Director Journal – March/April 2021

Director Journal

A P U B LI CATI O N O F TH E I N STITUTE O F C O R PO R ATE D I R ECTO R S

NOW WHAT? As Canada emerges from the pandemic, it needs a national economic strategy

MARCH/APRIL 2021

BOARD DYNAMICS FOR EXECUTIVES Professional Development Program for Senior Management

BUILDING STRONGER INTERACTIONS BETWEEN LEADERSHIP AND THE BOARD

“

Optimizing the dynamics between Management and the Board is essential to achieving better outcomes.

”

JANET YALE Chair of Review Panel, Broadcasting & Telecommunications Legislative Review Former President and CEO, Arthritis Society Former Executive VP, Telus

A fresh perspective on optimizing management-board effectiveness. Understand management-board dynamics: clearly define roles and accountabilities of both management and the board Optimize interactions with board members: develop strategies to effectively communicate and inform both inside and outside of board meetings Improve organizational decision-making: learn how to bridge the information gap between management and the board

FORMAT

APPLICATION DEADLINE

PROGRAM DATES

Online

May 4, 2021

June 1, 4, 8, and 11, 2021

*DELIVERED AS HALF-DAY, ONLINE SESSIONS.

TO LEARN MORE ABOUT OPTIMIZING MANAGEMENT-BOARD EFFECTIVENESS, VISIT ICD.CA/BDE.

CONTENTS

Director Journal Editorial EDITOR Simon Avery ART DIRECTOR Lionel Bebbington CONTRIBUTORS Richard Blackwell, Brendan Burden, Virginia Galt, Gordon Pitts, Serge Rivest, Barbara Smith, Prasanthi Vasanthakumar, Heather Wilson

Executive Lead

Editor’s note

Embracing the crisis

CEO insights

Rahul Bhardwaj on keeping up with expectations

Dispatches

Horrible bosses; Covid-19 confessions; innovative escapism; the talking dead; and insects for lunch

Matthew Fortier Vice-president, policy and public affairs

Issues

Institute of Corporate Directors

Directors’ dilemma

Rahul Bhardwaj - President and CEO Patricia Fletcher - Vice-president, education Ken Gibson - Chief administrative officer Jan Daly Mollenhauer - Vice-president, sales, marketing and membership Kathryn Wakefield - Vice-president, chapter relations

Finally Content Eric Schneider - President Abi Slone - Creative director Dana Francoz - Advertising sales dana.francoz@finallycontent.com 416-726-2853

COVER PHOTOGRAPHY BY GABRIEL LAMZA/UNSPLASH

Departments

Building trust and confidence in Canadian organizations is imperative. At the Institute of Corporate Directors (ICD), we believe that this starts with the right leadership and good governance. Directors must lead by being informed, prepared, ethical, connected, courageous and engaged with the world. In the pages that follow, you will find thoughtful and provocative articles that explore these essential leadership qualities. Bâtir la confiance envers les organisations canadiennes est primordial. À l’Institut des administrateurs de sociétés (IAS), nous croyons que cela commence par un bon leadership et une bonne gouvernance. Les administrateurs doivent gouverner en étant informés, préparés, intègres, connectés, courageux et ouverts sur le monde. Dans les pages qui suivent, vous trouverez des articles réfléchis et provocateurs qui explorent ces qualités de leadership essentielles. 2701 – 250 Yonge Street, Toronto, Ontario M5B 2L7 T: 416-593-7741 F: 416-593-0636 E: info@icd.ca ISSN 2371-5634 (Print) www.icd.ca ISSN 2371-5650 (Online) The ICD welcomes a diversity of opinion for inclusion in Director Journal. The contents of this publication do not necessarily reflect the opinions of the ICD, its partners, its sponsors, or its advertisers. Readers are encouraged to consider seeking professional advice and other views. To request reprints of articles, please contact info@icd.ca

Canada’s wakeup call

Heather Wilson on giving feedback to the chair of the board

Directors on the move

Recent board appointments across the country

Policy perspective

Matthew Fortier on the corporation’s new, post-pandemic role

Parting shot A new light

04 05 06 11 12 43 49 50

Features ICD Fellow’s profile

14

Cover story

24

In conversation

38

Recommended reading

44

John Manley on gender diversity, stakeholder governance and U.S. relations

The pandemic has shown that Canada needs a focused national economic strategy

Corporate director Tony Gaffney on high-performance boards

Roger Martin on our harmful obsession with efficiency

ICD.CA | 3

EDITOR’S NOTE

Embracing the crisis With principled leadership, Canada should emerge stronger from the pandemic WHEN STANFORD UNIVERSITY economist Paul LORSQUE L’ÉCONOMISTE Paul Romer a Romer quipped that “A crisis is a terrible thing to lancé en boutade qu’une « crise est une chose waste,” he was talking to venture capitalists in terrible à gaspiller », il parlait devant des inCalifornia about the challenge rising education vestisseurs en capital de risque du défi que levels in competing countries posed to the Unitles niveaux croissants d’éducation de pays ed States. That was in 2004 – hardly a time of concurrents représentaient pour les Étatsupheaval by today’s standards. In 2021, the comUnis. C’était en 2004 – guère une époque de ment by Romer – a former chief economist of the bouleversements comme celle d’aujourd’hui. World Bank – resonates more strongly than ever. En 2021, le commentaire de Romer – ancien Having had our lives turned upside down by économiste en chef de la Banque mondiale – Covid-19, we have been forced out of our comrésonne plus fortement que jamais. fort zones and are primed for change, business Après avoir vu nos vies chamboulées par la writer Richard Blackwell argues in our cover stoCovid-19, nous avons été sortis de notre zone ry (page 24). A lot of that openness to new ideas de confort et nous sommes prêts à changer, and processes comes from a broad recognition écrit notre collaborateur Richard Blackwell that the status quo falls short – both economicaldans notre article principal (page 24). BeauSimon Avery ly and socially. The result is a rare opportunity to coup de cette ouverture à de nouvelles idées Editor rethink where we are heading as a country and et processus vient d’une reconnaissance savery@icd.ca what we will have to do to reach our goals and globale que le statu quo économique et sofulfill national aspirations. Of course, it’s not just cial ne fonctionne plus. Résultat : une occaCanada that finds itself in this position, and adsion rare de repenser comment réaliser nos objectifs et nos aspirations nationales. Bien vances in international thinking will influence sûr, il n’y a pas que le Canada qui se trouve our course, but Blackwell makes the case that to dans cette situation, mais Blackwell fait valoir que pour prospérer, nous prosper we will have to modernize our energy sector, embrace emerging devons moderniser notre secteur énergétique, adopter les technologies technologies and support greater innovation and entrepreneurism. émergentes et soutenir davantage l’innovation et l’entrepreneuriat. Our author interview this issue features the business thinker and L’entrevue d’auteur de ce numéro présente le penseur d’affaires strategic advisor Roger Martin discussing his latest book When More Is et conseiller stratégique Roger Martin, qui discute de son dernier Not Better: Overcoming America’s Obsession with Economic Efficienouvrage When More is Not Better: Overcoming America’s Obsescy (page 44). Martin also sees the developed world in a position to adopt sion with Economic Efficiency (page 44 ). Il prévoit des changemajor changes. His book makes a strong argument that the coronavirus ments majeurs dans le monde développé; selon lui, la pandémie a pandemic has laid bare the weaknesses of democratic capitalism and is exposé les faiblesses du capitalisme démocratique et les entreprises spurring “fundamental rethinking” among companies of their business doivent revoir complètement leurs pratiques et leur engagement practices, and their commitment to diversity and sustainability. envers la diversité et le développement durable. If Canadians are prepared to take new pathways, it falls upon Si les Canadiens sont prêts à emprunter de nouvelles voies, il rebusiness and political leaders to lead the way to a more equitable vient aux entreprises et aux leaders politiques de mener la marche and prosperous post-pandemic society. In our profile of CIBC chair vers une société post-pandémie plus équitable et plus prospère. and former deputy prime minister John Manley – who is among Dans notre profil de John Manley, nommé Fellow de l’IAS cette this year’s slate of ICD Fellows – he reminds directors and politiannée, il rappelle que la pandémie a créé des occasions en or cians alike of the tremendous opportunity that the pandemic has pour des changements positifs. Selon lui, c’est la plus grande crise given them to institute positive change. “It is the greatest crisis we vécue en temps de paix; un service public exceptionnel est donc have faced outside of wartime and therefore the need for outstandplus important que jamais. DJ ing public servants is greater than ever,” he says. DJ

4 | DIRECTOR JOURNAL

CEO INSIGHTS

Fast times, higher standards

ILLUSTRATIONS BY AARON MCCONOMY

The onus is on directors to keep pace with society’s shifting expectations THE PANDEMIC has changed so much about LA PANDÉMIE a changé tellement de our lives in such a short period of time. choses dans nos vies en si peu de temps. One of its effects has been to heighten L’un de ses effets a été de hausser les the public’s expectations of businesses. attentes du public envers les entreprisToday’s sentiment says it’s no longer sufes. Le sentiment dominant est qu’il ne ficient for companies to just make monsuffit plus d’accroître la richesse des acey for shareholders; instead, they must tionnaires, mais plutôt d’être à l’écoute be attuned to the needs of all stakeholddes besoins des parties prenantes et de ers, playing a role in helping to solve any contribuer à résoudre les problèmes de number of society’s problems – including la société – y compris la pandémie monthe global pandemic, abuse in the workdiale, le harcèlement sur les lieux de traplace and accelerated climate change. vail et les changements climatiques qui Many companies are hearing the call to s’accélèrent. action. In March, for example, U.S. PresiBeaucoup d’entreprises entendent ces dent Joe Biden announced that his counappels. En mars, par exemple, le présiRahul Bhardwaj try would have enough coronavirus vacdent américain Joe Biden annonçait que LL.B, ICD.D cine doses by the end of May for all adults son pays disposerait, fin mai, d’assez de President and CEO, in the United States. vaccins contre le coronavirus pour tous The Institute of Corporate Directors The ambitious goal was made possible les adultes aux États-Unis. after the White House brokered a historCet objectif ambitieux fut possible ic deal that will see Merck & Co. help its après que la Maison Blanche a conclu une rival Johnson & Johnson to manufacture entente historique qui verra la société its vaccine. Merck & Co. aider sa concurrente Johnson But many leaders are failing to get the message – sometimes & Johnson à fabriquer son vaccin. with severe consequences. Mais beaucoup de leaders n’entendent pas le message – parWe are already seeing that tone deafness at the top will no lonfois au prix de graves conséquences. La société n’acceptera ger be accepted by society. Boards of directors need to be paying plus désormais une telle surdité. Les conseils d’administration attention and as companies navigate the new reality, it’s importdoivent porter attention à ce type d’événements et au moment ant they have access to practical guidance. où les entreprises naviguent dans cette nouvelle réalité, il est imOn March 25, I will be moderating an online session to help portant pour elles d’avoir accès à des directives pratiques. boards frame the risks and opportunities presented by Ottawa’s Le 25 mars, j’animerai une séance en ligne destinée à aider target of net-zero carbon emissions by 2050. les conseils à évaluer les risques et les occasions présentés par This work is part of the Institute of Corporate Directors’ partla cible de zéro-net émission de carbone d’ici 2050 proposée nership with the World Economic Forum to adapt the internapar Ottawa. tional body’s Climate Governance Initiative (CGI) for the CanaCet événement s’inscrit dans le partenariat de l’Institut des dian market. administrateurs de sociétés avec le Forum économique mondiAs host of the Canadian chapter of the CGI, called “Chapter al afin d’adapter au marché canadien son initiative de GouverZero,” we are helping the corporate director community to emnance pour le développement durable. bed climate considerations into their strategic decision making. Au moment où nous luttons tous pour répondre à des atAs we all strive to live up to higher expectations, I urge tentes plus élevées, j’invite nos membres à consulter la variété members to plug into the variety of content we are offering to de contenus que nous offrons pour aider leurs conseils à tenir le keep themselves and their boards up to speed on developments. DJ rythme des développements. DJ

ICD.CA | 5

COMPILED BY Prasanthi Vasanthakumar

Dispatches A digest for diligent directors

HORRIBLE BOSSES Bad bosses are everywhere. By bullying direct reports, gossiping about them or invading their privacy, these tyrants create a toxic workplace culture – one that can plague employees with everything from job dissatisfaction and stress to alcoholism and family conflict. So why do we put up with them? In the Harvard Business Review, four researchers conclude that many bad bosses will offer a carrot or say something nice to mitigate the harm done, setting up the employee for the next round of abuse. After studying 79 managers, Shawn McClean, Stephen Courtright,

6 | DIRECTOR JOURNAL

Troy Smith and Junhyok Yim concluded that many bad bosses were primarily concerned with repairing their social image after an outburst. However, this type of damage control is just trying to “fake nice,” instead of “make nice,” because it doesn’t include a sincere apology. If organizational leaders and employees forgive and forget, the toxic tirades will continue, warn the scholars. The best way to break this vicious cycle is to implement zero-tolerance policies with no free passes. But the boss has work to do, too. Saying sorry and meaning it is a good place to start.

NEWS

WHAT’S HOT IN 2021 Despite the economic uncertainty caused by Covid-19, venture capitalists invested heavily in U.S. startups last year. Kimberly Weisul, editor-at-large at Inc. magazine, follows the money to identify what’s intriguing entrepreneurs, investors and consumers.

