Corporate KnightsSAFETY NET P.18

Guaranteed minimum income explained FUTURE 40 P.35

Smaller corporate sustainability leaders TAX HAVENS P.56

The campaign to close loopholes

Building it right

The Magazine for C lean C apit ali sm

A paid insert to The Globe and Mail and The Washington Post

SPRING 2016 • Vol. 15. Issue 2 • $6.95

Spr ing 2016 • Corporate Knights • 5

MINIMUM INCOME FOR ALL p18

Proposals for a guaranteed minimum income have been gaining momentum over the past few years. What's all the fuss about?

HOMEGROWN SUCCESS STORY p24

Toronto-based Ecobee has evolved into one of the heavy hitters in the international smart thermostat market.

RESULTS FOR FUTURE 40 p35

In our third annual Future 40 Responsible Corporate Leaders in Canada ranking, a clear trend emerges: smaller companies are disclosing more.

TOP COMPANY PROFILE: HORIZON UTILITIES p38

Horizon Utilities leads the Future 40 by demonstrating long-term leadership regarding sustainable development.

SPOTLIGHT ON GREEN BUILDINGS IN CANADA p42

Corporate Knights assembled an expert panel to help construct a list of the top environmentally sustainable buildings in Canada.

GETTING DENSITY RIGHT p50

Canadian cities, big and small, are working to densify themselves in an attempt to build more liveable and sustainable communities. It’s far from a straightforward path.

FORTUNE 500 TAX LOOPHOLES p58

A new analysis from American non-profit groups Citizens for Tax Justice and the U.S. PIRG Education Fund digs into the use of offshore subsidiaries among Fortune 500 companies.

THE RISE OF TAX HAVENS p60

Economist and author Gabriel Zucman tells Corporate Knights why he was inspiredto write a book on the scourge of tax havens.

KNIGHT'S TALE p8

Editor-in-chief Jeremy Runnalls outlines why corporate taxation should be considered a funda-mental tenet of corporate social responsibility.

NEWS BRIEFS p11

Apple issues green bond, Venezuela hikes gas prices and U.S. investigates money laundering through real estate.

HOT AIR p65

The science involved in measuring rising global temperatures is complicated. That doesn't mean it's wrong.

HEROES AND ZEROS p72

Campbell begins voluntary GMO labelling, while big tech brands are tied to Congolese conflict cobalt. KNIGHT BITES p74

A fun melange of statistics about parking in America that you probably never considered all at once.

Co-op grids p20

Berlin is considering a proposal that would transform the municipal grid into a citizen-led co-operative. The Mitacs touch p40

This non-profit looking to bridge the gap between industry and academia on R&D.

Healthier buildings p48

Building healthier structures for their occupants is a cornerstone of green building design, but isn't talked about much.

Taxing business p56

A movement is afoot to put multinational tax avoidance on the international reform agenda.

Industrial revolutions p70

How energy, communication and transportation technologies are leading us towards the third industrial revolution.

FEATURES…

Table of contents SPRING 2016

Clean Capitalism An economic system in which prices incorporate social, economic and ecological benefits and costs, and people know the full impacts of their marketplace actions.

Photo by Don Erhardt | Cover by Hudson Christie

The Centre for Interactive Research on Sustainability, Universityof British Columbia, is one of the medallists in our Green Buildings Review p.42

Spr ing 2016 • Corporate Knights • 35

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Leo Burnett, 175 Bloor Street East, North Tower, 12th Floor, Toronto, ON M4W 3R9 416.925.5997

PRE

PRE

SS

Soaring to new heights. We didn’t use it to fly a kite. Or spend an afternoon at the beach with the family. But we did recognize the potential of wind as a source of renewable energy. That’s why we invest in renewable energy that helps generate enough electricity to power more than 750,000 homes. When our energy meets the energy from the wind, harnessing the future happens.

