ARCH Canadian Voices on the Role of Business in Society by global-canada

Canadian Voices on the Role of Business in Society

November 2021 1

Global Canada (http://Global-Canada.org) is a non-governmental organization committed to enhancing Canada’s positive global impact and identifying global best practices that assist Canada’s own challenges. In an increasingly multi-stakeholder world, Global Canada believes that the responsibility for global impact cannot rest with government alone. All stakeholders—including the private sector, universities, social entrepreneurs and philanthropists — have an important role to play.

Table of Contents INTRODUCTION............................................................................................................................ 4 Who Is This For?............................................................................................................................ 6 EXECUTIVE SUMMARY............................................................................................................... 7 LEADERSHIP PROFILES............................................................................................................. 12 CHAPTER 1: THE RELATIONSHIP BETWEEN SOCIETY AND BUSINESS MATTERS......................................................................................................... 14 1) The Status Quo is Not Sustainable................................................................................................... 15 i) Climate Change ................................................................................................................... 16 ii) Inequality and Inequity........................................................................................................... 17 iii) Lack of Trust and Social Cohesion......................................................................................... 18 iv) Canada’s Place in the World.................................................................................................. 19 v) Indigenous Reconciliation...................................................................................................... 19 2) Business is Critical to Solving Today’s Toughest Challenges............................................................. 20

CHAPTER 2: WHY BUSINESS LEADERS SHOULD CARE................................................. 23 1) The Fraying Relationship Between Society and Business................................................................. 23 2) Growing Criticisms of Capitalism...................................................................................................... 24 3) Impact on Their Business................................................................................................................. 26 4) Personal Legacy.............................................................................................................................. 28

CHAPTER 3: THE BUSINESS CASE......................................................................................... 29 1) Achieving Profit through Purpose..................................................................................................... 29 2) Creating and Sharing Value with Stakeholders.................................................................................. 30 i) Communities and Civil Society.............................................................................................. 31 ii) Employees............................................................................................................................ 32 iii) Customers............................................................................................................................ 34 iv) Investors............................................................................................................................... 36 v) Governments........................................................................................................................ 37 vi) Media.................................................................................................................................... 37 3) Future Prepping............................................................................................................................... 38 i) Generational Shifts................................................................................................................ 39 ii) The Importance of Preparing for the Future Today................................................................. 39

CHAPTER 4: THE PURPOSE OF BUSINESS TODAY........................................................... 41 1) The Need for Purpose...................................................................................................................... 41 2) The Evolution of the Purpose of the Corporation.............................................................................. 43 3) The Purpose of the Canadian Corporation....................................................................................... 45 4) Stakeholder Approach in Theory, Shareholder Primacy in Practice................................................... 46

CHAPTER 5: ENHANCING THE FUTURE ROLE OF BUSINESS IN SOCIETY................ 48 1) The Evolving Relationship Between Society and Business................................................................ 48 2) Increasing Focus on All Stakeholders............................................................................................... 49 3) Longer-Term Thinking...................................................................................................................... 50 4) Sharing Value Created..................................................................................................................... 52 5) Creating and Measuring Societal Value: The Role of the Sustainable Development Goals................. 53 6) Leading on the Big Issues................................................................................................................ 57

CONCLUSION: THE IMPERATIVE TO ACT............................................................................. 63 1) 2) 3) 4) 5)

Every Canadian business should have a clear purpose beyond making money............................... 64 Canadian businesses should align their key metrics to the United Nation’s Sustainable Development Goals........................................................................................................................ 64 The Canadian business community should collectively stand up to be counted: making concrete, time-bound commitments that are refined every three years................................ 64 Canadian business leaders should help develop and actively participate in structured national cooperation and collaboration ........................................................................................... 65 Canadian businesses should take a greater leadership role in global initiatives and organizations linking profit with purpose.......................................................................................... 65

ACKNOWLEDGEMENTS............................................................................................................. 66 APPENDIX 1: SURVEY PARTICIPANTS’ BIOGRAPHIES..................................................... 67 APPENDIX 2: METHODOLOGY & BUSINESS INTERVIEW GUIDE................................... 73 APPENDIX 3: SOCIETY AND BUSINESS INITIATIVES AROUND THE GLOBE.............. 75 APPENDIX 4: THE SUSTAINABLE DEVELOPMENT GOALS (UNITED NATIONS SDGS)........................................................................................................... 77 APPENDIX 5: REFERENCES AND FOOTNOTES................................................................... 78

Introduction “If commercial endeavour isn’t for the betterment of people, which is increasingly tied to the betterment of the planet, then what is it for?” – Tamara Vrooman, President and CEO of the Vancouver International Airport Authority and Chair of the Canada Infrastructure Bank