PHOTOGRAPHY BY DNY59/ISTOCK (LEFT), KRISTINA FLOUR/UNSPLASH (RIGHT), ICONS BY THE NOUN PROJECT

Created by Vectors Point from the Noun Project

Created by Wing from the Noun Project

Created by Amelia from the Noun Project

Created by Gregor Cresnar from the Noun Project

Created by Adrien Coquet from the Noun Project

HOLISTIC HEALTH CARE Cityblock Health, combines primary and behavioural care with social services to treat patients with multiple health conditions, including substance abuse, anxiety and depression, in underserved urban populations. Raised $54-million in 2020. PRODUCTIVITY HACKS Notion Labs, the selfproclaimed all-in-one workspace, brings multiple apps and software together to make it easier for employees to quickly find what they need. Raised $50-million in 2020. UNBIASED COMMUNICATION In a world that is increasingly conscious of unconscious bias, Textio helps employers write inclusive job postings and related content. Raised $12-million in 2020. MEDITATION SIMPLIFIED Calm.com, a sleep and relaxation app, demystifies meditation. In these stressful times, some people just want Idris Elba to lull them to sleep with a bedtime story. Raised $75-million in 2020. THE NON-BANK With primarily phone-based interactions and no physical branches, Chime, a so-called neobank, offers an alternative to the traditional financial institution. Raised $485-million in 2020.

COVID CONFESSIONS A Covid-19 diagnosis can spur a range of reactions, from dutiful quarantine to irresponsible denial. But some people go to great lengths to keep their positive test a deep, dark secret. Three survivors confess to The Atlantic’s Saahil Desai about their elaborate coronavirus cover-ups: One father stayed mum because he didn’t want his tween spreading the news at school; a health-care worker kept it under wraps so her mother and grandmother wouldn’t panic; and a severely ill flight attendant dodged her parents’ phone calls for weeks as she suffered in silence. Kindness and shame are only some of the emotions that motivate these Covid camouflagers. Megan Moran, a health-communications scholar at John Hopkins University, notes that disclosing an illness changes the way people view us. “It’s giving up control,” she tells Desai. This secrecy could also stem from the deep-rooted myth that health is a sign of virtue and infection a sign of sin. After hearing about the evils of risky behaviour for months on end, people are afraid of judgment, says one Harvard epidemiologist. Every story needs a villain, and in the horror show that is Covid-19, risk takers like holiday sunseekers have often been cast in this role. But in many places around the world, a poor government response is truly to blame.

ICD.CA | 7

INNOVATIVE ESCAPISM In late January, Netflix announced that Bridgerton is its biggest hit ever, captivating 82 million households in 28 days. Launched on Christmas Day, this historical romp is a steamy reimagining of the stuffy old British period piece, complete with romance, riches and scandal. But what truly sets it apart is its diverse casting, says Martin Ivens in Bloomberg. Unlike its racially homogenous predecessors like Downton Abbey and Brideshead Revisited, Bridgerton subverts audience expectations by casting Black actors in royal roles. For example, British-Zimbabwean actor Regé-Jean Page plays the dashing duke and romantic lead. With the recent focus on diversity, equity and inclusion, it’s no surprise that “colour-blind” casting is a hit. In times of crisis, people seek comfort in the familiar. But as long as they are entertained, they will welcome innovation too, says Ivens. Bridgerton is just one of Netflix’s many pandemic successes. The streaming giant was also home to The Office last year, which was the most popular TV series streamed in the United States. British period fare is an escapist staple, but for many viewers, something as familiar as the pre-pandemic workplace is a sign of the good old days.

GREENWASHING APPEARS TO BE RAMPANT, HURTING BOTH CONSUMERS AND THE ENVIRONMENT GREEN LIES Buyer beware: A review by the International Consumer Protection Enforcement Network (ICPEN) finds that 40 per cent of sustainability claims made online could be deceptive. The global consumer watchdog identifies three types of misleading statements: own-brand eco-labels that aren’t affiliated with an accredited organization; vague, feel-good claims like “sustainably sourced” or “recycled cotton,” with no details; and omitted information, such as product pollution levels. In Bloomberg Green, Jess Shankleman notes such unsubstantiated claims may amount to greenwashing, which is illegal. Amid growing demand for products that don’t pollute, these green poseurs could be overcharging consumers and stealing business from genuinely sustainable choices.

8 | DIRECTOR JOURNAL

NEWS

THE TALKING DEAD

INSECTS ARE IN Want some crunch in your cuisine? Two billion people around the world regularly chow down on insects, but Westerners have typically turned up their noses at this custom. But as concerns about the environmental impact of food production grow, insects are inching their way onto menus. Rich in protein and more sustainable to produce than meats like beef and pork, insect products are already available around the world, write Emilie Filou and Amy Hawkins in The Economist. Edible delights include cricket snacks in Britain, mealworm burgers in Germany and cricket powder in Canada. However, the International Platform of Insects for Food and Feed (IPIFF) estimates that only nine million people in the European Union ate insect products in 2019. Ick factor aside, this low intake may also be owing to a lack of regulation. But that could all change. Introduced in 2018, the EU’s Novel Food Directive covers insects but requires speciesspecific authorizations, with the first expected early this year. This will allow insect food manufacturers to commercialize their products across the continent and increase capacity.

CHEW ON THIS

THOUSAND TONNES

PHOTOGRAPHY BY DAVID BALEV/UNSPLASH (TOP LEFT), ILLUSTRATIONS BY RAWPIXEL/ISTOCK (LEFT), OLEKSANDR HRUTS/ISTOCK (RIGHT)

Microsoft could bring you back from the dead, albeit as a chat bot. The tech giant has filed a patent that suggests this digital immortality is possible, writes technology editor Barry Collins in Forbes. Unlike conventional chat bots that are trained using conversations and material from multiple users, Microsoft’s system would take one’s personal data – such as images, voice recordings, social media posts and e-mails – to build a chat bot that looks and sounds like the individual, complete with “personality”. All this makes it possible to train a digital version of yourself that lives forever. Collins notes the patent doesn’t discuss the privacy implications of reincarnating people as chat bots. Can you opt out? Can you prevent others from virtually resuscitating your deceased loved ones? Will your digital doppelganger share too much information about you? Only time will tell.

300

250

200

150

100

50 0.5 0 2019

2025

2030

Whole insects - dry

Product incorporated with insect powder (pasta, snacks, bars, etc.)

Powder/insect ingredients

Total Production

Source: International Platform of Insects for Food and Feed IPIFF predicts insect-based food production in Europe will grow from 5,000 tonnes in 2019 to 260,000 tonnes by 2030. Bugphobes, fear not: Producers expect insect powders and ingredients – not whole insects – to drive growth.

ICD.CA | 9

UPCOMING ICD BOARD FUNDAMENTALS & ISSUES OVERSIGHT COURSES Delivered by experienced directors with the support of subject matter experts, the ICD offers a variety of short courses. They delve into specific subject areas key to optimizing board effectiveness and provide an in-depth understanding of current top-of-mind issues.

ICD BOARD FUNDAMENTALS

ICD BOARD FUNDAMENTALS

Audit Committee Effectiveness

Board Oversight of Strategy

Members of audit committees will gain insight and the necessary tools to move beyond the traditional role of compliance oversight.

Developed jointly with CPA Canada to help directors apply a framework for successfully engaging in the strategy development and oversight process.

Program date: April 28, 2021 Application deadline: March 31, 2021 Format: Online

Program date: May 17, 2021 Application deadline: April 19, 2021 Format: Online

ICD BOARD FUNDAMENTALS

ISSUES OVERSIGHT

HR & Compensation Committee Effectiveness

Oversight of Cybersecurity

Directors will develop deeper insight into issues such as CEO succession planning, executive compensation and incentive plans.

Enhance your contributions to board discussions and decision-making around cybersecurity risks aggravated by the COVID-19 pandemic.

Program date: April 15, 2021 Application deadline: March 18, 2021 Format: Online

Program date: June 22, 2021 Application deadline: May 25, 2021 Format: Online

ALL COURSE CONTENT HAS BEEN UPDATED TO MEET THE DEMANDS OF TODAY’S BOARDS. FOR A COMPREHENSIVE LIST OF ICD COURSE OFFERINGS, VISIT ICD.CA/COURSES.

ISSUES

BY Simon Avery

Canada’s wakeup call

ILLUSTRATION BY RLT IMAGES/ISTOCK

Self-reliance has got to be our new best friend

NOTHING CLARIFIES THE MIND like a life-or-death situation, and for the past year the coronavirus pandemic has done just that. Global deaths from Covid-19 infections reached 2.6 million in early March while the broader losses caused by the pandemic remain immeasurable. So, what have we as Canadians learned? We know that vaccines are a lifeline, and they are not coming from where we might expect. All doses of the first two Covid-19 vaccines approved for shipment to Canada (the Pfizer-BioNTech product and Moderna’s) have been manufactured in Europe. The first two million doses of the third vaccine (AstraZeneca’s) will be exported from India. None of the doses earmarked for Canadians are being made in the United States, our largest and most important trading partner. In the last days of his administration, former U.S. president Donald Trump signed an executive order to give Americans “first priority” for vaccines produced in the United States – a policy that has survived in U.S. President Joe Biden’s White House. It would be difficult for Ottawa to criticize the U.S. government for putting its own citizens first. After all, the United States risked billions of dollars to develop and manufacture Covid-19 vaccines in a hurry, while Canada did not. After the embarrassing failure last year of a partnership with China to help test and produce a Covid vaccine, the Canadian government chose to rely instead on other countries and began placing orders for hundreds of millions of doses from pharmaceutical companies headquartered in the United States and Europe. While the United States has not exported any doses of coronavirus vaccines manufactured domestically, the European Union has shipped vast quantities. In February alone, the European Union exported 25 million doses, with more than eight million of those going to Britain and more than three million to Canada, The New York Times reported. Those shipments have continued even as only a small fraction of the trading bloc’s 450 million citizens have received their own shots. While Europe is helping to protect Canadians from the deadly effects of the pandemic and enable our governments to begin reopening the economy, the United States is focused on its own health. U.S. attitudes and policies are changing as the country faces deep cultural and political divisions at home and struggles fruitlessly to contain China’s emergence as a superpower. Rising protectionism is one outcome of this environment, and Biden moved quickly to tighten “Buy American” regulations and enforce made-in-America rules.

It is important that Canadians recognize the implications of these events and respond accordingly. On matters ranging from public health and international trade, to national defence and environmental protection, it has become clearer than ever that we cannot expect the United States to act in our best interests. Our leaders should be strengthening the U.S. trading relationship wherever possible, but also expanding alliances internationally and building self-sufficiency into the Canadian economy. We need to enhance research and development through greater government investment and incentives. And we need our leaders to be bolder in applying whatever leverage we may have over the United States on the issues that matter to us most. DJ

None of the Covid-19 vaccines for Canadians are being made in the United States, our most important trading partner.

SIMON AVERY is the editor of Director Journal and a freelance business writer.

ICD.CA | 11

The dilemma I’ve just been appointed chair of one of my boards. How can I make sure I receive feedback from my fellow directors?

Heather Wilson ICD’s Director of Research Services

FOR A NEW BOARD CHAIR, recognizing the importance of receiving constructive feedback from peers on the board is a good starting point. Evaluations are an effective way of building a continuous improvement culture. An incoming chair has the opportunity to establish a meaningful evaluation process at the beginning of their term. By welcoming and receiving feedback, the board’s leader models good behaviour for the rest of the board and supports the creation of strong performance expectations for all directors. “The chair’s role is critical to ensuring board effectiveness and, given the importance of the role, it is essential that the chair get timely and constructive feedback from the other directors,” said Cornell Wright, chair of the corporate department at the business law firm Torys LLP. Assessments can be formal or informal, or a combination. For formal evaluations, many organizations will ask the chair of the governance committee to solicit feedback and conduct an evaluation with the chair. Some chairs will ask for commentary from directors after every board meeting. They

12 | DIRECTOR JOURNAL

may also want to request feedback during one-on-one conversations with directors. Bonnie DuPont, an experienced director and ICD Fellow, recommends the governance committee chair schedule individual interviews with directors to discuss the chair’s performance after structured board evaluation surveys have been conducted. DuPont notes that a thorough board chair evaluation can be time-consuming, so a sufficient amount of time must be allocated. Individual directors will want to carefully and constructively explore their thoughts about the board and the chair’s performance. Compiling the feedback into a usable form will also require an investment of resources. A session with the board chair will need to be carefully planned, especially if there are issues with performance that need to be discussed. Owing to its time-consuming nature, DuPont says it’s not necessary to conduct this type of formal evaluation every year, unless there is a pressing need. Once the assessment has occurred, it is important to ensure that next steps are undertaken. It is critical that the board chair act on the feedback provided by fellow board

members, especially where the circumstances warrant change. Areas identified for improvement should be monitored to make sure that they are moving in the right direction. DuPont also recommends changing evaluation methods from time to time in order to gain a different perspective. “It’s important that those conducting the evaluation try to be creative about how to get the information needed to keep the board fresh.” The understanding of what makes a good board chair is also evolving. Today’s chairs are not only expected to run good board meetings but also to act as excellent facilitators and team builders. Part of their role should include helping all board members achieve success. DuPont says she asks board members about the chair’s leadership skills and engagement as well as his or her level of preparation. She says that a chair may do a disservice to their board by “taking a strong position and doing a lot of talking instead of letting the conversation evolve.” She notes that the best chairs she’s worked with seldom express their own opinions (at least initially) but instead ask for the ideas of others. Feedback for committee chairs is important too. DuPont says that it helps improve committee effectiveness but also assists with identifying potential candidates for the next board chair. Board succession planning is an important aspect of governance, and regular interviews with directors help to identify those with both interest and ability. Exemplary leadership by the board chair is often critical to success. Helping the chair understand what is required of the position and where improvement may be needed will contribute to the growth of strong and resilient organizations. DJ

ILLUSTRATION BY AARON MCCONOMY

Q.

