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2019 & 2020 Sustainable ElectricityTM Annual Report Electricity Canada

Letter from the Public Advisory Panel

November 13, 2020 Andrew Hall, Chair, Electricity Canada Board Committee on Sustainability Re: Public Advisory Panel’s Annual Letter

The members of the Sustainable ElectricityTM Program's Public Advisory Panel are pleased to submit the 2020 Annual Letter of Advice to the Electricity Canada Board Committee on Sustainability and the Board of Directors regarding your members’ sustainability performance during the 2019 reporting year.

This has been an extraordinary year. We recognize that the COVID-19 pandemic has put incredible pressure on member companies as an essential service and that electricity sector workers have been on the front lines keeping Canadians safe and our communities running. As a result of the pandemic, member companies were not able to provide 2019 data to the Electricity Canada and thus we do not have the same data-driven basis for our letter and recommendations. Nevertheless, the Advisory Panel felt it was important to provide a letter recognizing your achievements and putting forward our recommendations based on world events this past year. We look forward to returning to a more data-driven approach next year.

1. GHG Emissions

The electricity sector has reduced its GHG emissions by almost 50% over the past 20 years, and emissions in the sector continue to trend downwards. These reductions are particularly important as we see emissions in other sectors, such as oil and gas and transportation, continue to rise. We urge Electricity Canada members to remain committed to keeping carbon emissions down even as demand for electricity rises and as certain assets reach the end of their useful lives. To this end, Electricity Canada’s Board Committee on Sustainability in 2019 introduced a new objective that members establish company-level carbon inventories to better track the industry’s carbon footprint. We look forward to seeing Electricity Canada members make progress on this objective.

Recommendation 1: Member companies, if they haven’t done so already, should establish company-level carbon inventories to better track the industry’s carbon footprint. 2. Climate Risk, Adaptation & Resiliency

Last year we recommended that Electricity Canada members should establish real and credible objectives and/or targets to adapt and be more resilient. We were pleased to see Electricity Canada act on this recommendation and, through its Board Committee on Sustainability in 2019, establish an objective on climate change adaptation. As adverse weather events like heat waves, droughts, floods, and wildfires are becoming increasingly severe, Electricity Canada members must do even more to both reduce emissions and to adapt to climate change. In the face of the increasingly obvious threat of climate change and the urgency for action, we strongly recommend that Electricity Canada make such adaptation plans and carbon inventories mandatory for all Electricity Canada members going forward.

Recommendation 2: Electricity Canada should make adaptation plans and carbon inventories mandatory for all of its members going forward.

2019 & 2020 Sustainable ElectricityTM Annual Report Electricity Canada

3. Banking and Financial Markets and ESG/Climate Risk

This year in the financial sector, we saw an increased focus on sustainability and ESG related issues. It became clear this year that there was more capital getting allocated to projects at a cheaper price. There have been major companies embracing investments that make commitments to the principles of sustainability. Some notable examples include Blackrock and Brookfield, both having made significant commitments to investing in this area. Some key issues that are getting focus in the financial markets are not only lending to “Activity Based” activities buts also an increased focus on “Behavioural Based” activities. A lot of work has been done in the Canadian banking sector to assist in developing a North American version of the European taxonomy standards.

All that said, this increased focus among financial stakeholders will financially benefit members who focus on further refining and developing their sustainability practices. Further, as commercial banks, institutional investors, and other members of the financial community increasingly recognize the risk climate change poses to the economy, members should consider the implications of climate-related risks and opportunities in relation to their own business. To this end, we recommend that members work towards identifying and disclosing climate information in accordance with the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD) recommendations, which are quickly becoming the global standard for climate.

Recommendation 3: Member companies should work towards identifying and disclosing climate information in accordance with the Financial Stability Board’s TCFD recommendations. 4. Diversity, Equity & Inclusion

This past year has been marked by social movements that challenge injustice and seek to empower systemically disenfranchised people, both in Canada and beyond. Anyone involved in workforce management has felt the impact of movements like Idle No More, #MeToo and Black Lives Matter. We see that many Electricity Canada members have acknowledged the work that needs to be done and support the values of Diversity Equity and Inclusion (DEI). Many of the Electricity Canada members, and Electricity Canada itself, have signed on to Equal by 30 and EHRC’s Leadership Accord on Gender Diversity (which itself includes a benchmarking exercise, the collection of metrics and an evaluation of diversity initiatives). However, despite good intentions, the challenges of inequity remain and the representation of women, Indigenous peoples, youth, and visible minorities, among other groups, is far lower than it should be.

The panel strongly recommends that members prioritize, embed, and broaden their DEI initiatives to create work environments and organizational cultures that are supportive of diverse talent. One emerging opportunity is that diverse groups of young people are excited about careers that contribute to the energy transition. Electricity Canada members should harness this momentum to work to diversify their staff and opportunities for innovation. This will require organizations to establish clear metrics, related to both hiring and retention, to measure progress over time and create accountability – elevating DEI to the same status as other business priorities such as productivity and safety.

