ask you, how does this place into the discussion around ESG at the board level and how can board members assist in changing that perception?
Geeta: I'll stop you right here. I think that this is actually not that they're ignoring these issues. I think the resource industry, whether it is oil and gas, whether it is mining, have been actually out of Canada at the forefront of supporting the best environmental decisions that you can imagine. Here in Calgary I think there are more than five women running multi-billion dollar companies and it may be even higher than that. We have absolutely not being ignoring it. It's been reframed under a different brand and a different name and a different discussion. But the fundamental industries have actually been on the leader of a lot of these different pieces. The answer right now is slightly different. What it is, is it's about knowing your audience, knowing what matters to them and knowing how you respond. What I would say that we exist in here in Calgary is sometimes a bit of an echo chamber. Where we hear each other and so what that means is when people believe, you ask any room of oil men and I'm sure the same thing in Vancouver, are you an environmentalist? Most of them will raise their hands. They believe in supporting the environment. If you ask them do you believe in supporting women? Most of them will raise their hands. If you believe in diversity? Most of them will raise their hands and they actually act on it as well. I think the challenge is slightly different. The challenge is, from an ESG perspective, this is a set of beliefs and you cannot change a belief system with pure fact. You change a belief system with questions and with stories. So in terms of, going back to your original question on what can you do here or why are we ignoring it, I don't think we're ignoring it in anyway. I think it's more we don't know how to handle it. I think that this is a community that is going look at our track record. Versus sharing the stories of their success and fundamentally there is a transition that is going on here. It's real. If we stop paying attention to it, and we stop paying attention to the fact that our primary customer is no longer a pipeline or a refinery, it's actually all of use. It's all of us on this call. We will be sharing stories in a different way and that is what this industry, for more than 4 decades, has forgotten.
Linda: And I'll jump in there Geeta. You're absolutely correct. We have, and I don't think we communicate it well, the success stories. Is everything perfect? Of course not. Nothing is and we acknowledge that. I attended a mining conference some years ago that was focused on African mining. A significant number of the mining minsters of various African countries were there. Talking with them was one of the most interesting times I'd spent because they were all looking at me going, "We want the Canadian mining companies here. We want the Canadian." I'm going, "There's world wide companies." But their response, and I was taken aback, was, "The Canadian mining companies are at the forefront of doing it right. Of caring about the communities they're in. About establishing the social licence. About building infrastructure that we need. We need roads. We need power plants. We need these things. We find the Canadian companies at the forefront of that." I don't think that we have communicated that as well as we should have. Geeta's right, it needs stories of the successes of what has happened.
Geeta: I'll just follow up on what Linda just said. This is the opportunity. There's a lot of women I believe on this call who are either on boards right now or were interested in getting on boards. This is a massive platform to use to leverage your skills and your voice because for the first time it is being actively solicited. So take advantage of it. So this is a fantastic platform issue where boards are looking for different perspectives on stakeholders and this is a great opportunity for I think, not just the women on this call, but women in general or diverse communities in general, to start getting their voices listened to and heard and actually have a positive impact on the decisions that are being made. To use Linda's point, change from the inside out.
Beth: I'm just going to, Caireen, take one more step on that same point because it's going to feed into, I think, our other questions coming up. When we were talking about Western perception and being in that bubble, echo chamber, I think communication is really something that is key for a board. So setting what the plan and what the vision is and that's something, as a board member however diverse your background is, whether it's gender or it's race or it's other diverse components that you bring to the table, you can really add in the communication scope by communicating to outside of the company, and within the company, in a different way because you're going to have a different voice and you're going to have a different nuance and you're going to have a different ear. So that communication point is so critical and is really something that I think, as women, we can really be an addition and a real add, in terms of getting the voice projected in a different way.
Caireen: I just want to circle back to one of the comments that was made about, again, the access to capital and how we started out this conversation around there are a lot of external stakeholders and internal stakeholders that are measuring these things and when you're looking at access to capital, as a specific example, that financial institutions and other lenders are asking for that information up front. Beth, I'm going to direct this to you given your practice. Do you see, not only a shift in what's being asked, but a measurement to see whether or not that plan has been adhered to, how many steps have been made forward? Is there some sort of a metric that's being applied as well?