DIRECTORS’ DILEMMA

DIRECTOR LENS • Incoming chairs can establish an effective evaluation process from the beginning of their term, setting expectations for a robust performance management culture.

POUR UN NOUVEAU président du conseil, reconnaître l’importance d’une rétroaction constructive de la part de ses pairs est un bon point de départ. Les évaluations sont un moyen efficace de bâtir une culture d’amélioration continue. Dès le début de son mandat, un président désigné a l’occasion d’établir un processus d’évaluation pertinent. En accueillant la rétroaction, il devient un modèle de bonne conduite et suscite la création d’une attente de solides performances pour l’ensemble des administrateurs. « Le rôle du président est crucial pour assurer l’efficacité du conseil et, compte tenu de l’importance de ce rôle, il est essentiel que le président obtienne de la rétroaction opportune et constructive de la part des autres administrateurs », explique Cornell Wright, président du département corporatif au cabinet juridique Torys LLP. Les évaluations peuvent être formelles ou informelles ou une combinaison des deux. En ce qui concerne les évaluations formelles, plusieurs organisations demandent au président du comité de gouvernance de solliciter de la rétroaction et de mener une évaluation avec le président du conseil. Certains présidents solliciteront des commentaires des administrateurs après chaque réunion du conseil. Il peut aussi arriver qu’ils requièrent de la rétroaction au cours de conversations en tête à tête. Bonnie DuPont, administratrice d’expérience et Fellow de l’IAS, recommande que le comité de gouvernance organise des entrevues individuelles avec les administrateurs pour discuter de la performance du président du conseil après avoir reçu les résultats d’un questionnaire d’évaluation. Mme DuPont signale qu’une évaluation rigoureuse du président du conseil peut nécessiter beaucoup de temps. Une séance avec le président du conseil devra être soigneusement planifiée, en particulier s’il faut discuter de problèmes de

performance. En raison de la nature chronophage de ces évaluations formelles, Mme DuPont soutient qu’il n’est pas nécessaire de les mener chaque année, à moins d’une urgence. Il est essentiel que le président du conseil agisse en fonction de la rétroaction fournie par ses collègues, en particulier si la situation exige un changement. Les zones d’amélioration identifiées devraient faire l’objet d’une surveillance afin afin que les choses évoluent dans la bonne direction. Mme DuPont recommande aussi de modifier de temps à autre les méthodes d’évaluation afin d’obtenir une perspective différente. La notion de ce qui fait un bon président du conseil évolue aussi. On s’attend aujourd’hui à ce que les présidents dirigent efficacement les réunions du conseil, mais aussi qu’ils agissent comme facilitateurs et stimulent l’esprit d’équipe. Une partie de leur rôle devrait consister à aider les autres membres du conseil à connaître du succès. Bonnie DuPont affirme qu’elle pose des questions aux administrateurs sur les compétences du président du conseil en leadership et en engagement ainsi que sur son degré de préparation. Elle explique qu’un président peut faire du tort à son conseil en « prenant une position tranchée et en parlant beaucoup plutôt que de laisser la conversation se poursuivre ». Elle fait remarquer que les meilleurs présidents du conseil avec qui elle a travaillé exprimaient rarement leur opinion (tout au moins au début), mais sollicitaient plutôt les idées des autres. La rétroaction est aussi importante dans le cas des présidents de comité. Selon Mme DuPont, elle contribue à améliorer l’efficacité des comités, mais aussi à identifier des candidats potentiels au titre de président du conseil. La planification de la relève est un aspect important de la gouvernance et des conversations régulières avec les administrateurs aident à identifier ceux et celles qui montrent le plus d’intérêt et de capacités. DJ

• It is important to allocate sufficient time to conduct a thorough board chair evaluation. • Evaluation methods should be changed from time to time to keep the chair and the rest of the board fully engaged. • The expectations for board chairs are evolving. They must run effective board meetings but also have strong leadership, interpersonal and facilitation skills.

• Les nouveaux présidents du conseil peuvent établir un processus efficace d’évaluation au début de leur mandat, suscitant ainsi l’attente d’une culture robuste de gestion de la performance. • Il est important d’accorder assez de temps pour mener une évaluation rigoureuse du président du conseil. • Les méthodes d’évaluation devraient être modifiées de temps à autre afin que le président et le reste du conseil demeurent pleinement engagés. • Les attentes à l’égard des présidents du conseil évoluent. Ceux-ci doivent diriger efficacement les réunions du conseil, mais aussi faire preuve d’un solide leadership et de compétences interpersonnelles et de facilitation. Presented in partnership with

Send your comments or ideas to: Heather Wilson Director of Research Services boardinfo@icd.ca Every issue, we will feature a question from readers or one from ICD’s complimentary research service, ICD BoardInfo icd.ca/boardinfo

ICD.CA | 13

'I’m not a specialist in anything, but I know a lot about a lot of different things,' says John Manley, whose career spans roles in senior government and on corporate boards.

14 | DIRECTOR JOURNAL

BY Gordon Pitts PHOTOGRAPHS Brendan Burden

UNCOMMON ELEMENT JOHN MANLEY has developed a rare perspective on leadership. In conversation with business writer Gordon Pitts, the former deputy prime minister and outgoing chair of CIBC talks about a growing boardroom trap for women, the merits of stakeholder governance and why today is a great time to be in public service Dans les rôles qu’il a occupés, de vice-premier ministre à président du conseil de la CIBC – un poste qu’il quittera le mois prochain – JOHN MANLEY a développé une rare perspective sur le leadership. En conversation avec le journaliste d’affaires Gordon Pitts, il évoque les pièges des femmes au sein du conseil, les mérites de la gouvernance par les parties prenantes et les raisons pour lesquelles aujourd’hui est un bon moment pour évoluer dans le service public IN A LONG CAREER SPANNING SENIOR GOVERNMENT and corporate board roles, John Manley has stood as a consistent advocate for diversity, pushing for more women on boards and in the C-Suite. Now, at 71, he is heartened by the progress, but sees an unexpected – in his view, unfortunate – consequence of the surging demand for women as directors. It is not uncommon for high-performing women to drop out of executive roles too early in their careers, he believes. They can get their pick of choice board positions that take a less onerous toll on their personal lives. “They are highly sought after, but they might have got the brass ring if they had stayed [in their executive roles],” Manley says. He does not criticize their career choices. Top executive jobs are a huge drain on time and energy, often placing intense pressure on family members who carry the heaviest home and child-rearing roles.

AU COURS D’UNE LONGUE CARRIÈRE où il a occupé des postes élevés au gouvernement et dans les conseils d’administration, John Manley est demeuré un constant partisan de la diversité, prônant l’accès de plus en plus de femmes à des conseils et à la haute direction d’entreprises. Aujourd’hui, à 71 ans, il se réjouit des progrès réalisés, mais entrevoit une conséquence inattendue – et malheureuse – de la demande exponentielle de femmes dans les conseils d’administration. Il n’est pas inhabituel pour des femmes hautement performantes d’abandonner des postes de haute direction trop tôt dans leur carrière. Elles peuvent obtenir un siège de choix à un conseil qui imposera un tribut moins lourd à leur vie personnelle. « Elles sont hautement recherchées, mais elles auraient pu viser beaucoup plus haut si elles étaient restées [à leur poste de haute direction] », affirme M. Manley.

ICD.CA | 15

Board positions are more episodic and less intense in their work-life demands, he says, and they can pay well. He also expects to see a future rebalancing, as more women fill board positions and the male-female split moves to parity. Women may see some decline in blue-chip board options, but top-level executive opportunities should expand. Societal change should ease some of the child-raising burden, through, for example, increased parental leave by fathers. It is a classic big-picture observation from a veteran director and corporate chair who looks at issues through his singular prism. Manley calls himself “an odd fish,” perhaps a combination of odd duck and fish out of water, whose generalist skills have landed him in leadership roles on the boards he serves. His strength as a problem solver, mentor and agent of change has led to his induction as a 2021 Fellow of the Institute of Corporate Directors.

‘A piece of cake’ Fifteen years ago, Manley left the highest ranks of national leadership, having served Liberal governments as deputy prime minister and in cabinet portfolios such as finance, industry and foreign affairs. He describes his role as Canada’s point man in response to the 9/11 terrorism attacks in the United States as his “moment of fame.” He served as CEO of the Business Council of Canada, while taking blue-chip director positions at Canadian Imperial Bank of Commerce (where he is finishing his term as chair of the board), aviation training and support firm CAE Inc. (also a chair role) and telecom giant Telus Corp. He has found himself in leadership roles on boards without really seeking them, he says. In politics, he had already become accustomed to working with people with diverse opinions. “If you’ve been able to run a cabinet meeting, with the kind of people sitting around that table, running a board meeting in a corporation is a piece of cake,” he laughs. Having practised tax and business law, he can serve as an interpreter between government and business, which speak such different languages. “I’m not a specialist in anything, but I know a lot about a lot of different things,” Manley explains.

16 | DIRECTOR JOURNAL

MANLEY HAS OCCUPIED A FRONT-ROW SEAT DURING AN EVOLUTION IN GOVERNANCE AWAY FROM SOLELY MAXIMIZING SHAREHOLDER VALUE. DE SON POINT DE VUE, CETTE SITUATION A SUSCITÉ UN CALCUL DIFFÉRENT DANS LE MODÈLE DE RECRUTEMENT DES CONSEILS. Il ne critique pas leurs choix de carrière. Les postes de haute direction imposent une immense somme de temps et d’énergie et exercent une pression intense sur les membres de la famille qui assument la plus grande partie des tâches de la maison et du soin des enfants. Les tâches d’administrateur sont plus épisodiques et moins intenses, dit-il, et peuvent être bien payées. Il s’attend à un rééquilibrage à l’avenir, dans la mesure où plus de femmes pourvoiront des postes d’administrateur et où on se dirigera vers la parité dans les conseils. Les femmes pourraient connaître un certain déclin des options aux conseils de grandes entreprises, mais il devrait y avoir pour elles une augmentation des postes de haute direction à combler. Il s’agit là d’une observation globale classique de la part d’un administrateur de longue date et président du conseil qui envisage les enjeux à travers son prisme particulier. M. Manley se qualifie luimême de « bête étrange », dont les compétences généralistes l’ont mené à des rôles de leadership au sein des conseils.

In his 15 years as a director, he has occupied a front-row seat during an evolution in corporate governance away from the once-prevailing notion that the only role of the corporation is to maximize shareholder value. Boards now operate in a multi-stakeholder environment, where responding to broader interests becomes part of the corporation’s requirement to earn social licence, he says. When he started, that was “a fledgling thought and probably somewhat controversial.” But its rise has been driven by large institutional investors and their emphasis on ESG – environmental, social and governance – practices. Increasingly, boards look for the corporation to report comprehensively on ESG performance. Every board meeting that he attends carves out time for discussions of ESG issues, such as reducing the organization’s carbon footprint. But does the critical goal of shareholder returns get lost in the drive to mushier non-financial concerns? Manley agrees that if you don’t achieve good financial results, the shareholders won’t hold the stock. You still have to be concerned about total shareholder return but also reliability of earnings into the future. To achieve that steady long-term stream, a corporation has to perform well in the ESG realm, he believes. Yet the measurement of one aspect – the “S” for social – is still “squishy.” The diversity-inclusion part is quantifiable, he agrees,

!# $$

"

Sa force comme homme de solutions, mentor et agent de changement a conduit à sa nomination comme Fellow 2021 de l’Institut des administrateurs de sociétés.

Quantifier les ESG Il y a quinze ans, M. Manley quittait les rangs les plus élevés du leadership national, après avoir été vice-premier ministre et ministre des Finances, de l’Industrie et des Affaires extérieures. Il qualifie de son « moment de gloire » le rôle qu’il a joué comme principal porte-parole du Canada en réaction aux attaques du 11 septembre aux États-Unis. Il a aussi été chef de la direction du Conseil canadien des affaires, tout en occupant des postes d’administrateur de grandes sociétés, notamment à la Banque canadienne impériale de commerce, chez CAE Inc. et le géant des télécommunications Telus. En politique, il s’était déjà habitué à travailler avec des gens aux opinions diverses.

ICD.CA | 17

but in other categories, corporations are still looking for tools of self-assessment. He suspects that will come as they move closer to defining “the social enterprise.” That means measuring commitment to philanthropy, for example, and areas of employee engagement and benefits. Covid-19 has spurred conversation around paid sick leave and people working at home, thus triggering more thinking on work flexibility.