S:7.5”

S:9.5”

T:8.25”

T:10.875”

B:8.75”

B:11.25”

2016 FUTURE

40

RESPONSIBLE LEADERS IN CANADA RANKING An analysis of which medium-sized enterprises in Canada stack up best when it comes to sustainability performance By CK Staff

gets companies with revenues of $2 billion or more and at least 2,000 employees. But start-ing in 2014, we also began to rank Canadian companies that fall under that threshold in a separate ranking known as the Future 40.

Over these past three years, we’ve observed a dramatic increase in transparency and disclo-sure practices at many leading medium-sized Canadian enterprises. This trend is particularly pronounced when it comes to resource produc-tivity indicators.

This year, 90 per cent of companies on the Future 40 disclosed their energy consumption compared to 78 per cent in 2014. An impres-sive 90 per cent reported their carbon emis-sions versus 82 per cent in 2014.

The improvement is even more recogniz-able when it comes to the water and waste

Most of the oxygen in the corporate sus-tainability space tends to be sucked up

by the largest companies in the marketplace. To a certain extent this makes sense, as they have the greatest individual impact, face sizeable levels of public scrutiny and have substantial resources to devote towards efforts like expand-ing corporate social responsibility disclosure practices and auditing their supply chains.

This also has its drawbacks, as it takes the focus off not-so-large companies. A business wasting electricity due to a poorly insulated office leads to negative consequences no mat-ter the size – increased costs, wasted energy and an expansion of its carbon footprint.

Corporate Knights continues to focus on the big corporate fish through our annual Best 50 Corporate Citizens in Canada, which tar-

Our metr ics

ENERGY PRODUCTIV ITY $ Revenue per gigajoule of energy consumption

CARBON PRODUCTIV ITY $ Revenue per tonne of direct/indirect GHG emissions (scope 1 & 2 only)

WATER PRODUCTIV ITY $ Revenue per cubic metre of water used

WASTE PRODUCTIV ITY $ Revenue per tonne of waste produced net of waste recycled/reused

BOARD DIVERSITY Percentage of women who sit on company board

MANAGEMENT DIVERSITY Percentage of women who work in senior executive positions

CEO-TO-AVERAGE WORKER PAY How much more CEO gets paid, expressed as multiple compared to average worker

SUSTAINABIL ITY PAY L INK At least one sr. executive’s compensation tied to sustainability themed performance targets

GICS industry legendBanks | BanksCom Serv | Commercial Services & SuppliesChem | ChemicalsDiv Con | Diversified Consumer ServicesDiv Fin | Diversified Financial ServicesDiv Tel | Diversified TelecommunicationPower | Electric UtilitiesFood | Food ProductsMach | MachineryMedia | MediaMining | Metals & MiningPetro | Oil, Gas & Consumable FuelsP&F | Paper & Forest ProductsRE-Trust | Real Estate Investment TrustsRE-Man | Real Estate Management & DevelopmentTranspo | Transportation InfrastructureH20 Util | Water Utilities

36 • Corporate Knights • Spr ing 2016

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

YES

YES

YES

NO

YES

YES

YES

YES

YES

YES

YES

NO

NO

NO

NO

NO

NO

NO

YES

YES

CompanyRank

Horizon Holdings

GTAA

Export Development Canada (EDC)

Investissement Quebec

New Gold Inc

Manitoba Telecom Services Inc

Societe de transport de Montreal (STM)