Beth: Yeah, and this has started much more popular in Europe. It is starting to come over into Canada. A bit in the US so US I think is actually a little less ESG oriented than we are here. But you'll see it impact on the pricing that you're going to get for your loans or for your corporate finance options as well. You're going to see it impact in terms of what covenants you are required to adhere to under your loan agreements and under your prospectus and your other documentation. When you're looking for the investment in you're not going to be able to just say, "Yeah, we like ESG and we're all about it." You're going to have to provide performance metrics and you're going to have to provide facts and you're going to have to provide an ESG plan. You're going to have to provide that, one, to get the capital in a lot of cases, but even if you're able to get the capital within the ESG lens you're going to have to also back it up and you'll get a benefit, in terms of pricing for sure on that, but also just in terms of interest.
Geeta: I was just going to follow up onto what Beth just said. Just to give you guys a sense here, in 2019 the asset manager proxy voting support for ESG related shareholder resolutions increased from the 50 large US fund families, the Blackstone, Eaton Vance, PIMCO, Allianz Global, T. Price, those guys to 46% from under 20. Just take that for a moment. Your average proxy voting support for public companies, for ESG related shareholder resolutions, increased to almost 50%. The word ESG was not even on the radar screen 5 years ago. So if you think about what that means, this is beyond a decision on where you allocate your capital, this is a much broader decision around stewardship and decisions on capital flows and changing capital flows changes the world. It takes down industries, as we've seen, with coal. It changes board rooms as we saw with hashtag #metoo and it changes public perception on what's important as we saw with Black Lives Matter. This is so crucial, and I'll say that from my experience with capital, I've seen this play out in a very, very differentiated approach. While everybody cares and comments on ESG there are different levels of sophistication. You have a number of funds predominantly the large sovereign. Like the Norwegian Sovereign Wealth Fund, Kepler in the United States, which have gone full on in terms of zero carbon investing. They need to have a minimum requirement of diversity on boards. They need to see certain level of transparency. They've encapsulated it in a set of criteria that are here. Then on this side it's people who are just looking at it, learning about it and going, "Okay. Maybe we want to be 10% of the way there." But if you don't understand the trends of what capital allocators are doing, and the impact in just the last few years in terms of proxy voting and public companies, this is a continuum of capital from starting private capital to public capital to gross capital, this is the single biggest issue that is being discussed at those tables. So that's kind of number one. How you measure it is a completely different discussion. There are so many standards of measurement from Pier I to SASB to ... there's just so many different standards of measurement. MSCI just came out with the MSCI ESG Index. This is what is fundamental, you probably saw it, BP and Shell came out with their full end to end carbon tracking system. So, there's lots of different ways to go and I think that there's going to be another 5 years as this flushes out. But you can't just put it out there and not do something about it. But the starting point is putting out there, having the conversation, understanding the importance of it and then slowly, depending on the size of your company, the impact of this. Who your customers are. What industry you're in. It's slowly evolving into the different stages of implementation. I hope that was helpful.
Beth: I would say we're at a very critical point where there are societal shifts and changes and you can usually, in hindsight, look back and see some of the triggers to it and the points that push it over. Right now we are clearly moving forward in a new direction and it is going to be critical that the work start to happen now. In that people embrace ESG and get familiar with it because we will follow, I think even more so, the European emphasis on this. I know Asia has really started to turn to it as well. Then US, I assume, will likely have some impact from the Presidential election as well on their focus as well. So right now it's a good time to be catching up. I think you will find that the companies, if you're going to join as a board member, or the non-profits as well as a board member, that are in an evolution stage and they're often, in Canadian side of things, learning how to either do it or if they're already doing it, how to message it and you can really be a part of something as a board member in how that moves forward, and the companies that aren't looking at it you may not be as involved in as a board member, but if you are I would suggest you use your voice to get involved in it.
Linda: That's correct because you will not have the social licence to operate and you will not be able to raise the capital if you haven't put these issues at the forefront of what you're doing.
Caireen: So that leads me to an interesting question, and all three of you have touched on this briefly, but I'd like to drill down a little bit more. I expect that a lot of people are listening to this discussion today are a range of different interest levels in this topic and experience with dealing with boards. From perspective board members all the way up to people who are relatively senior who have quite a significant amount of experience on for profit boards, how can this broad spectrum of women listening today, how can they leverage this focus on the ESG issues to either get on board as a perspective board member, or to continue their board career?
Geeta: I'll take the first shot at it if that's okay?
Caireen: Yes.