Gender parity “You will begin to develop metrics around a lot of that, which will make it easier to measure where we are.” Meanwhile, he remains heavily committed to gender diversity on boards, which has come faster than he had imagined. He is a member of the 30% Club, a global initiative

« Si vous êtes en mesure de diriger une réunion du cabinet, avec le genre de personnes qu’on trouve autour de la table, présider la réunion du conseil d’une entreprise, c’est du gâteau ». Ayant pratiqué le droit fiscal et le droit des affaires, il peut servir d’interprète entre le gouvernement et les entreprises, qui parlent des langues si différentes. « Je ne suis pas un spécialiste de quoi que ce soit, mais j’en sais pas mal sur beaucoup de choses différentes », explique M. Manley. Durant ses quinze années à titre d’administrateur, il a été aux premières loges de l’évolution de la gouvernance de sociétés, dont le principal article de foi a longtemps été que le seul rôle d’une entreprise consiste à maximiser la valeur des actionnaires. Les conseils évoluent aujourd’hui dans un environnement de multiples parties prenantes où la nécessité de répondre à des intérêts plus larges fait partie de ce qu’on exige des entreprises pour qu’elles méritent leur acceptabilité sociale, souligne-t-il. Quand il a commencé, c’était là « une idée naissante et sans doute controversée ». Mais elle a été propulsée par de grands investisseurs institutionnels qui ont mis l’accent sur les pratiques ESG – envi-

John Manley Chair of CIBC and CAE, director of Telus and former deputy prime minister

Président du conseil de CIBC et CAE, administrateur de Telus et ancien vice-premier ministre

Born in Ottawa on Jan. 5, 1950, John Manley earned a bachelor of arts from Carleton University in 1971 and a law degree from the University of Ottawa in 1976. After practising law with an Ottawa firm, he entered Parliament as the member for Ottawa South in 1988, where he spent 16 years. He served as Deputy Prime Minister under Jean Chrétien from January 2002 to December 2003. His major portfolios included Minister of Industry, from 1997 to 2000; Minister of Foreign Affairs from 2000 to 2002, which spanned the period of the 9/11 terrorist attacks and their aftermath; and Minister of Finance, from 2002 to 2003. After politics, Manley joined the law firm McCarthy Tétrault, where he worked from 2004 to 2009. He later served as CEO of the Business Council of Canada, a major public policy voice (formerly the Canadian Council of Chief Executives) from 2010 to 2018. He is currently senior business advisor with the law firm Bennett Jones. Manley has served as chair of the board of CIBC since 2015, and his term ends in April. He has also chaired its U.S. subsidiary’s board since CIBC’s large U.S. acquisition in 2017. He has been a director of CAE since 2008 and chair of its board since August, 2018. He has been a director of Telus since 2012, where he now serves on its corporate governance and pension committees. His other notable board position was at the now-defunct technology multinational Nortel Networks. — Gordon Pitts

Né à Ottawa le 5 janvier 1950, John Manley a obtenu un baccalauréat ès arts de l’Université Carletonen 1971 et un diplôme en droit de l’Université d’Ottawa en 1976. Après avoir pratiqué le droit dans un cabinet d’Ottawa, il a fait son entrée au Parlement en 1988 comme député d’Ottawa Sud. Il y a passé 16 ans. Il a été vice-premier ministre sous Jean Chrétien de janvier 2002 à décembre 2003. Il a occupé les postes de ministre de l’Industrie de 1997 à 2000, ministre des Affaires extérieures de 2000 à 2002 et ministre des Finances de 2002 à 2003. Après sa carrière politique, John Manley s’est joint au cabinet juridique McCarthy Tétreault, où il a travaillé de 2004 à 2009. Il a ensuite été chef de la direction du Conseil canadien des affaires (anciennement Canada Council of Chief Executives), une voix de première importance en matière de politiques publiques, de 2010 à 2018. Il est présentement conseiller d’affaires principal au cabinet juridique Bennett Jones. M. Manley siège au conseil de la CIBC depuis février 2005 et comme président depuis avril 2015. Il est aussi président du conseil de sa filiale américaine depuis son acquisition en 2017. Il est administrateur de CAE depuis 2008 et président du conseil depuis août 2018. Il est membre du conseil de Telus depuis 2012 et siège à ses comités de gouvernance et de pension. Il a aussi siégé au conseil de la défunte multinationale technologique Nortel Networks. — Gordon Pitts

18 | DIRECTOR JOURNAL

of chairs and CEOs founded in 2010, aimed at reaching 30 per cent female membership on boards and in senior management. At the start, just stating a 30-per-cent goal met resistance from some boards. Now, for many large public corporations, including the three he serves, “we went beyond that very quickly over the last 10 years.” For these players, 30 per cent is often just the floor. At CIBC, for example, the goal is gender parity. But, he admits, there is still a wide gap in gender balance between large-capitalization companies and mid-size enterprises. What’s more, the female presence in executive suites is taking more time to grow. Which brings him to the rich board choices currently facing rising female executives, because of the heavy demand for them by large corporate boards, and still relatively short supply compared with male candidates. “If you are a high-performing female executive who sticks your hand up for board work, you have to decide which offers to take. That is not the case for your male counterparts because there are lots of them.” From his own perspective, that has created a different calculus in board recruitment. When faced with the retirement of a male director, “odds are when we look at the qualifications of potential replacements, and if two candidates are equally qualified, we will take the woman over the man.” In the future, he says, it will not be as simple as saying “the tie goes to the woman,” as boards move toward parity and the current wave of female directors takes up their board tenures of, typically, 12 to 15 years. But why not quotas to speed up the process? Manley points out

Today's boards must respond to broader stakeholder interests in order to earn social licence, says ICD Fellow John Manley.

ronnementales, sociales et de gouvernance. De plus en plus, les conseils s’attendent des sociétés qu’elles fournissent un rapport complet de leurs performances ESG. Dans chaque réunion du conseil à laquelle il assiste, un moment est réservé à des discussions sur les enjeux ESG, comme la réduction de l’empreinte carbone de l’organisation. Mais l’objectif essentiel du rendement des actionnaires s’est-il perdu dans le flot des vertueuses préoccupations non financières? M. Manley convient que si on n’obtient pas de bons résultats financiers, les actionnaires ne garderont pas leurs actions. Il faut encore se préoccuper du rendement, mais aussi de la stabilité des futurs revenus. Pour obtenir ce flot constant à long terme, croit-il, une entreprise doit bien performer dans le domaine des ESG. Mais la mesure d’un de ces aspects – le « S » de social – demeure bien imprécise. Le volet diversité et inclusion est quantifiable; mais pour les autres catégories, les entreprises sont toujours à la recherche d’outils d’évaluation. Il soupçonne que cela viendra à mesure qu’on s’approchera de la définition de « l’entreprise sociale ». C’est dire qu’il faudra mesurer l’engagement en philanthropie, par exemple, et les domaines d’engagement des employés ainsi que les avantages. La Covid-19 a stimulé la conversation autour des congés de maladie rémunérés et du télétravail, suscitant ainsi de nouvelles réflexions sur la flexibilité du travail.

La parité des genres « Nous commencerons bientôt à développer des indicateurs pour beaucoup de ces choses, ce qui nous aidera à mesurer où nous en sommes. » Entre-temps, John Manley demeure fermement engagé envers la diversité au sein des conseils, ce qui s’est produit plus rapidement que ce qu’il aurait imaginé. Il est membre du Club 30 %, une initiative mondiale réunissant des présidents du conseil et des chefs de direction créée en 2010 et dont l’objectif est d’atteindre une représentation de 30 % de femmes dans les conseils et à la haute direction des entreprises. Au départ, le seul objectif de 30 pour cent

ICD.CA | 19

MANLEY CALLS THE PANDEMIC ‘THE GREATEST CRI­SIS WE HAVE FACED OUTSIDE OF WARTIME.’ M. MANLEY EST RECONNU POUR SON BON JUGEMENT EN SITUATIONS TRÈS STRESSANTES. that there are a lot of factors to weigh when determining board appointments, such as skills, experience and corporate culture. Imposed quotas don’t offer the needed flexibility. In general, “I’d rather see the rules applied more organically, than being rigid.” Meanwhile, the correlation between diversity and financial performance means investors will continue to drive behaviour toward equity of all kinds.

Experience and judgment Boards are also looking for a greater range of specialized experience, in areas such as technology and cybersecurity, and financial expertise. Manley wonders whether, as boards recruit more people with these skills and backgrounds, it will become harder to follow the hallowed principle of “nose in, fingers out” for director involvement in the business. The board does not run the company, he reminds us. While he wants board members with enough technical skill to know the questions to ask, he doesn’t want directors telling management what to do, especially if senior managers think it is the wrong thing to do. “I want people who have experience that is relevant and have demonstrated good judgment. You can have the former without the latter.” Manley himself is one of those people with a track record of good judgment in high-pressure situations. He clearly revels in being in the middle of the fray. During the Covid-19 pandemic, he has had mixed feelings as he watches leaders tackle the crisis. It brings back memories of the hectic and deeply troubling fallout from the 9/11 attacks. “It was tense and there was a lot at stake but I went into public life with a desire to be of service and to make a difference. “That was an opportunity that was handed to me,” he says, and it is the same now for public service leaders. The pandemic “is 100

20 | DIRECTOR JOURNAL

s’est heurté à de la résistance chez certains conseils. Aujourd’hui, chez plusieurs sociétés inscrites en bourse « nous sommes allés très rapidement au-delà de cet objectif au cours des dix dernières années ». Pour ces organisations, 30 % ne représente souvent qu’un plancher. Chez CIBC, par exemple, l’objectif est la parité des genres. Mais, admet-il, il existe toujours un fossé profond dans l’équilibre des genres entre les sociétés à forte capitalisation et les entreprises de taille moyenne. Qui plus est, la présence des femmes dans les postes de haute direction croît plus lentement. Ce qui amène M. Manley à évoquer les riches choix de conseils qui s’offrent actuellement aux femmes cadres, en raison de la forte demande dont elles sont l’objet. « Si vous êtes une femme cadre hautement performante qui lève la main pour occuper un poste à un conseil, vous devez décider entre deux offres. Ce n’est pas le cas pour vos collègues masculins parce qu’ils sont en plus grand nombre. » De son point de vue, cette situation a suscité un calcul différent dans le modèle de recrutement des conseils. Lorsqu’un conseil voit un de ses membres masculins prendre sa retraite, « les chances sont que si deux candidats de sexe opposé ont les mêmes qualifications, c’est la femme qui l’emportera ». À l’avenir, dit-il, ce ne sera pas aussi facile que de dire : « En cas d’égalité, c’est la femme qui gagne », à mesure que les conseils migreront vers la parité et que la vague actuelle de femmes accédant à des conseils croîtra, normalement d'ici 12 à 15 ans.

L’expérience et le jugement Les conseils sont aussi à la recherche d’un éventail plus large d’expérience spécialisée, dans des domaines comme la technologie et la sécurité informatique ainsi que l’expertise financière. M. Manley se demande si, à mesure que les conseils recrutent plus de gens ayant ces compétences et ces antécédents, il ne deviendra pas plus difficile de suivre le principe sacré voulant que l’administrateur connaisse l’entreprise, mais ne se mêle pas de sa gestion. Le conseil ne dirige pas l’entreprise, rappelle-t-il. Même s’il souhaite que les administrateurs dotés d’assez de compétences

times more complicated and difficult than the aftermath of 9/11 with very fraught decisions about how much risk to take to offset other losses.” But, he adds, “what a time to be in public service. “On one hand I don’t envy them, and on the other hand I do. It is the greatest crisis we have faced outside of wartime and therefore the need for outstanding public servants is greater than ever.” Yet Manley’s appetite for service can still find expression outside the halls of Parliament. He may be “over it,” as he says of government life, but boards provide a demanding outlet for a still-smouldering commitment to causes and an idealistic pursuit of a better Canada. DJ

techniques connaissent la question à poser, il ne veut pas qu’ils disent quoi faire à la direction, en particulier si les dirigeants pensent que c’est la mauvaise chose à faire. « Je veux des gens qui ont une expérience pertinente et font preuve de jugement. On ne peut pas avoir l’un sans l’autre. » Durant la pandémie, il a éprouvé des sentiments mitigés en observant certains leaders faire face à la crise. Cela lui a rappelé les lendemains mouvementés et troublants du 11 septembre. La pandémie « est 100 fois plus compliquée et difficile que les retombées du 11 septembre, avec son lot de décisions ardues sur le degré de risque à prendre pour compenser d’autres pertes ». Mais, ajoute-t-il, « quel grand moment pour être dans le service public ». L’appétit de M. Manley pour le service public trouve encore son expression hors des salles du Parlement. Même si la vie gouvernementale est terminée pour lui, sa fonction d’administrateur lui offre encore des lieux d’engagement dans la poursuite d’un Canada meilleur. DJ

GORDON PITTS is a Toronto journalist whose latest book, Unicorn in the Woods: How East Coast Geeks and Dreamers Are Changing the Game, was published this fall by Goose Lane Editions.

GORDON PITTS est un journaliste d’affaires dont le dernier ouvrage, Unicorn in the Woods : How East Coast Geeks and Dreamers Are Changing the Game, a été publié l’automne dernier par Goose Lane Editions.

Diversity is the scope of differences. Equity and inclusion are involvement and action. We’re pleased to advance low-carbon electricity solutions alongside championing diversity across our business and fostering an inclusive team. Our differences make us stronger. Meaningfully engaging all our talent enriches our culture and ultimately benefits our performance.

Proudly leading by example.