University of Calgary

Vermilion Energy Inc

HudBay Minerals Inc

IAMGOLD

Port Metro Vancouver

Brookfield Global Integrated Solutions

London Hydro

Farm Credit Canada

Lundin Mining Corp

Teranga Gold Corp

Tembec Inc

Newalta Corp

Capstone Mining Corp

Power

Transpo

Div Fin

Div Fin

Mining

Div Tel

Transpo

Div Con

Petro

Mining

Mining

Transpo

RE-Man

Power

Banks

Mining

Mining

P&F

Com Serv

Mining

78.3%

17.2%

43.7%

60.7%

51.2%

55.3%

2.8%

56.3%

71.0%

16.8%

29.7%

95.5%

100.0%

69.8%

68.9%

55.4%

74.8%

71.6%

15.6%

50.7%

89.1%

38.0%

60.2%

100.0%

61.2%

75.0%

0.0%

6.3%

65.8%

25.5%

53.6%

0.0%

75.0%

75.0%

0.0%

89.0%

36.9%

0.0%

40.6%

70.7%

82.9%

44.0%

70.8%

59.0%

71.9%

65.0%

8.3%

56.3%

34.7%

57.0%

39.9%

97.9%

64.3%

69.2%

58.2%

61.1%

67.9%

82.5%

17.1%

34.6%

N/A

6

2

2

27

98

3

17

16

31

50

8

9

N/A

6

N/A

51

21

14

N/A

10.1%

4.4%

0.1%

N/A

21.8%

0.0%

0.0%

0.0%

23.5%

1.9%

26.1%

7.3%

1.5%

6.6%

0.0%

22.3%

4.8%

14.5%

0.1%

14.8%

20.0%

26.7%

8.3%

53.3%

11.0%

30.0%

40.0%

30.0%

11.1%

11.1%

0.0%

27.3%

0.0%

25.0%

33.3%

0.0%

14.3%

0.0%

7.7%

12.5%

55.6%

44.4%

22.2%

37.5%

11.1%

16.7%

41.7%

78.0%

20.0%

8.3%

16.7%

14.3%

18.2%

N/A

25.0%

40.0%

0.0%

13.0%

7.7%

23.1%

72.04%

65.37%

61.55%

57.01%

56.19%

54.00%

53.57%

52.16%

51.76%

50.96%

50.95%

50.08%

48.41%

48.05%

46.58%

45.31%

43.55%

42.82%

42.81%

42.72%

70.5%

70.7%

85.0%

75.0%

10.9%

71.4%

84.6%

6.3%

10.6%

22.6%

9.8%

87.5%

75.0%

59.0%

0.0%

36.4%

12.5%

0.0%

0.0%

31.4%

GICS

Ind

ustry

Ener

gy

Prod

uctiv

ity

Carb

on

Prod

uctiv

ity

Water

Pr

oduc

tivity

Waste

Pr

oduc

tivity

CEO t

o Avg

. Wo

rker

Pay

Taxe

sPa

id

Boar

d Di

vers

ity

Mana

geme

nt

Dive

rsity

Susta

inabil

ity

Pay L

ink?

Over

all

Scor

e

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

NO

YES

NO

YES

NO

YES

NO

YES

NO

NO

NO

NO

YES

NO

NO

NO

NO

NO

YES

NO

Saskatchewan Research Council

York University

Cogeco Communications Inc.