Geeta: So I think my experience has been when you start your board career women get nominated to boards because they are first valued for their competencies and their skill sets before they are valued for their strategic perspectives. I would say for women on boards today, or for women who are interested in getting on boards, use this as your platform. Because this is something that you can own. It is different and is not something that is pure, simple, easy to do. This is different. It requires a voice. It requires a champion. It requires a story. It requires learning. It requires competency and it requires strategy. If you think about there is a clear set of competencies that you can develop around this topic that can be used and leveraged for engagement. This engagement that you have is literally what's going to cement, not just your average competencies, but cement your ability to serve and add value in the strategic conversations of boards. If you're a lawyer, if you're a CFA, if you are a CA, you're going to be tapped because of your skills because you can share audit committee. You can handle comp and governance. You can do those types of things but the true value to a board is the strategic discussions that a board has. Not just the competencies and skills that it brings. Each strategic discussion is informed by a set of perspectives that I think Linda, Elizabeth and Caireen talked to. What I would say here is you can use this as a phenomenal platform to develop a set of competencies that can be developed to engage and leverage for engagement for boards. I just think this is a massive opportunity and I'm seeing it. I had a conversation recently with a senior individual, who's an operating partner at one of the top 3 investment firms in the world, and he was telling me they've just done 7 searches for women between investment associate all the way up to operating partner to board members for their companies. One of the things that they are looking for, women in diverse minorities. One of the things that they are looking for is they are looking for that perspective to have a better understanding to balance the board on strategic views. So it's a phenomenal platform right now to use.
Linda: I totally agree with that. To understand and coming to the boards with that perspective that is so essential. That real enduring change happens one step at a time. I don't think you have to think everything happens immediately. Everyone has their own voice and they have to learn how to express it in a way that is clear and is understood. I find that for myself I don't persuade well if I react in anger. I have to draw people to my thoughts and that requires a more reasoned step. We all try things that worked 25 years ago, actually, in the late 1980's, even more than that. I tried to do the first wind farm in British Columbia. It didn't happen because we were just too far ahead. Batteries weren't strong enough. They didn't develop wind turbines in British Columbia. All of those things stopped making it economically viable. 25 years later we succeeded. I think people have to accept that there's a process to this and, yes, the ESG is a way to get a voice to the board and to bring perspective and understand the timeframes it takes to effect change.
Beth: A lot of it is about long term thinking and planning in a way that you can really see the emphasis switch from immediate share profits inside a corporation to what is our long term sustainable goal. That's a great and exciting thing to have happen, I think.
Linda: I agree. The companies have to look at what have they contributed? Where are they contributing and thinking from those perspectives.
Geeta: So think about it from this perspective. I had the opportunity to address a keynote to a University in Eastern Canada, to their graduating group, in engineering and sciences. I just asked a poll question, how many of you would want to work in the oil and gas industry? I think maybe 3 hands went up. How many of you want to work in the mining industry? Even less. And, how many of you want to work in tech? Every single hand went up. It's those types of things. If you understand that this is a generation that is actually making decisions on a set of values. That is what starts driving change. I agree with Linda. From a corporate work perspective change is not immediate but, from a rate in pace of change perspective, it is accelerating in the world today. Look at Facebook. In one month they had a full on boycott of their entire advertising platform. This is material revenue. In Calgary we have lost, and to use Linda's words, we've lost our social licence to act in oil and gas. Yet, fundamentally, this is one of the most environmentally sustainable industries. If you're going to have a barrel of oil, which we all need to build our phones and power our homes and fuel our cars, and would you rather have it from here, from a country that has high standards versus a country that has significantly poorer standards. So this whole nuances of discussion is not being had at the board room table because the boards didn't think it was important. They thought demand is always going up so therefore why should we care? And they missed because most industries missed this. They miss that there is this destructive trend of, yes, we're in a cyclical downturn in oil and gas but there is a secular shift of renewables coming in. That secular shift, combined with this rising voices, literally created duration on certainty in an industry. In view of duration on certainty in an industry how, as an investor, do you invest? Because you cannot calculate terminal value anymore. Your engineering report, your 2P Nav, it doesn't matter. So when boards miss this you die. Your business literally dies. As we have seen happen because without capital, in capital intensive businesses, you fail. So this is a massive platform, to Caireen's question, this is a massive platform, and an opportunity for women who have a more interested perspective in sustainability, to actually bring that perspective to the board room and use it to engage in those strategic conversations, because they matter.