44%

43%

Board of Directors

Executive Team

Women

Women

Learn more: capitalpower.com/EDI

ICD.CA | 19

A FRIENDLIER GIANT

Even with gentleman Joe Biden in the White House, the U.S. will likely continue to put America First Le Canada peut espérer une plus grande coopération avec les États-Unis, mais ce sera encore l’Amérique d’abord

The election of U.S. President Joe Biden signals a return to historical norms in Canada-U.S. relations, but should not lull Canadians into complacency, John Manley warns. Manley believes the upheaval of the past four years may have signalled an inflection point for our foreign policy. Donald Trump may have vacated the White House, but “Trumpism itself hasn’t gone away.” Trumpism, as expressed in U.S. international relations, represents an aggressively go-it-alone stance that ignores alliances and unleashes flurries of trade, economic and legal actions with no warning and little regard for allies. The Biden administration signals a reversion to America’s respect for alliances, but policymakers should be aware that the Trump doctrine may not have been an aberration, Manley says. Manley, a former minister of finance and foreign affairs, notes Americans are in a constant state of electioneering. In less than two years, the Republicans could gain control of the House and Senate, thus limiting Biden’s effectiveness. And in 2024, another presidential election looms. The Biden election “may just be a little bit of a backward step on a progression to a much more difficult environment for Canada.” The conclusion, in Manley’s view, is that Canada needs to find reliable anchors for its international relations in addition to the United States. The most appropriate candidates lie in Europe, as well as Australia and New Zealand. Britain would ordinarily qualify, but it still has to solve its post-Brexit relationships in Europe. He observes that however welcome the Biden administration’s multilateral thrust, issues of tension will remain. The Democrats lean closer to the views of organized labour, with its protectionist impulse. And while the Republicans used to be reliable free traders, they are no longer, he points out. Canadian leaders are used to talking to Americans about perennial irritants like softwood lumber, fisheries and Buy America policies. “At least that is ground well trod upon and we know it and work through it.” By contrast, “when the Trump administration was firing tariffs at us on steel and aluminum, and with no justification but that we were [supposedly] a national security threat, that is entering the twilight zone. How do you even respond to that?” With the Biden team, there will still be contentious matters, but also an atmosphere of civility, rationality and reason, he says. Biden’s cancellation of U.S. permits for TC Energy Corp.’s controversial Keystone XL pipeline was one of those irritants. Manley found it predictable, given the politics around Keystone. While he believes it passed all the objective tests, the pipeline had become a symbol in broader environmental politics. The action also reflects the new reality in Canada-U.S. energy relations. The United States embraced free trade in the late 1980s and early 1990s because it could secure Canada’s commitment as a reliable energy supplier. Since then, the U.S. has become the largest energy supplier in the world. “It changed the whole dynamic of the relationship in ways we haven’t totally taken on board.”

22 | DIRECTOR JOURNAL

L’élection de Joe Biden signale un retour aux normes historiques des relations canado-américaines, mais les Canadiens ne devraient pas se bercer d’illusions, prévient John Manley. M. Manley croit que la tourmente des quatre dernières années pourrait avoir déterminé un point d’inflexion dans notre politique extérieure. Donald Trump a quitté la Maison Blanche, mais « le trumpisme en tant que tel n’est pas disparu. » Le trumpisme, tel qu’il s’est manifesté dans les relations internationales des États-Unis, représente une attitude agressive de repli sur soi qui ignore les alliances et déclenche sans prévenir un déluge de mesures commerciales, économiques et juridiques sans se soucier de ses alliés. L’administration Biden signale un retour au respect de l’Amérique pour les alliances, mais les décideurs canadiens devraient prendre conscience que la doctrine de Trump n’a peut-être pas été une aberration, affirme M. Manley. Ancien ministre des Finances et des Affaires extérieures, John Manley explique que les Américains sont constamment en période électorale. Dans moins de deux ans, les Républicains pourraient reprendre le contrôle de la Chambre et du Sénat, limitant ainsi la marge de manœuvre de Biden. Et en 2024, une autre élection présidentielle aura lieu. L’élection de Biden « pourrait n’avoir été qu’un petit pas en arrière dans une progression vers un environnement beaucoup plus difficile pour le Canada. » La conclusion, selon M. Manley, est que le Canada a besoin de trouver d’autres ancrages fiables que les États-Unis dans ses relations internationales. Les candidats les plus appropriés se trouvent en Europe ainsi qu’en Australie et en Nouvelle-Zélande. En temps normal, le Royaume-Uni ferait partie de la liste, mais ses relations post-Brexit avec ses voisins européens occupent encore son attention. M. Manley observe par ailleurs que malgré les professions de foi multilatérales de l’administration Biden, les sujets de tension demeurent. Les Démocrates sont plus proches des syndicats en matière de protectionnisme. Et même si les Républicains furent à une certaine époque des tenants du libre-échange, ce n’est plus le cas. Les leaders canadiens sont habitués de discuter avec les Américains d’irritants permanents comme le bois d’œuvre, les pêcheries et les politiques Buy America. « Au moins, nous sommes en terrain connu, nous connaissons la question et nous y travaillons », rappelle l’ancien ministre. En revanche, « quand l’administration Trump nous a imposé sans prévenir des tarifs sur l’acier et l’aluminium, sans autre justification que nous étions prétendument une menace à la sécurité nationale, nous nous sommes trouvés en zone incertaine. Comment répondre à une telle chose? » Avec l’équipe Biden, il y aura des sujets contentieux, mais aussi une atmosphère de civilité, de rationalité et de raison, souligne-t-il. L’annulation par M. Biden des permis relatifs au projet controversé de pipeline de Keystone XL mené par TC Energy Corp., figure parmi les irritants. C’était là une décision prévisible, estime M. Manley. Même s’il croit que ce projet passe avec succès tous les tests objectifs, il est devenu un symbole politique.

The election of U.S. President Joe Biden does not mean 'Trumpism' has gone away, warns ICD Fellow and former deputy prime minister John Manley.

He reminds Canadians of the cardinal rule of international relations: “If you want a friend, get a dog.” Countries will always act in their own best interest, notwithstanding old relationships. Yet he welcomes the potential return to a more multilateral approach toward China. He believes the United States let Canada down following the Vancouver arrest of Meng Wanzhou, the chief financial officer of Chinese telecom company Huawei. “It is unfortunate because two innocent Canadians [Michael Kovrig and Michael Spavor, who are being detained in China] have paid the price and it could have been dealt with entirely differently.” “President Trump’s disrespect for alliances, for co-operative action with like-minded countries, made it difficult for Canada because we were kind of left on our own.” China’s role as a heavyweight economic player presents challenges. “We admitted them to the [World Trade Organization] in the belief that they would be evolving into a free-market economy. We haven’t seen that happen.” For Manley, these are issues better approached co-operatively, and that should be possible for the next two years or more – at least until another potential earthquake of a U.S. election. — Gordon Pitts

La mesure témoigne aussi d’une nouvelle réalité dans les relations canado-américaines en matière d’énergie. Les États-Unis ont adhéré au libre-échange parce qu’il leur permettait de faire du Canada un fournisseur fiable d’énergie. Depuis, les États-Unis sont devenus le plus grand fournisseur d’énergie au monde. « Les pays, rappelle John Manley, agissent toujours dans leur propre intérêt, sans égard aux vieilles relations. » Il n’en accueille pas moins le retour possible d’une approche plus multilatérale envers la Chine. Il croit que les États-Unis ont laissé tomber le Canada après l’arrestation de Meng Wanzhou, la cheffe de la direction financière de Huawei. « C’est malheureux parce que deux innocents (Michael Kovrig et Michael Spavor, toujours détenus en Chine) en ont payé le prix. » Le rôle de la Chine comme poids lourd économique présente beaucoup de défis. « Nous l’avons admis au sein de l’Organisation mondiale du commerce, croyant qu’elle évoluerait vers une économie de libre marché. Ce n’est pas encore arrivé. » Selon M. Manley, ce sont des enjeux qu’il est préférable d’aborder dans un esprit de coopération, ce qui devrait être possible au cours des deux prochaines années. — Gordon Pitts

ICD.CA | 23

Canadians have a once-in-a-lifetime opportunity to examine our national economic goals.

24 | DIRECTOR JOURNAL

PHOTOGRAPHY BY KSENIA MAKAGONOVA/UNSPLASH

Reshaping Canada’s economy after the pandemic THE GLOBAL COVID-19 PANDEMIC has forced every country — including Canada — to rethink its economic direction, and plan for a new world after the infections subside. Thought leaders recognize that there is a small silver lining resulting from the pandemic: We are more open to substantial change after an unprecedented upheaval that has shaken many of our assumptions about health, business and the role of government. While Canadians are unlikely to embrace the “Great Reset” proposed last year by the World Economic Forum, which would see capitalism wholly upended and redesigned, we can still take this once-in-a-lifetime opportunity to examine our national economic goals, and set new priorities for growth and development. Increasingly, it looks like much of the transformation will involve energy and climate-change policy. In the short term, the pandemic has already forced many sectors to sharply adjust their operations, and prepare to accommodate significant changes that will linger well into the recovery.

The country is primed for big changes, but to take advantage of this historic moment, business and political leaders need to intensify efforts to modernize the energy sector, embrace emerging technologies and turn innovative ideas into economic prosperity, writes Richard Blackwell Le pays est sur la voie d’un changement majeur, mais pour tirer parti de ce moment historique, les leaders d’affaires et politiques doivent intensifier leurs efforts pour moderniser le secteur énergétique, adopter les technologies émergentes et transformer les idées innovatrices en prospérité économique, écrit Richard Blackwell

LA PANDÉMIE MONDIALE DE COVID-19 a forcé chaque pays – dont le Canada – à repenser sa trajectoire économique et à planifier son orientation dans un nouvel univers, quand les infections se seront estompées. Les leaders éclairés reconnaissent qu’il existe un côté positif issu de la pandémie : nous sommes désormais plus ouverts à des changements substantiels après un bouleversement sans précédent qui a ébranlé plusieurs de nos prétentions sur la santé, les affaires et le rôle du gouvernement. Même si les Canadiens sont peu susceptibles d’embrasser la « Grande réinitialisation » proposée l’an dernier par le Forum économique mondial, laquelle consisterait à chambarder complètement et repenser le capitalisme, nous pouvons quand même saisir cette occasion unique d’examiner nos objectifs économiques nationaux et d’établir de nouvelles priorités en matière de croissance et de développement. De plus en plus, il semble que cette transformation touchera l’énergie et les changements climatiques.

ICD.CA | 25

26 | DIRECTOR JOURNAL

Domestic business travel is unlikely to bounce back now that everyone is comfortable with online meetings but personal travel could surge.

PHOTOGRAPHY BY MARGO-BRODOWICZ/UNSPLASH (LEFT), JESSICA ARENDS/UNSPLASH (RIGHT)

Bank of Montreal chief economist Douglas Porter noted that many individuals and businesses have been displaced from their comfort zones, and have thus realized that they are capable of dropping old habits and adopting new technologies. Working remotely from home, learning through electronic portals, and selling products and services online are now commonplace and will likely intensify after the pandemic, he said. “We have to be careful about assuming that some of the changes we’ve seen in the past year will be completely permanent,” Porter said. There will be some reversals, although many will stick. For example, domestic business travel is unlikely to return to pre-pandemic levels now that everyone is more comfortable with online meetings. But personal travel will likely resume eventually, and could actually boom because of pent-up demand, he said.

À court terme, la pandémie a déjà forcé plusieurs secteurs à s’ajuster rapidement et à apporter des changements importants qui persisteront bien au-delà de la reprise. L’économiste en chef de la Banque de Montréal Douglas Porter souligne que beaucoup de personnes et d’entreprises ont été déplacées de leur zone de confort et ont ainsi réalisé qu’elles sont capables d’abandonner de vieilles habitudes et d’adopter de nouvelles technologies. Il est maintenant devenu monnaie courante de travailler de la maison, d’apprendre sur des portails électroniques et de vendre des produits et services en ligne et ces phénomènes vont sans doute s’intensifier après la pandémie, selon lui. « Nous devons être prudents en présumant que certains changements que nous avons connus dans le passé seront à jamais permanents, soutient M. Porter. Il y aura des renversements de situation, même si beaucoup de ces changements demeureront. Par exemple, les voyages d’affaires au pays sont peu susceptibles de revenir aux niveaux d’avant la pandémie, maintenant que chacun est plus à l’aise dans les réunions en ligne. Mais les voyages personnels reprendront éventuellement et pourraient en fait monter en flèche en raison d’une demande jusqu’alors refoulée. » La fabrication dans le secteur de la santé est sans aucun doute une de ces industries qui connaîtront un changement permanent, poursuit M. Porter. La pression exercée pour assurer la production nationale d’équipements et de produits pharmaceutiques – un point faible du Canada pendant la pandémie – sera incessante. L’économiste soutient par ailleurs que l’importance accordée par le gouvernement fédéral aux changements climatiques a été écartée par la nécessité de se concentrer sur l’urgence pandémique, mais il croit que les questions environnementales reviendront au centre des préoccupations – en particulier avec une nouvelle administration américaine qui les prend au sérieux. « Maintenant qu’il y a eu un changement de régime aux ÉtatsUnis, la voie à suivre est plus claire pour Ottawa. L’administration Biden étant largement sympathique au gouvernement fédéral dans une foule de domaines, l’importance de ces questions s’en trouve renforcée. »

Working from home is now commonplace and will likely intensify after the pandemic, Bank of Montreal chief economist Douglas Porter says.

ICD.CA | 27

Rethinking our en­ ergy sector, including the role of oil and gas development, will be central to Canada’s economic strategy in the coming decades.

36 | DIRECTOR JOURNAL 28

PHOTOGRAPHY BY CHUTTERSNAP/UNSPLASH (ABOVE), JMARKUS SPISKE/UNSPLASH (BELOW)

One industry that is very likely to change permanently, Porter said, is health-care manufacturing. The pressure to secure domestic production of equipment and pharmaceuticals — a weak point during the pandemic — will be relentless. Porter noted that the federal government’s focus on climate change was derailed somewhat by the need to concentrate on emergency pandemic actions, but he thinks environmental issues will soon swing back into the crosshairs — especially with the new administration in the United States taking it seriously. “Now that we’ve got regime change in the U.S., it makes the path clearer for Ottawa. With the Biden administration largely simpatico with the federal government in a lot of areas, it makes the case that much stronger.” This is not simply a North American phenomenon, he added. Governments around the world are embracing climate change as a central issue and a key to economic growth after the pandemic. “If that is where the world is going, we shouldn’t try to fight it. In fact, we should probably try to get a little bit ahead of it.” It’s not just Biden’s moves to push environmental issues to the top of the U.S. agenda that will force Canada’s hand. Institutional investors such as Larry Fink, CEO of the massive fund manager BlackRock Inc., are pressuring companies to prepare for a “net-zero” economy; General Motors Co. has promised to make most of its vehicles electric by 2035; and carbon taxes are taking hold worldwide. Rethinking our energy sector, including the role of oil and gas development, will be central to Canada’s economic strategy in the coming decades. There is almost universal recognition that Canada’s energy industry must change. The debate is now focused on how far, how fast and in what direction it must make that shift.