Nevsun Resources Ltd

Ivanhoe Cambridge

Enerplus Corp

Edmonton International Airport

Dundee Precious Metals Inc

AltaGas Ltd

Lucara Diamond Corp

Westport Innovations Inc

First Capital Realty Inc

Methanex Corp

Avalon Rare Metals Inc

Morguard Corp

AuRico Gold Inc

Pan American Silver Corp

EPCOR Utilities

SunOpta Inc

Primero Mining Corp

Com Serv

Div Con

Media

Mining

RE-Trust

Petro

Transpo

Mining

Petro

Mining

Mach

RE-Man

Chem

Mining

RE-Man

Mining

Mining

H20 Util

Food

Mining

27.7%

0.0%

3.9%

75.0%

43.1%

17.6%

17.3%

27.8%

15.3%

97.7%

29.5%

46.4%

0.0%

2.5%

8.4%

25.5%

37.6%

0.0%

0.0%

71.5%

0.0%

0.0%

0.0%

97.1%

64.2%

14.1%

15.0%

92.7%

0.0%

97.8%

73.4%

28.1%

0.0%

16.3%

95.8%

94.2%

89.2%

0.0%

100.0%

71.8%

19.7%

0.0%

9.1%

0.0%

0.0%

32.1%

0.0%

45.2%

11.9%

47.3%

54.2%

51.6%

16.3%

4.8%

19.8%

89.6%

49.4%

0.0%

36.9%

70.4%

3

5

44

N/A

N/A

18

6

N/A

35

N/A

N/A

104

N/A

3

N/A

N/A

82

11

N/A

150

0.0%

35.6%

8.5%

28.5%

12.4%

2.3%

0.0%

16.1%

2.1%

-9.5%

N/A

2.8%

6.9%

N/A

14.1%

N/A

34.5%

1.8%

13.9%

0.9%

28.6%

30.0%

25.0%

0.0%

15.4%

16.7%

33.3%

0.0%

11.1%

28.6%

11.1%

25.0%

25.0%

0.0%

0.0%

12.5%

0.0%

30.0%

18.2%

0.0%

25.0%

11.1%

27.0%

0.0%

31.3%

23.1%

25.0%

5.9%

33.1%

16.7%

20.0%

43.0%

33.3%

0.0%

0.0%

25.0%

0.0%

14.3%

25.0%

33.3%

42.04%

41.41%

41.12%

39.92%

39.51%

38.06%

37.71%

35.54%

34.85%

34.08%

33.92%

32.64%

32.17%

31.98%

31.96%

31.86%

30.60%

30.49%

29.27%

28.55%

0.0%

0.0%

100.0%

38.2%

77.5%

0.0%

0.0%

50.6%

96.7%

0.0%

0.0%

31.4%

0.0%

64.9%

40.3%

8.3%

17.2%

0.0%

0.0%

32.7%

THE 2016 FUTURE 40

Spr ing 2016 • Corporate Knights • 37

Advertisement

Greater Toronto Airports Authority, followed closely by Export Development Canada. Both companies have won the Future 40 ranking in previous years.

With a turnover rate of 22.5 per cent, a number of new companies also joined the list in 2016. These include the utilities London Hydro and EPCOR Utilities, as well as Edmonton In-ternational Airport and paper company Tembec.

There are several indicators in which smaller Canadian companies in the Future 40 outperform their larger peers on the Best 50 ranking, including maintaining a lower CEO to average worker pay ratio.

Elsewhere, however, smaller companies are struggling to keep up. Future 40 companies are failing to invest in the same percentages of research and development as their larger industry rivals.

Non-profit organizations like Mitacs are working to bridge this void by helping to build partnerships between academia and industry to spur further innovation, particularly among smaller enterprises (see p.40).

Once Ontario and Alberta implement their plans, 80 per cent of the country’s population will find itself under some form of carbon pricing. In addition, the federal government is signalling its interest in a national minimum on carbon pricing as a first of many steps towards reaching its aggres-sive post-Paris conference carbon reduction goals.

This presents both a threat and an oppor-tunity for Canada’s business community. These Future 40 companies are among the best posi-tioned to take advantage of it. K

Dig into the ranking at corporateknights.com

indicators. Corporations reporting water con-sumption jumped to 75 per cent, compared to 48 per cent two years prior; and 70 per cent reported how much waste they generated ver-sus 43 per cent in 2014.

What many medium-sized companies are beginning to realize is that sustainability is not an expensive luxury only available to the largest companies, but an integral part of stay-ing competitive in today’s marketplace.

This view is best exemplified by Horizon Utilities, the top company in this year’s Fu-ture 40 ranking (see p.38 for profile). “Many people have asked me over the years why we spend more money on sustainability mea-sures,” says Neil Freeman, VP, business devel-opment and corporate relations at Horizon.

“And my response is that we spend less than you. Measurement gives us increased mileage on what we do spend.”

Perhaps more notably, disclosure has re-mained strong in both the energy and mining sectors despite the challenges brought on by the current period of low commodity prices.

“It’s very encouraging to see companies in sec-tors facing strong fiscal headwinds deciding to maintain the scope of their sustainability reporting,” says Michael Yow, director of re-search at Corporate Knights.

Following Horizon in the ranking is the

A BUSINESS WASTING ELECTRICITY DUE TO A POORLY INSULATED OFFICE LEADS TO NEGATIVE CONSEQUENCES NO MATTER THE SIZE.

38 • Corporate Knights • Spr ing 2016

“It was at this point that we started asking how sustainable development practices could enhance how we serve customers,” explains Freeman.