Caireen: I'm going to pivot our discussion a little bit. We've been talking a lot about for profit corporations but obviously there's a segment of opportunities, particularly for people who are just looking to enter and start their board career with not for profits. So what would be the difference, in any of your experiences, in how this issue is being approached from the for profit side versus the not for profit side? Clearly it's still going to be important but are there nuances there that would be important for somebody looking to launch their board career in the not for profit space that they need to be aware of?
Linda: Absolutely. Absolutely. By corporate law alone in the Corporations Act, as a company the directors have a fiduciary obligation to the corporation. That is their legal obligation. That's not true in a not for profit. So your board has a very different perspective about what it's trying to achieve. Now as we speak to the corporate judiciary duty, clearly that extends to other stakeholders, but it's fundamentally by law to the corporation. In a not for profit you have so many stakeholders. I served on the board of the Canadian Mental Health Association for a period of time and found so difficult the number of the donors, the employees, the volunteers, the service providers, they all have different fundamental issues and it's much harder, I think, in a not for profit to meet the different needs of the direct stakeholders who you must account to.
Geeta: I'd agree completely with what Linda said. What I would echo to it is because of that more focus on stakeholders than shareholders alone, there is an immediate appetite in the not for profit to embrace and engage these types of issues. Because they understand the importance of engaging their entire community from who they are serving to who they raise money from to who they work with as partners. I think what I've seen is, for example, UNICEF, the UN came together to create the sustainable development goals. This is the first time the UN has come together in like 5 decades to actually do something like this. This is amazing to actually advance. This is talking to that shared purpose and share values that this generation is facing. For the University of Calgary, where I Chair the Board of Governors, we're number two in sustainability in all of the universities in the U15 here in Canada. Does anybody know that? So they're doing a lot of these things and they're adopting this because they have, at the University of Calgary, a 40,000 member community that is asking for it, and they're listening to it, because they're young and they're plugged into purpose and values of that generation. For profit boards do have that responsibility to shareholders but part of that responsibility to shareholders is to ensure that you are alive. Is to ensure that you do not go bankrupt. Without access to capital that just cannot happen and so there's an extrapolation that needs to take place here to think through, not just the first order event, but the second order and the third derivative order event on what is the implication to all of these changes that are sweeping the world today, at the board level.
Caireen: So I've got that we're now at 10:47 so I've got a few questions that have come up. I'm going to throw them out there and you guys can answer them. The first one is, someone recommended that example of an ESG report that can be found on the web or speak to the characteristics of an effective ESG report.
Beth: I'll speak to it maybe first just from what the options are little bit and then, Geeta, you may have more practical input to add to that. There is a lot of uncertainty on which reporting do you use. It's the new thing so you're going to see a lot of the accounting firms are now offering a service to assist with the reporting. But the two main standards are Sustainability, Accounting Standards Board and the Global Reporting Initiative. There's also the World Economic Forums, Business Council Standards and a few others. But the first two I mentioned are actually going to be collaborating now. The first, the Sustainability, Accounting Standards was based a lot on industry specific metrics. The second, the Global Reporting Initiative, is more based on your overall footprint and metrics. The two going together should help pull one, perhaps, more towards an awareness of industry differentiators and then on the other side, hopefully on the overall global side, the impact would be to move the industries standards a little more towards a global metric as well. Those standards are not the only ones. There certainly are a lot but in terms of the reports that you can use, Nasdaq has a reporting guide that's publicly available, and then as I mentioned all of the accounting firms, I think the major anyway, are certainly able to provide some. Now that's the free forms. I think the free forms will start to come out more and more, especially for the non-profits, I think you'll see better resources become available but we can probably send a follow up response to with an email list with some options on the free available ones. Geeta may have them off the top of her head but I do not.