Clean oil? Raymond Chan, a director of Telus who was an executive in the oil patch for decades, agrees that climate change issues must be addressed, although “fossil fuel is going to be here for a while, whether you like it or not,” he insists. These fuels need to be produced more sustainably and responsibly,

There is almost universal recognition that Canada’s energy industry must change. The debate is now focused on how far, how fast and in what direction it must make that shift. Il y a une reconnaissance presque universelle que l’industrie énergétique canadienne doit changer. Le débat porte maintenant sur l’ampleur, la rapidité et l’orientation de ce changement.

One industry that is likely to change permanently, says Bank of Montreal chief economist Douglas Porter, is health-care manufacturing. (Bottom left)

Il ne s’agit pas simplement d’un phénomène nord-américain, ajoute M. Porter. Partout dans le monde, les gouvernements considèrent les changements climatiques comme un enjeu central et une clé de la croissance économique après la pandémie. « Si c’est la direction que prend le monde, nous ne devrions pas tenter de la combattre. En fait, nous devrions être à l’avant-garde. » Ce n’est pas seulement la décision du président Biden de placer les questions environnementales au sommet des préoccupations américaines qui forcera la main du Canada. Des investisseurs institutionnels comme Larry Fink, chef de la direction du grand gestionnaire de fonds BlackRock, font pression sur les entreprises pour qu’elles se préparent à une économie « net-zéro ». General Motors a promis que la plupart de ses véhicules seraient électriques en 2035 et des taxes sur le carbone sont instaurées à travers le monde. La refonte de notre secteur énergétique, y compris le développement du pétrole et du gaz, sera essentielle à la stratégie économique du Canada dans les décennies à venir. Il y a une reconnaissance presque universelle que l’industrie énergétique canadienne doit changer. Le débat porte maintenant sur l’ampleur, la rapidité et l’orientation de ce changement.

Du pétrole propre? Raymond Chan, un administrateur de Telus qui fut dirigeant dans le secteur pétrolier pendant des décennies, convient qu’il faut agir sur les enjeux liés aux changements climatiques, même si « les combustibles fossiles seront encore là pour un bout de temps, que ça nous plaise ou non », insiste-t-il. Cette forme d’énergie doit être produite de façon plus durable et responsable, dit-il, pendant que se produit un déplacement simultané vers les énergies vertes et renouvelables. « Il faut aller vers les deux volets. » Des millions d’automobiles et d’avions seront déployés autour du monde pendant encore des décennies, assure M. Chan. « Nous ne pouvons simplement pas vivre avec l’impression que nous n’avons qu’à fermer le robinet de la demande à notre discrétion. Ça n’arrivera pas. »

ICD.CA | 29

30 | DIRECTOR JOURNAL

There will be millions of gasoline-burning cars and airplanes de­ployed around the world for decades to come, says corporate director Raymond Chan.

L’administratrice de sociétés Judith Athaide, qui pendant de nombreuses années a été consultante dans le secteur de l’énergie, admet que le secteur pétrolier et gazier ne disparaîtra pas du jour au lendemain. « Nous devons reconnaître que l’industrie est un facteur important du niveau de vie et de la prospérité du Canada – pas seulement au fil de l’histoire, mais encore aujourd’hui. La demande de pétrole et de gaz continuera d’augmenter pendant bien des années, dit-elle, même si le gros de cette consommation accrue proviendra de l’Asie. Le Canada peut prospérer en répondant à la demande, en particulier si l’industrie est en mesure de devenir un producteur à faible émission de carbone tout en maintenant sa compétitivité au chapitre des coûts. Dans l’ensemble, l’industrie a amélioré sa réponse aux défis environnementaux, affirme Mme Athaide, mais « elle a échoué à communiquer son histoire » et il s’agit là d’une lacune fondamentale. Il n’en de-

PHOTOGRAPHY BY JUSTUS MENKE/UNSPLASH

he said, while there is a simultaneous shift to renewables and green energy. “You need to go at both prongs.” There will be millions of gasoline-burning cars and airplanes deployed around the world for decades to come, Chan said, and “we just cannot live under the impression that we can just turn off that demand switch if we want to. It just won’t happen.” Corporate director Judith Athaide, who worked for many years as a consultant to the energy industry, agrees that the oil and gas sector will not — and should not — disappear overnight. “We have to recognize that the industry is a big piece of Canada’s standard of living and prosperity, not just historically, but even today.” Demand for oil and gas will continue to rise for many years, she said, although most of the increased consumption will come in Asia. Canada can prosper by helping to supply it, especially if the industry can become a low-carbon, low-emitting producer, while also maintaining cost competitiveness. The industry, over all, has been improving at meeting environmental challenges, Athaide said, but “it has failed to communicate its story” and that is a crucial deficiency. Still, she added, the oil patch must prepare for a long-term transition that could see a shift to oil-to-hydrogen technologies and other non-transportation applications. At the same time, it must invest heavily to “decarbonize” production though technology such as carbon capture and storage.

“If carbon is the enemy, and we eliminate carbon, what is wrong with oil and gas?” she asked.

Low-carbon leadership But there are other voices that feel a faster transition is necessary. They demand a sharper shift in focus away from traditional oil and gas production. “The writing is on the wall” for a permanent decline in oil and gas demand, said environmental engineer Maria Kelleher, who serves on several non-profit boards. Consequently Canada “has to get its skates on and figure out what we’re going to do when oil and gas isn’t as valuable.” We don’t want the oil industry to become the latest Blockbuster Video or Eastman Kodak Co., clinging to a technology that is clearly outdated, she said. Instead, the Canadian economy needs to quickly shift toward sectors that help mitigate climate change but also provide significant growth potential — such as battery technology, hydrogen fuel cells, biotechnology,

meure pas moins, ajoute-t-elle, que l’industrie doit se préparer à une transition à long terme vers des technologies de l’hydrogène et autres applications hors du transport. Du même souffle, elle doit investir massivement pour « décarboniser » sa production au moyen de technologies telles que le captage et le stockage du carbone. « Si le carbone est l’ennemi et que nous l’éliminons, quel est le problème avec le pétrole et le gaz? », demande-t-elle.

Le leadership en faible émission de carbone Mais il existe d’autres voix qui estiment nécessaire une transition plus rapide. Elles exigent un retrait plus radical de la production traditionnelle de pétrole et de gaz. « Le déclin permanent de la demande de pétrole et de gaz est écrit dans le ciel », affirme l’ingénieure en environnement Maria Kelleher, qui siège à plusieurs conseils d’administration d’organismes à but non lucratif. En conséquence, le Canada « doit chausser ses patins et déterminer ce qu’il fera quand le pétrole et le gaz auront perdu de leur valeur ». Nous ne souhaitons pas que notre industrie pétrolière devienne le dernier Blockbuster ou Eastern Kodak qui s’accroche à une technologie clairement périmée, dit-elle. L’économie canadienne doit plutôt se réorienter rapidement vers des secteurs qui contribuent à atténuer les changements climatiques, mais offrent aussi un potentiel de croissance important, comme la technologie de batterie, la pile à hydrogène, la biotechnologie et les véhicules électriques. Dans

Diversity Improves Performance We help boards get composition right

At Odgers Berndtson, we support our clients to diversify their boards to enhance decision making, oversight and organizational performance. bit.ly/ob_lets_talk

ICD.CA | 37

PHOTOGRAPHY BY APPA/UNSPLASH

“Nobody is going to turn off the oil and gas industry overnight,” acknowledges Yung Wu, CEO of the MaRS Discovery Dis­trict, but there are enormous opportunities to transform and diversify away from traditional activities. « Personne ne va mettre fin du jour au lendemain à l’industrie pétrolière et gazière », reconnaît Yung Wu. Mais il existe d’énormes occasions de la transformer et de la diversifier.

32 | DIRECTOR JOURNAL

ICD.CA | 33

and electric vehicles. In the coming years, there will be an intense worldwide focus on carbon, she said, so “you will have to have a carbon-neutral solution to everything.” James Meadowcroft, a professor in the school of public policy at Carleton University in Ottawa, said it makes sense for governments that want to stimulate their economies in the post-pandemic period to invest in low-carbon sectors where there is the potential for substantial growth. By picking winners carefully, Canada can boost its economic performance while lowering carbon emissions and battling climate change. The oil and gas industry was once a vital, growing business for Canada but world trends have turned against it, he said. “It isn’t going to come back. … The golden goose is ailing and we’d better find other ways to make money.” In a report he wrote called “Pathways to Net Zero,” Meadowcroft outlined recommendations for how Canada can become a leader in low-carbon sectors, and why it is important if the country wants to maintain a successful economy over the long term. A key component is focused investment by governments and the private sector in areas where we already have great strengths — many of which are related to our traditional energy and resource production. For instance, Canada can leverage its enormous low-carbon electricity advantage by further investing in hydro, wind and solar production, along with battery storage. We already have auto manufacturing skills that can be shifted to the rapidly growing electric vehicle sector, and there is vast potential for low-emission mining and agriculture. There are also opportunities in retrofitting existing structures, and in the creation of new technologies to reduce the carbon footprint of building materials, he noted. Governments need to focus on some of these potential winners and support them strongly, before it is too late, Meadowcroft said. In electric vehicles, for example, we’re in a critical period because manufacturers are already in the process of shifting to EV production. “We need active support for that. There is a window now for the next couple of years, but if we miss that window … that industry [in Canada] will wither.”

Getting new ideas to market Innovation and entrepreneurship will be key components in successfully shifting Canada’s economy. If the pandemic — and the

34 | DIRECTOR JOURNAL

Canada can leverage its enormous low-carbon electricity advantage by further investing in hydro, wind and solar production, along with battery storage, says Carleton University’s James Meadowcroft.

les années qui viennent, on verra à l’échelle mondiale un accent marqué sur le carbone, dit-elle, de sorte qu’« il faudra une solution carboneutre pour tout ». James Meadowcroft, professeur de politiques publiques à l’Université Carleton d’Ottawa, affirme qu’il est logique que les gouvernements qui veulent stimuler leur économie dans la période post-pandémie investissent dans des secteurs où il existe un potentiel de croissance substantielle. En choisissant soigneusement des options gagnantes, le Canada peut stimuler sa performance économique tout en réduisant ses émissions de carbone et en combattant les changements climatiques. Il fut un temps où l’industrie pétrolière et gazière était un secteur vital et en croissance pour le Canada, mais le monde a changé, dit-il. « Ça ne reviendra pas. … La poule aux œufs d’or est mal en point et nous ferions mieux de trouver d’autres moyens de nous enrichir. » Dans un rapport qu’il a publié sous le titre « Les voies vers le net-zéro », M. Meadowcroft propose certaines recommandations pour que le Canada devienne un leader dans les secteurs à faible intensité de carbone et énumère les raisons pour lesquelles cela est important si le pays désire maintenir une économie prospère à long terme. Un élément clé d’une telle stratégie consiste en un investissement ciblé, mené aussi bien par les gouvernements que le secteur privé, dans des domaines où nous avons de grandes forces – dont plusieurs sont liées à nos acquis traditionnels en énergie et en production de ressources. Par exemple, le Canada peut miser sur son immense avantage que représente l’électricité à faible émission de

PHOTOGRAPHY BYSHARISSA JOHNSON/UNSPLASH

The industry, over all, has been improving at meeting environmental challenges, corporate director Judith Athaide says, but ‘it has failed to communicate its story’ and that is a crucial deficiency. Dans l’ensemble, l’industrie a amélioré sa réponse aux défis environnementaux, affirme Judith Athaide, mais « elle a échoué à communiquer son histoire » et il s’agit là d’une lacune fondamentale.

ICD.CA | 35

remarkably swift development of Covid-19 vaccines — has taught us anything, said Yung Wu, CEO of the MaRS Discovery District in Toronto, it’s that technology and innovation, delivered quickly, are going to be essential as we move forward. The innovation economy, including tech startups and companies deploying those technologies, already makes up about 10 per cent of the economy, Wu said. But that sector is growing at three times the rate of any other traditional industry. Consequently, he said, “the future of Canada is clearly going to be based on the innovation economy.” The innovation economy includes a wide range of competitive entrepreneurial businesses ranging from clean technology, to life sciences, to advanced manufacturing, to agricultural technology. Clearly energy-related technology is going to be one of the most active and innovative, and that is a natural for Canada, which is already a global leader. “Nobody is going to turn off the oil and gas industry overnight,” Wu acknowledges, but there are enormous opportunities to transform and diversify away from traditional activities. “You look at the cluster of material scientists and geophysicists and chemical engineers and entrepreneurs in Alberta, and you can’t help but come away and say ‘Wow, that is such a talent pool,’” said Wu. “Talent is the flywheel that turns the innovation economy.” The time is ripe for Canada to “start playing offence” in this sector, he added, because of a growing global commitment to deal with climate change, helped along by the U.S. decision to return to the Paris climate agreement, and the widespread adoption of “net zero” carbon emission goals. The upward shift in carbon pricing will also result in many new financial instruments being made available, all of which will help shovel money toward innovation. Wu, who serves on several boards including that of the giant municipal workers’ pension fund OMERS, said a key area of strength for Canada’s future economy lies in life sciences — a sector he describes as a “clear winner” in the post-Covid-19 world. Canada has historically been a leader in this field — the discovery of insulin was among

36 | DIRECTOR JOURNAL

carbone en investissant davantage en production hydroélectrique, éolienne et solaire ainsi qu’en batteries de stockage.