Recommendation 4: Member companies should prioritize, embed, and broaden their DEI initiatives to create work environments and organizational cultures that are supportive of diverse talent and establish clear metrics related to both hiring and retention. In addition, there should be accountability by senior leaders to track progress.

2019 & 2020 Sustainable ElectricityTM Annual Report Electricity Canada

Letter from the Public Advisory Panel

5. Indigenous Reconciliation

Canada’s employers must include a commitment to increasing Indigenous employment and business opportunities in Canada’s energy transition. This will support Indigenous economic participation and improve Indigenous energy autonomy through involvement in the planning, execution and maintenance of any infrastructure projects. The three things cited most frequently by Indigenous populations for lower workforce participation rates are: lack of available jobs; lack of education and training; and, lack of prior work experience. In order to invest effectively, it’s important that any strategy starts by engaging local communities to understand which skills are needed to support that transition and respond to this by ensuring that training is made available so that Indigenous employees have opportunities for advancement. Electricity Canada members should be striving to work with Indigenous peoples at all levels, from recruitment, retention, and advancement of entry-level staff with the goal of achieving Indigenous representation at the executive and board levels. Electricity Canada members should also be striving to allocate contracts to qualified Indigenous businesses. Electricity Canada members should monitor and evaluate progress to share best practices and success.

Recommendation 5: Electricity Canada members should strive to work with Indigenous peoples at all levels, from recruitment, retention, and advancement of entry-level staff with the goal of achieving Indigenous representation at the executive and board levels and should monitor and evaluate progress toward this goal.

6. Biodiversity Loss

As we noted last year, declining biodiversity has reached crisis proportions with numerous reports released in the last few years pointing to massive die-offs and extinctions of species expected in the next decade and beyond. We acknowledged that member companies have made some progress but much more needs to be done at a time when biodiversity is under extreme pressure from a combination of habitat loss, extreme weather events and climate change more generally. We noted that many member companies have large land holdings and therefore have an excellent opportunity to make a positive contribution to Canada’s biodiversity. Electricity Canada and members should earnestly work on a comprehensive framework or guidance document for the industry to further protect and enhance biodiversity. Not a lot of progress was made on this issue in 2019 and so we recommend that biodiversity loss be made a higher priority for 2020.

Recommendation 6: Electricity Canada should work on a comprehensive framework or guidance document for the industry to further protect and enhance biodiversity, ultimately to be implemented by the members.

7. Electrification of Transportation, Buildings & Industry

The Government of Canada has committed to exceeding its 2030 climate targets and achieving Net-Zero emissions by 2050. Reaching these goals will require large-scale electrification of buildings, transportation, and industry. The electricity sector has a significant opportunity to help decarbonize these other sectors. We were pleased to see Electricity Canada partner with other industry associations to collectively address and push for electrification in summer, 2020. Even more recently, Electricity Canada and members released a “Call to Action” on meeting Canada’s 2050 decarbonization goals. This is a good first step; however, we hope/would like to see more defined targets/objectives/tactics for how Electricity Canada and its members intend to advance the country’s goal. Electricity Canada and its member companies can, and should, seize this opportunity to play a leadership role in setting Canada on a course to Net-Zero emissions by 2050. Particularly in the context of the coronavirus pandemic—where countries around the world are investing in a “clean recovery” and the Speech from the Throne emphasized opportunities in energy-efficient buildings, electric transportation, and zero-emission manufacturing – the electricity sector will play a foundational role in the trajectory of Canada’s future economic growth. We strongly recommend that both Electricity Canada and its member companies develop bold goals for the sector and see electrified transportation as a strategic place to start given the Federal government’s targets that all new car sales be zero-emission vehicles (ZEV) by 2040 (with interim sales goals of 10% by 2025 and 30% by 2030).

Recommendation 7: Electricity Canada and its member companies should develop bold goals for the sector relating to electrified transportation aligned with the Federal government’s targets.

2019 & 2020 Sustainable ElectricityTM Annual Report Electricity Canada

Letter from the Public Advisory Panel

8. Information Sharing and Collaboration

Last year, we requested the opportunity to draw on the expertise of some of the member companies’ staff to help us with our deliberations. We had that opportunity at our spring 2019 meeting and found it to be enlightening and useful in the development of this year’s letter. This is a practice we would recommend be normalized for the operation of the Panel going forward. Such a meeting unfortunately did not take place in 2020. We discussed this issue with Electricity Canada staff and Electricity Canada has committed to facilitating a virtual workshop for the Advisory Panel along these lines in the first quarter of 2021, with input from the panel on topics to be covered.

Recommendation 8: Electricity Canada should plan a virtual workshop for the advisory panel in Q1 of 2021 in the spirit of information sharing and collaboration. Conclusion

We know that this year has been unlike any other and that priorities have had to shift. However, the issues highlighted in this letter will continue to be important to the future of the sector as Canada embarks on its clean and more resilient economic recovery. We look forward to engaging on these issues in 2020 and beyond.

Sincerely,

Cara Clairman Chair, Public Advisory Panel