Geeta: So I think it depends on what industry, what company, what size. If you're looking for a for profit large corporation with greater than a 1,000 employees, go down the list. There is the, besides SASB, there's ..., there's all those type of reports that are out there and I'm sure if you just Google ESG reporting you'll see like a 1,000, but those are the two primary ones. Check out the MSCI, ISS waiting system, as well. That's just recent and that's just launched. There's a sustainability rankings survey as well. So just kind of start looking at who is your audience for this because it's okay to answer to your audience. If you are a younger company, a smaller company, still have a couple of million dollars in revenue, be thoughtful. It's more important to put together a timeline and a framework and just pick those three buckets. What are you doing for diversity and governance? What are you doing for transparency and governance? Think about what are you doing with the environment and is there things that you could do to help reduce emissions and/or be a little bit friendlier in this piece, depending on what type of an industry that you're in. On the social impact, most companies in Canada do pretty well on it, so I'm sure that you can think through that with people internally. But come up with a timeline around when you want to implement things because you can overwhelm your executive leadership team with here is this report and that report and these are all the standards that we need to follow, without understanding the context. If you are in an extraction industry, like mining or oil and gas, you probably have an HSE officer and so, if you have an HSE officer, talk about it. Talk about it in the HSE committee. Talk about how you can figure this out. There's a lot of reports out there. A lot of the management consulting firms, the ... and ... centers of the world have reports as well. But I just caution you on is there is no yet standard framework. There is a lot of views. If you take those three core items and you think about your business, or your organization within the context, work with your board and work with your executive leadership to create the right framework for yourself. There's a ton of them online if you just Google it.
Beth: Yeah, and the framework is a good way to think of it. One quick point for anybody who's an accountant on the call, which I suspect we may have a few, the CPA had a recent course, this summer I believe, a webinar that's available on exactly this and it will be a lot more helpful than I would be. I wouldn't say for non-accountants maybe it's not the spot to go but for anybody who is an accountant I would recommend that you do do that as part of your continuing education. There's certainly courses coming out specifically on this point for that. I suspect there will be for lawyers and for board members and for many more to come.
Caireen: So just building on that, we've got another interesting question. Someone is asking, how do boards balance short termism versus long termism on ESG parameters? Linda, did you want to start us off?
Linda: That's a very good question because you do have to balance both. You have to be, as a public corporation you're answering to your shareholders and to the corporation, and sometimes those want short term vision. But if a company is to succeed long term it has to address all of the ESG issues and it is very difficult. It is a struggle at the board level, I have found, to get people to think more long term and how that company is contributing to the community it's in and how it's being a part of it. What is it giving back? And not just looking at share price as a means. I have struggled with that getting to a long term view.
Geeta: I'll go back to the framework and the timeline. I think as a director you do have fiduciary responsibility. That fiduciary responsibility is not to run your company. It's to advise. It's to do strategic planning. It's to make sure that you bring to bear your perspectives that are out there in the market place to help advise your CEO and your executive leadership team, or give them perspective. Ask smart questions. What I'd probably say on this one is, again, it depends on the size of the company that you're in and it depends on the state that they're in. If you just kind of measured them today, and I'll use again the example of allocators, so 5 years ago no one talked about ESG. So when GPs came into, General Partners, like any of the major investment firms that you would know out of the United States, came into our board room to ask for investment dollars, we would just ask, "What is ESG?" Then we started to see the map of the 50 people, that are all white males, started to change over the last 5 years. You started to see comments around purpose. You started to see comments around creating a better environment to support diversity and inclusion which then drives transparency. So I think that this is a journey for a board, just like everything else that you do, and it's a journey for a company. When you're trying to balance short termism and long termism you have to start with where are you today. If you don't have a single woman on the board, start there. If you don't have a policy for recruiting women into your business, start there. Women are diverse minorities, into your business, start there. If you don't have a safety group, start there. There's so many different places that you can start, I'm somebody who goes, "It's easy to do step one, two and three once you know what your end is." and you have to, as a company, understand what is your ESG story. What is your corporate purpose? If you do that, because it's a really interesting discussion that has never been really had in B2B businesses before. But it has to be had right now when you are in a war for talent and capital and mind share. As you're kind of coming up with your story you can start backfilling behind that as you understand where you are and where you want to be. If there is no one size fits all, it is a journey, you just have to start. I hope that's helpful.
Caireen: We've got another question, sort of again builds on this discussion and the question is, as a corporate board member in Canada are you breaching your fiduciary obligations to the company if you do not raise the topic of ESG in the board room? And should you ask the company for regular updates on ESG progress?