Porter de nouvelles idées vers les marchés L’innovation et l’entrepreneuriat seront des éléments clés de la transition réussie de l’économie canadienne. Si la pandémie – et le développement remarquablement rapide de vaccins contre la Covid-19 – nous a appris quelque chose, affirme Yung Wu, chef de la direction de MaRS Discovery District de Toronto, c’est que la technologie et l’innovation livrées rapidement seront essentielles dans cette évolution. L’économie de l’innovation, y compris les entreprises en démarrage qui déploient ces technologies, représente déjà environ 10 pour cent de l’économie, souligne M. Wu. Mais le rythme de croissance de ce secteur est trois fois celui de l’industrie traditionnelle. En conséquence, dit-il, « l’avenir du Canada sera clairement fondé sur l’économie de l’innovation ». L’économie de l’innovation comprend un large éventail d’entreprises entrepreneuriales compétitives allant des technologies propres aux sciences de la vie en passant par la fabrication avancée et les technologies agricoles. Il est clair que les technologies énergétiques seront parmi les plus actives et innovatrices et que celles-ci sont évidentes pour le Canada qui est déjà un joueur mondial dans ces domaines. « Personne ne va mettre fin du jour au lendemain à l’industrie pétrolière et gazière », reconnaît M. Wu. Mais il existe d’énormes occasions de la transformer et de la diversifier. Le moment est venu pour le Canada de « passer à l’offensive » dans ce secteur, ajoute-t-il, en raison d’un engagement mondial croissant à faire face aux changements climatiques, soutenu par la décision des États-Unis d’adhérer à nouveau à l’Accord de Paris sur le climat et l’adoption généralisée d’objectifs « net-zéro » d’émission de carbone. La hausse soutenue du prix du carbone entraînera aussi la disponibilité de plusieurs nouveaux outils financiers qui contribueront tous à diriger des fonds vers l’innovation. Il n’en demeure pas moins que si le Canada souhaite que l’ensemble de ses efforts d’innovation pave la voie à un avenir économique prospère, un fossé crucial doit être comblé : le lien entre les innovateurs et les adoptants qui portent ces découvertes vers les marchés. Le rôle le plus approprié pour les gouvernements qui désirent combler ce fossé, selon M. Wu, consiste à offrir de solides mesures incitatives aux entreprises du secteur privé pour qu’elles

‘Creativity turns into economic discovery, and that creates a competitive advantage for Canada.’ « La créativité se transforme en découverte économique et le phénomène suscite un avantage concurrentiel pour le Canada. »

our innovations — but we are still a centre of expertise in many areas, such as applying artificial intelligence and data techniques to drug development. Still, if Canada wants all its innovative efforts to feed into a successful economic future, there remains a crucial gap that must be filled: the link between the innovators and the adopters who bring these discoveries to market. The best role for governments that want to bridge this gap, Wu said, is to put in place strong incentives for private sector businesses to adopt innovative technologies. There are many tax incentives, for example, that would prompt “capital to get off the sidelines and write cheques,” he said. If innovations can be scaled up and marketed by Canadian companies, it will create an economic engine for Canada with a strong head of steam. Indeed, if the traditional corporate world can get cozy with the inventors, Canada’s long-term economic future could be very bright, Wu insists. “When you connect the world of ICD members to the world of the startups and the innovators and the entrepreneurs, that’s where synthesis happens. Creativity turns into economic discovery, and that creates a competitive advantage for Canada.” DJ RICHARD BLACKWELL is a former business reporter at the Financial Post and The Globe and Mail. Over three decades, he covered many sectors, including technology, financial services, media and energy.

Leaders in: Executive Compensation Corporate Performance Measurement Shareholder Engagement Board Effectiveness For 15 years, Hugessen Consulting has supported directors and owners to make the right decisions across an extensive range of business situations. Especially in these turbulent times of COVID-19, count on our people to apply their deep experience, rigorous financial analysis, and sound judgement to develop tailored advice on executive compensation and related governance matters.

Independent insight. For confident decisions. hugessen.com

Toronto | Calgary | Montreal

adoptent des technologies innovatrices. Si ces innovations peuvent être adaptées et mises en marché par des entreprises canadiennes, cela s’avérera un puissant moteur économique pour le Canada. En effet, si l’univers des entreprises traditionnelles peut trouver une zone de confort avec les inventeurs, l’avenir économique à long terme du Canada pourrait être très brillant, assure M. Wu. « Quand on réunit le monde des membres de l’IAS et celui des entreprises en démarrage, des innovateurs et des entrepreneurs, c’est à ce moment que la synthèse se produit. La créativité se transforme en découverte économique et le phénomène suscite un avantage concurrentiel pour le Canada. » DJ RICHARD BLACKWELL est un ancien journaliste économique au Financial Post et au Globe and Mail. Au cours de trois décennies, il a couvert de multiples secteurs, dont la technologie, les services financiers, les médias et l’énergie.

Stepping up in a fastchanging world LAST YEAR, the Institute of Corporate Directors teamed up with executive search firm Odgers Berndtson as a supporting partner on an initiative, led by Tony Gaffney, in collaboration with 30 of Canada’s leading board chairs about emerging governance priorities. Areas of concern ranged from the impact of new technologies and perspectives on ESG, to heightened political polarization and the elements of good governance. In a wide-ranging discussion with ICD chief executive officer Rahul Bhardwaj, Tony Gaffney, a board member of the Altus Group and previously President’s Choice Bank, discusses the findings of his report: “High Performance in the Boardroom – an exclusive report on contemporary best practices of high-performing boards in a time of accelerating change.”

38 | DIRECTOR JOURNAL

ILLUSTRATION BY SOLARSEVEN/ISTOCK

RAHUL BHARDWAJ IN CONVERSATION WITH TONY GAFFNEY

ICD.CA | 39

Rahul Bhardwaj

Tony Gaffney

The beauty of the report is that the chairs don’t agree on every point, which is wonderful because it reflects the diversity of the chairs that contributed. —Tony Gaffney

What motivated you to conduct and compile this research? Tony Gaffney

Driven by curiosity to understand what high-performance in the boardroom looks like today, saw an opportunity to contribute to the corporate director community and a personal sense of obligation to engage in continuous improvement. The fact that 90 per cent of the chairs invited to participate embraced the purpose of the initiative and were eager to participate confirmed we were on to something worthwhile. I was also inspired by great mentors including the late Tom O’Neill, Katie Taylor, Barb Stymiest along with the 30 leading chairs who shared their time, insights and experience with such great enthusiasm. As we speak, directors are in the middle of the game. And it’s easy for things to look messy when you’re deep in the trenches. I put it to you that way because my sense is that you believe – and the other directors believe – there’s something fundamentally different in

40 | DIRECTOR JOURNAL

the acceleration and uncertainty taking place right now. Can you share with us what’s different?

The general view expressed by the chairs is that most of the change and uncertainty emanates from accelerating change in the business environment – as opposed to the pace of change in governance. For example, chairs are keeping an eye out for the type of market disruption that’s happening. Customer preferences and needs are evolving rapidly. New competitors are coming in to play. And for some, opportunities are opening up in areas beyond their core business. There was consensus also that while Covid-19 has clearly been a catalyst to accelerating change, the practices identified, while important pre-Covid-19, are now essential. Chairs spoke about the increasing number and complexity of issues that they now have to deal with. Many highlighted technology as a major catalyst for accelerated change. They also highlighted the critical importance today for boards to be clear on their purpose and values and in turn to embrace and genuinely commit to being accountable to their broad stakeholder community. Many referred to other emerging issues such as climate change,

sustainability, and topics under the broader umbrella of ESG – particularly diversity, equity and inclusion. How should boards respond to all of this?

The beauty of the report is that the chairs don’t agree on every point, which is wonderful because it reflects the diversity of the chairs that contributed. They represent mid-sized companies to large corporations from a cross section of industries. In addition, they’re operating in different parts of the country and some are operating globally. So, for each of them, change meant something a little different. The discussions were a good reminder that every board and company is unique. This diversity of thought and perspective is part of the value of their insights. As you bring the lens of the directors to this conversation, I’d like to know what you think are the key lessons stemming from your conversations?

It was striking to see how consistently the chairs emphasized the following principals: the importance of having the right chair, board and CEO for the time. Clarity of purpose and values as foundational to

ILLUSTRATION BY RAWPIXEL/ISTOCK

Rahul Bhardwaj

ICD.CA | 41

understanding the stakeholders to which the company is accountable, informing strategy and shaping culture. The linkage between strategy and risk and importance of reviewing both frequently. Healthy board and management working relationships. Agility in today’s rapidly changing environment. Getting talent right at all levels, including from the chair through to workforce. How DE&I generates greater diversity of thought, innovation and performance. Focus on the right issues and overall board effectiveness. Did you get a sense that there was consensus – this might be too strong a word – but some sort of unifying vision around what it means to have high-performing boards?

Yes, that it increases the probability that the company will be successful, create value and meet or exceed the expectations of its stakeholders.

Now, turning to technology, there’s been a clear shifting of the gears here. The digital revolution has been under way for the last 10 to 15 years. The banks, for example, have been all over digital since the mid-2000s, finding improved customer experiences. When you look at the entirety of emerging technology, whether it’s mobility, cloud data or artificial intelligence and robotics, how does this all come together?

The chairs spoke at length about the opportunities, risks and governance of emerging technologies. In terms of governing innovation and technology, they particularly emphasized the importance of considering how emerging technologies can create new strategic opportunities, differentiated customer experiences and new business models. Several highlighted that implementation often requires major capital investment, business transformation and

How can we ensure corporate Canada doesn’t regress on gender equity? COVID-19 threatens to reverse decades of progress in female representation on corporate boards and leadership teams. Leaders need to act to prevent lasting economic damage – and to seize opportunities for genuine change in diversity, equity and inclusion. We encourage corporate, investment and policy leaders to join us in protecting gains and assuring future progress. Read our report: Women, COVID-19 and the threat to gender equity and diversity

Comment pouvons-nous nous assurer que les entreprises canadiennes ne régressent pas en matière d’équité entre les sexes? La COVID-19 menace de renverser des décennies de progrès en matière de représentation des femmes au sein des conseils d’administration et des équipes de direction. Les dirigeants doivent prendre des mesures pour éviter tout dommage économique à long terme et saisir les occasions pour apporter des changements réels en matière de diversité, d’égalité et d’inclusion. Nous encourageons les dirigeants de sociétés, les gestionnaires de placement et les décideurs à se joindre à nous pour protéger les gains réalisés et assurer les futures avancées. Exemplaire supplémentaire pour la traduction française. Lisez notre rapport : Les femmes, la COVID-19 et la menace en matière de diversité et d’équité entre les sexes

adoption and should be governed with that in mind from the outset. Others were anxious as to whether enough investment was being made, in the right areas - such as evolving how the company interacts with customers and suppliers. All agreed that talent and workforce disruption needed to be central on the agenda. Is there anything you’d like to go deeper on?

I would say the following. Every board is different. Achieving high performance is a journey. It starts with having conversations about the topics highlighted by the chairs. The report is rich in insights from the thirty-plus leading board chairs who contributed. Those who have read the report confirm what we had hoped would be the case, that it enables readers to weigh the differing viewpoints, draw on those insights most relevant to their organizations and return to it as their circumstances evolve. DJ

ICD DIRECTORS ON THE MOVE

DIRECTORS ON THE MOVE The ICD would like to congratulate the following members on their recent board appointments Government

Rani Dhaliwal

DIRECTOR INVEST ALBERTA CORP.

DIRECTOR ONTARIO FINANCING AUTHORITY

Tabatha Bull

Tamara Vrooman

Janet Riopel, ICD.D

DIRECTOR INDEPENDENT ELECTRICITY SYSTEM OPERATOR

Janet Cloud, ICD.D DIRECTOR REAL ESTATE COUNCIL OF ONTARIO

Andrée Savoie, ICD.D DIRECTOR OPPORTUNITIES NEW BRUNSWICK

Dexter John, ICD.D DIRECTOR FINANCIAL SERVICES REGULATORY AUTHORITY OF ONTARIO

Marcia Nelson, ICD.D DIRECTOR GREEN LINE

Bharat Mahajan DIRECTOR GREEN LINE

Ian Bourne, F.ICD, ICD.D DIRECTOR GREEN LINE

Fred Cummings, ICD.D DIRECTOR GREEN LINE

Patricia McLeod, ICD.D

CHAIR CANADA INFRASTRUCTURE BANK

Retail & Consumer Products

Renah Persofsky, ICD.D DIRECTOR HYDROFARM LLC.

Nicolas Gaudreau, ICD.D DIRECTOR NOVEXCO INC.

Metals & Mining Marilyn Spink

DIRECTOR AVALON ADVANCED MATERIALS INC.

Alan Hair, ICD.D DIRECTOR GOLD ROYALTY CORP.

Kulvir Singh Gill, ICD.D

Not-for-Profit

Financial

DIRECTOR HEARTLAND HOUSING FOUNDATION

DIRECTOR VANCOUVER CITY SAVINGS CREDIT UNION

Allison Radford, ICD.D

Technology

Mike Derbyshire, ICD.D

DIRECTOR EDMONTON HUMANE SOCIETY

Carolann Harding ICD.D

Joan Hertz, ICD.D

DIRECTOR BRANE CAPITAL

Philippe Savoy, ICD.D

ADVISORY BOARD MEMBER ALEXA TRANSLATIONS

CHAIR INSURANCE COUNCIL OF BRITISH COLUMBIA

Richmond Graham, ICD.D

TRUSTEE ARTIS REAL ESTATE INVESTMENT TRUST

DIRECTOR MARATHON GOLD CORP.