Horizon became one of the few utilities in the country to institute an infill development strategy, working to encourage further densifi-cation of Hamilton and St. Catharines.

This was achieved by first moving to mini-mize business startup costs at brownfield prop-erties targeted for redevelopment by reducing connection fees. Horizon then created a da-tabase of the existing sites and the electricity assets that were already there so prospective buyers could maximize old equipment like transformers left over on the properties and cut costs even further.

“This is great news for the region and a shin-ing example of smart growth development,” exclaimed then-provincial transportation min-ister Glen Murray at the time. The project went on to earn a Brownie Award from the Cana-dian Urban Institute.

The company also turned its attention to maximizing energy conservation efforts among its customers. In 2011, Horizon applied to the Ontario Power Authority’s Conservation Fund to develop an energy-density mapping tool so it could specifically target conservation market-ing efforts to each building’s specifications.

“We then incented our conservation team with performance-driven metrics on both de-mand and energy conservation for our man-agement people,” says Freeman. “Get us the conservation and earn us an incentive cheque from the province at the same time because it makes us a stronger business and lowers costs for the customers.”

Because of this and other conservation ef-forts, Horizon was the only utility in Ontario with more than 60,000 customers to hit both its energy production and conservation targets as required under Ontario’s long-term energy plan.

Horizon is in the midst of a public debate over a potential merger with three other major utilities, which would create the second-largest electricity distributor in Ontario. With disclo-sure practices not as strong at the three other companies, it remains to be seen if Horizon will be able to maintain its position as a sus-tainability champion in the years ahead.

Freeman agrees that the other utilities have a way to go on disclosure, but points out that they have been showing initiative in other ar-eas like renewable energy. For example, Pow-erStream is the largest solar developer of any municipally owned utility in Ontario.

“What I can tell you is that the merger in-tegration philosophy is of highest common de-nominator and not the lowest,” says Freeman. K

Horizon Utilities had a legacy problem. An old power corridor was running

through the Twelve Mile Creek watershed in the Niagara Peninsula, an environmentally sen-sitive area peppered with walking and cycling trails. Even though it would never be built today, the power lines were there and needed to stay in place for reliability reasons. Horizon was facing heavy criticism every time the foli-age was cut back to protect the lines as it re-duced the natural beauty of the area.

Instead of ignoring local concerns, Horizon decided to partner with the City of St. Catha-rines, the Niagara Peninsula Conservation Au-thority and Ontario Power Generation on a pilot project to replace the existing fauna with 5,000 native wild flowers, grasses and shrubs. This allowed for improved biodiversity in the area while also cutting the cost of maintenance going forward.

“So it was responsible stewardship of a dif-ficult problem that made sense both for the

community and from a cost perspective,” says Neil Freeman, VP, business development and corporate relations at Horizon.

Horizon is best known for its competitive electricity rates and strong customer service, earning top marks in the 2015 UtilityPULSE Electrical Utility Customer Satisfaction Sur-vey. The municipally owned utility provides electricity for roughly 242,000 commercial and residential customers covering the cities of Hamilton and St. Catharines in Southern Ontario.

But it has also begun to gain recognition for the steady integration of sustainable development principles into its work over the past decade.

The first step involved measurement and transparency. In 2008, Horizon became the first utility in Ontario to begin following the Global Reporting Initiative sustainability dis-closure practices, while also revamping its an-nual report to give equal attention to social, environmental and economic considerations.

PEERING OVER THE HORIZONHorizon Utilities leads the Future 40 by demonstrating long-term leadership regarding sustainable development. By CK Staff

Illustration by Melanie Lambrick

40

Spr ing 2016 • Corporate Knights • 41

WE’RE ACHIEVING EXCELLENCE THROUGH SUSTAINABILITYOur company-wide focus on the social, environmental and economic outcomes of our practices informs the business decisions we make. As a result, Horizon Utilities was the first company in Canada to earn the Sustainable Electricity Company™ designation from the Canadian Electricity Association.

® Registered trademark of Horizon Holdings Inc.

Learn more at horizonutilities.com

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