Beth: I'm going to answer without answering. Just to give the lens, I as a student many years ago, worked for Dr. Janis Sarra, who is a leading legal commentary on this exact point. She has a very good paper out from late 2018, so not completely out of date, which we can provide. Commonwealth Climate and Law Initiative - Climate Change and Legal Risk. She's got a number of others. The long story short is right now it's not clear that you are. It will depend a bit in the industry you're in. It'll depend a bit in which board and organization you're talking about. Fiduciary obligation is something that I like to call, the warning that you're talking to a lawyer is it's a good word to know when you're talking to a lawyer, but it is something that is very critical and that stakeholders, not just shareholders, are now starting to have a voice in. Potentially a legal right in terms of not just social licence but also whether or not there's other legal liabilities as a board member. For a majority of companies I think that it would be prudent. I don't think that it's necessarily at the point where it's a clear obligation under law but there is definitely some areas where it's a risk. I think going forward you will see that shift and I think you will see the legal academics driving forward and also perhaps, in Canada at least, maybe not the US Supreme Court, but in the Canadian legal system I think you will see a more increased willingness to consider it part of the duties of a director. Now, Caireen actually, this is something you run into in the bankruptcy and insolvency and restructuring part. I don't know if you're willing to step in maybe on that question but I think it's something you run into the most directly.
Caireen: I think it's an interesting question, and what the obligations are, I agree with Beth's comments about how that's framed by the industry and by the size of the company and who the stakeholders are. It's not a one stop answer. But I can say that we are seeing more and more. My view would be as this becomes a part of the normal course of doing business, it's still relatively new, it's a critical issue. It's something that people need to be thinking about and be having those discussions at the board level. But it's going to be normalized very quickly and as soon as it gets normalized, that is going to slot it into one of those fiduciary obligations that a director has. It's going to become more and more accepted by the courts and more and more accepted by corporate law. This is something that needs to be part of what a company is doing much like directors have to discharge their fiduciary obligations by keeping an eye on the financial help of the company. Geeta, I don't know if you've got any thoughts on that.
Geeta: Yup. Love lawyers. By the way, like I was saying when Beth fell off, I think she's amazing and can't recommend her enough. But what I would say is it's almost semantics at this point. Whether it's a direct legal obligation of your role or whether it's just an obligation of your role. As a director you are responsible for ensuring strategy and direction and mission and alignment and ensuring that there's sufficient resources for company operations and ensuring that the Chief Executive Officer is aware of key stakeholder issues, that you're aware of those key stakeholder issues. It's more of a now that you are aware of it, or if you are aware of it, you have to bring that up. If this is not a discussion that you are not having at your board table today, and you are a director or somebody in the C Suite, bring it up. And bring it up, to use Linda's words, bring it up in a manner with facts. Like a lot of boards want to see facts here. They just don't want to hear rising voices, collective consciousness, they want to actually see facts. Bring up proxy votes. Bring up the Norwegian Sovereign Wealth Fund. Bring up ... Show where capital is going. Where direction is going. Where boycotts are going on products depending on if you're in a B2C or a B2B business. Absolutely, bring it up. It's less about the fiduciary obligation piece, and more of your moral obligation as a board member to bring your best thought to bear, to help guide and protect this organization and create sustainability of your organization for the long term.
Beth: One thing, just as the lawyer in me can't help but say this, ESG components involving environmental, societal and governance, all have elements to themselves in a more broken down way that you may very well have very clear board of director fiduciary duties. I'm not suggesting as to whether or not ESG, as a whole is required, doesn't mean that you are very likely to have considerations on either climate, environmental, or frankly, if you have a metoo situation. Any of those things you certainly could have legal risk. So I just want to make sure that that's clear. ESG maybe not with ESG as the whole. It certainly, in all elements, something that you're probably having to consider as a board member.
Caireen: So with that I'm going to say it's 11:01. We've had a very engaging discussion. We've got one comment and two additional questions. So what we will do is we will answer those questions by email so that people have the answers to them and we've got a couple of links and the paper that Beth mentioned. I've made some notes so we'll make sure that we get those out to the participants for today, along with the survey and the link to the recording, that Deborah mentioned at the beginning. This has been a really engaging discussion. I'd like to thank our panelists for their time and the amount of preparation that they did for today's webinar. Really, really interesting topic. Women Get On Board believes in the spirit of giving back and so on behalf of our speakers on the next ... Women Get On Board is going to be making an annual donation to our charity partner, Dress For Success. With respect to the survey we encourage you to fill it out and provide some feedback as to about how you felt this went and if there are other topics that you'd like to see us cover. We also encourage you to reach out to any of our panelists, or myself, through LinkedIn or otherwise, to continue this important discussion. We'd be delighted to hear from any of you on further thoughts questions. On behalf of Gowling WLG and Women Get On Board, we'd like to thank you for joining us today.