Sharon Ludlow, ICD.D

Dave Revell, ICD.D

Real Estate

Cathy Bennett, ICD.D

DIRECTOR NIAGARA HEALTH

DIRECTOR MONTREAL MUSEUM OF FINE ARTS

Darlene Hyde, ICD.D

Lis Wigmore

Aida Tammer, ICD.D TRUSTEE ARTIS REAL ESTATE INVESTMENT TRUST

DIRECTOR ORGANIGRAM HOLDINGS INC.

Gervan Fearon, ICD.D

Caroline Codsi, IAS.A

Insurance

Marni Wieshofer, ICD.D

DIRECTOR FLUENCE TECHNOLOGIES

DIRECTOR BREATHE LIFE

CHAIR SWIM DRINK FISH CANADA

Medical & Health Care

John Jussup, ICD.D

CHAIR FOOD FIRST NL

DIRECTOR CANADA NICKEL CO.

CHAIR CAN-CAL RESOURCES LTD.

Patrick Nangle, ICD.D

Caroline Codsi, IAS.A

Pradeep Sood DIRECTOR TRUTRACE TECHNOLOGIES INC.

Manufacturing

Peter D. Watson, ICD.D CHAIR BIONEUTRA GLOBAL CORP.

Energy & Power

Robert Patzelt, ICD.D. CHAIR PACE ATLANTIC CIC

Transportation CHAIR EDMONTON REGIONAL AIRPORTS AUTHORITY

Education

Janet Cloud, ICD.D GOVERNOR UNIVERSITY OF TORONTO

Yuri Fulmer, ICD.D ADVISOR LITTLE KITCHEN ACADEMY

Biopharmaceutical Rochelle Stenzler, ICD.D

DIRECTOR APPILI THERAPEUTICS INC.

Lorne Gertner, ICD.D DIRECTOR GOODCAP WELLNESS INC.

Rochelle Stenzler, ICD.D CHAIR GOODCAP WELLNESS INC.

DIRECTOR GREEN LINE

Send your board appointment publication requests to: Sheldon Mahabir, Director of Member Engagement, smahabir@icd.ca ICD.CA | 43

44 | DIRECTOR JOURNAL

RECOMMENDED READING

Less efficiency, more creativity In his latest book, When More is Not Better: Overcoming America’s Obsession with Economic Efficiency, Roger Martin argues that companies’ short-term focus is hurting innovation and amplifying inequality. The strategy guru shared some of his views in a recent conversation with Director Journal’s Virginia Galt

‘Most efficiencyobsessed organizations declare activities associated with innovation to be “wasteful” and speculative,”’ says author Roger Martin.

ROGER MARTIN, a provocative business thinker, strategic management advisor and former dean of the University of Toronto’s Rotman School of Management, argues that the efficiency that once made the U.S economy the envy of the world has gone into overdrive, further enriching the top 1 per cent at the expense of a shrinking middle class. Lean business models designed for the short-term benefit of shareholders have displaced workers, “ground down wages,” and stripped organizations of resilience. The coronavirus pandemic has made this glaringly apparent (woefully inadequate staffing levels of nurses, shortages of essential personal protective equipment, and supply chain disruptions serve as just a few examples). Faith in democratic capitalism has been eroded, Martin

says. We must stop treating the economy as a machine that can be fine-tuned for maximum efficiency, he argues, and shift toward viewing it as a complex, adaptive system in which we seek a fundamental balance of efficiency with resilience. Martin’s book couldn’t be more timely, Jonathan Haidt, professor of ethical leadership at New York University’s Stern School of Business, writes in the foreword. “One of the most promising reactions to this global catastrophe has been the growing realization that it offers us a once-in-a-lifetime chance to change things – big things that seemed immutable just a few months ago. ... Martin’s book is the most essential book I know of for building a better post-pandemic America, with important lessons for all Western democracies.”

ICD.CA | 45

In addition to providing oversight, a board should be creating an environment in which management ‘serves customers well in a way that makes the world a better place,’ says strategy expert Roger Martin.

How much has the relentless drive for greater efficiency hampered the ability of organizations to innovate and prosper under rapidly changing circumstances?

It would have hampered them greatly under normal circumstances. But it is worse still under the current craziness. Essentially, most efficiency-obsessed organizations declare activities associated with innovation to be “wasteful” and “speculative.” And the reason is that it is hard to plan and quantify progress on innovation. So, innovation-oriented activities get screened out in cost-reduction efforts. Senior executives complain all the time about the pace of effectiveness of innovation in their organizations, but they don’t see the role of their actions in stifling innovation. Is “Build Back Better” more than just a slogan? Are you seeing signs in the corpo-

46 | DIRECTOR JOURNAL

rate world, especially now, that might lead to lasting shifts and new thinking on business practices and social responsibility?

called out for such things as increasing dividends after imposing mass layoffs. How influential is public opinion at this point?

When it comes to “Build Back Better” in the political domain, I just don’t know. For businesses, I think it is already happening. So, I think the thesis that this [pandemic] has been a spur to fundamental rethinking is correct. That would be the case in the companies with which I interact. [They’re] upping the ante on racial diversity, upping the ante on gender diversity, upping the ante on sustainability.

When you read the book, you’ll see that I am sentimentally favourably disposed towards the world of business, so I am always chagrined big time when I see corporate executives behaving blatantly anti-socially. I feel that consumers and employees are waking up to a greater extent, they are flexing their muscles to a greater extent. If consumers won’t buy your stuff because you have a bad track record on [environmental] sustainability, for instance, you will change, even if you are bloody-minded and don’t give a damn about the planet.

There is certainly greater scrutiny of corporate behaviour. There are countless examples of manufacturers that have shifted production lines to make medical equipment and companies that have offered customers relief on payment schedules. At the same time, some companies have been

In 2019, the Business Roundtable issued a declaration committing the country’s top chief executive officers to leading their companies for the benefit of all

RECOMMENDED READING

stakeholders – customers, employees, suppliers, communities and shareholders. This is encouraging, you said in a recent online discussion with the Aspen Institute, but companies need the tools to implement those undertakings.

This book is an attempt to provide ways to do that. I would say to business leaders that elimination of slack is not being efficient. You can say that having no excess people is a good idea, until the next pandemic comes along. Establish multiple goals. Be like Southwest Airlines, where you say our goal is to be the lowest-cost airline with the highest customer satisfaction, the highest employee satisfaction and [at the same time] be the most profitable airline in America. Southwest has done all these things simultaneously. What that will do is make you more creative, and if you are more creative, you will have a strategy that’s harder to replicate. For a long time shareholder primacy was the guiding hand of business but that’s changing. In Canada, directors owe their duty to the corporation not only to the shareholder. How can boards enable management to think and act for the long term interests of the company and in the interests of stakeholders as well as shareholders?

I work almost exclusively with CEOs, and one thing I talk a lot about with clients is how to work with the board to get done what they need to get done. Boards give them stock-based compensation, and then they expect the CEOs to behave as if they didn’t have stock-based compensation. You get judged on what you did to maximize the share price and then the board asks: ‘Why are you cutting R & D? Why are you not building the company?’ There are lots of ways to increase share price, and the hardest one is to build the business and make it more profitable. The Covid-19 pandemic has highlighted more than ever the corporate role in addressing social issues. What’s the board’s role in transforming companies toward a broader set of goals, beyond maximizing efficiencies and stock prices?

Directors have a tough job. If you are going to be a useful board member, you just

simply have to believe that your job [in addition to oversight] is to create an environment in which management does the right thing and serves customers well in a way that makes the world a better place. Out of that, good things will flow. There’s quite a bit of soul-searching [on diversity] now. I think most companies can point to considerably greater success already in programs designed to advance women to the

highest levels of corporations and boards. For African-Americans, the progress is less clear. I do think that having a board that’s dramatically different than your client base is a dumb idea. DJ VIRGINIA GALT, a former business and education reporter for The Globe and Mail, covers legal, education and management issues for a number of publications.

ICD.CA | 47

WHO BENEFITS FROM ICD BOARD MEMBERSHIP?

WITH AN ICD BOARD MEMBERSHIP, YOUR BOARD GAINS ACCESS TO THE COLLECTIVE INTELLIGENCE AND SHARED WISDOM OF BOARDS OF DIRECTORS ACROSS CANADA DEVELOPMENT Member Education – ICD-Rotman DEP; Canada’s leading program for directors Committee Education – One day courses on board effectiveness and topical issues Board Education – Custom learning tailored to the unique challenges of your board Governance Portfolio – Board opportunities via the ICD Directors Register RESOURCES Digital Resource Centre – Providing information by topic/area of expertise BoardInfo – Customized governance research service Board Member Recruitment – Confidential and cost-effective searches Director Journal – Bi-monthly magazine featuring thought leadership editorials NETWORKING Expand your professional network through our 11 Chapters across Canada Gain insights and real-world perspectives through the ICD National Conference

LEARN MORE AT ICD.CA/BOARDMEMBERSHIP

POLICY PERSPECTIVE

A clear purpose

ILLUSTRATION BY AARON MCCONOMY

The pandemic is changing the role of the corporation in society

ONE OF THE MOST STRIKING EFFECTS OF The efficiency with which many compaCovid-19 has been the redefinition of the nies have met the needs of society in this role of private enterprise in society. We pandemic invites a discussion of the evohave been conditioned to believe that, in lution of the corporation’s role. Companies times of crisis, governments will have the are not subsets of government (though they capability and resources to mitigate and depend on governments for permission to ultimately solve the problem. And there’s operate), nor do they exist to meet the bano doubt the federal government acted sic needs of citizens (though they are now quickly to get more than $200-billion out expected to address the interests of a broad the door in the first eight months of the array of stakeholders). One thing, however, pandemic, to help businesses and indiseems certain: Companies – particularly viduals coping with the economic fallout listed entities – are not simply contractual of the pandemic. But in myriad ways, it agreements among shareholders that exist is private enterprise that has stepped up solely to make a profit for their owners. Matthew Fortier where governments could not. The challenge for board directors will be ICD’s Vice-President Except for in a few jurisdictions around to accept an evolved role for their compaof Policy the world (including in Atlantic Canada, ny in society and govern accordingly. The where the “bubble” has proved enormousSupreme Court of Canada’s 2008 ruling in ly effective), government responses to the the case of BCE Inc. versus its bondholders, practical matters of managing a pandemwhich states that boards owe their duty to ic have often been slow and confusing. In the corporation and not only to shareholdCanada, our federated system, which in ers, helps by providing a legal context. From normal times is an enormous strength, has been an obstacle to now on, directors will need to work with management to develop a co-ordination. There are outstanding elected and public servants in clear and shared understanding of why their company exists for the our country whose efforts have been hampered by a federal-probenefit of their stakeholders. vincial system designed when Rupert’s Land was still a thing. Although this seems daunting, it is feasible. Clear purpose for a The solutions to this pandemic scream for agility, which is not corporation – a rationale for its very existence – provides a contypically a strength of government. By contrast, companies in the text for setting strategy. Boards that ask, “Does this strategy help us private sector rely on strategic and operational agility to respond fulfill our purpose?” will have a clearer understanding of how the to market demand. Successful ones are able to react, organize and CEO and management team intend to lead, as well as a means to mobilize people and resources. more easily validate major capital-allocation proposals. We’ve seen this in our retail grocery and food-supply-chain secThere will always be an important role for government in helptors where modifications last year permitted fresh food and suping to steer society through major challenges. But other, nimbler plies to be replenished and delivered. We’ve seen it in e-commerce units of organization, such as companies, will fill critical gaps. and logistics, which scaled up at a remarkable pace to meet unAs societies sharpen their focus on the effects corporations have precedented demand. And we’ve seen it most dramatically in the on employment, privacy, equity and environmental stewardship, pharmaceutical sector, where vaccines were created, safely tested, defining their role in society is a clear need. There may be no betmanufactured and delivered around the world in the span of one ter time than now as corporations help to lead communities and fully completed NHL season. countries through the pandemic. DJ

ICD.CA | 49

PARTING SHOT

Lighter days

PHOTOGRAPHY BY MINK MINGLE/UNSPLASH

Six months ago, health officials warned Canadians to expect a long, dark winter defined by rising rates of indoor transmission of Covid-19, amid extended lockdowns that would increase social isolation, anxiety and depression. Some 10,000 Covid deaths later – not to mention immeasurable collateral losses – Canadians emerged from the darkness on March 20 to welcome a new season along with the accelerating roll out of vaccines from coast to coast. DJ

50 | DIRECTOR JOURNAL

CONNECTING BOARDS WITH EXPERIENCED DIRECTOR CANDIDATES

n

n

n

n

ICD members have substantial governance experience and leadership credentials to offer prospective boards Update your profile to showcase your qualifications and enhance your visibility in board searches Search and apply for open board roles, create personalized alerts and benefit from board career guidance Post your board director roles to ICD’s vast member community across Canada

LEARN MORE AT ICD.CA/DIRECTORSREGISTER

Building the resilient organization What five traits of resilience should boards understand and oversee to help organizations thrive?

Learn more in our latest report www.deloitte.com/resilience2021

© Deloitte LLP and affiliated entities.

Institute of Corporate Directors Institut de administrateurs de sociétés 2701-250 Yonge St., Toronto, Ontario M5B 2L7

40047045