Even though capitalism has done much to improve the quality of life of billions around the world, there is growing pressure for capitalism to be modernized so that profits, capital providers, and owners are not the overwhelming focus. Profits are evidently vital to a business. Without them, a business cannot re-invest to innovate, improve productivity, scale-up operations, grow and strengthen its workforce, provide dividends to investors, or frankly, survive. Moreover, through profits, businesses can pay taxes to help governments provide crucial services to citizens and to support important causes in their respective communities and throughout the world. Furthermore, shareholder returns play a role in enhancing economic prosperity and, in some cases, societal well-being. For instance, returns to pension plans help millions of Canadians retire with more financial security. Nevertheless, momentum is building for the purpose of the corporation to be reformed to something broader than profits for shareholders. The societal expectation is growing that businesses should link profit with purpose, creating and sharing value with stakeholders with the aim to overcome the challenges facing society and the planet. There were discussions pre-pandemic around the globe regarding how to modernize capitalism and strengthen the role of business in society. Amid efforts to overcome the challenges caused by COVID-19, the conversations about modernizing capitalism and strengthening the relationship between society and business have intensified. Many predict these conversations and movements will accelerate post-pandemic. One of the most publicized efforts as of late is the 2019 declaration of the U.S. Business Roundtable, which stated: “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.”1 The statement sought to redefine the purpose of a corporation in the United States to be more considerate of the interest of other stakeholders instead of perpetuating a fixation on profits for shareholders. This business leaders’ statement came exactly a hundred years after the Michigan Supreme Court in 1919 declared that “a business corporation is organized and carried on primarily for the profit of the stockholders” and almost exactly half a century after Milton Friedman’s article in the New York Times making the case for shareholder primacy2. Perhaps even more notable, the statement was released about two decades after the same organization, the U.S. Business Roundtable, stated, “The paramount duty of management and of boards of directors is to the corporation’s stockholders… The interests of other stakeholders are relevant as a derivative of the duty to stockholders.”3 Evidently, the statement itself demonstrates that there is immense pressure for things to be different. 4

Around the world, initiatives are re-examining the purpose of businesses (Please see Appendix 3 for examples of other initiatives). In the United States, the Aspen Institute’s Business and Society Program and, in the United Kingdom, the British Academy’s Future of the Corporation are attempting to spark discussion centered on the question: ‘What is the role of business in society moving forward?’4 This report gives voice to Canadian views on the role of business in society. Almost 100 Canadian business leaders and thought leaders express in their words why it is crucial for business leaders to engage in the conversation, take action to link profit with purpose, and help to tackle the global challenges facing this generation by creating and sharing value with stakeholders. Although the report reflects the voices of Canadian business and thought leaders, responsibility for the conclusions and recommendations remains with the authors alone.

The following topics are covered within this report: Chapter 1- The Relationship Between Society and Business Matters This section argues that the conversation regarding the everchanging role of business in society is a pivotal one. Chapter 2 –Business Leaders Should Care This section explores how the business landscape may be changing across the country, from the relationship between society and business to capitalism itself. Chapter 3 – The Business Case This section submits there are many opportunities for business leaders, as well as many risks involved in how they adjust to today’s new and enhanced societal expectations of business. Chapter 4 - The Purpose of Business Today This section illustrates how the role of business has evolved over the years into something that is not just about shareholders and profits - and is increasingly more about linking profit with purpose to create and share value with stakeholders. Chapter 5 – Enhancing the Future Role of Business in Society This section identifies elements of the traditional role of business that are changing and attempts to lay out which principles and concepts the modernized role of business in society will espouse. Conclusion – The Imperative to Act This final section proposes five concrete recommendations to enhance the positive role of Canadian business in society going forward.

It is clear that the ecosystem in which businesses operate is not going to be the same moving forward. There will be higher expectations. Stakeholders will judge businesses ever more critically due in large part to attitudinal changes spurred by generational shifts. The result: the role of business in society will evolve into something much different than what it has been for the last few decades.

Who Is This For? The insights and opinions from Survey Participants in this report will be valuable for a wide array of people. Fellow business leaders, in Canada and around the globe, can use this report to learn about different perspectives from their Canadian colleagues as part of their own thinking on the evolving role of business in society. Academia as well as university students interested in business, public policy, or law, can use this report to gain perspective on where things currently stand and to contemplate what they want the future of business in Canada and around the world to become. The hope is that this report can help business associations, not-for-profits, and policymakers better understand what kind of support and regulatory changes could be considered to strengthen the role of business in society. This report is also for the general public. Everyone has a role to play in influencing the relationship between society and business through their choices such as who they choose to work for, vote for, and purchase from.

Executive Summary Chapter 1: The Relationship Between Society and Business Matters 1) The Status Quo is Not Sustainable Beyond the enormous and acute global challenge of the COVID-19 pandemic, the Survey Participants – including the business leaders - identify climate change, inequality and inequity, a lack of trust and social cohesion, Canada’s place in the world, and Indigenous reconciliation as the largest challenges facing Canada and the world. To tackle these societal challenges, the role of business in society must evolve.

2) Business is Critical to Solving Today’s Toughest Challenges There is a need for a holistic and concerted effort by all institutions – including businesses - to solve the complex and consequential societal challenges confronting the world today. Businesses need to link profit with purpose by creating and sharing value with stakeholders which includes helping to tackle the immense challenges facing the world.

Chapter 2: Why Business Leaders Should Care 1) The Fraying Relationship Between Society and Business The relationship between society and business is strained and has degraded since the financial crisis of 2008. The relationship risks deteriorating even further if business leaders do not help tackle the world’s most important challenges through linking profit with purpose by creating and sharing value with stakeholders.

2) Growing Criticisms of Capitalism Although there are benefits produced by capitalism, there is a desire held by many that capitalism be reformed to help address societal challenges and focus more on a variety of stakeholders. It is felt that if capitalism is not proactively modernized with the assistance of the business community, this modernization will be thrust upon the private sector.

3) Impact on Their Business The challenges facing this generation will have a direct or indirect impact on the profitability and financial sustainability of businesses in the long term. Consequently, by increasing efforts to help tackle societal challenges, business leaders are helping mitigate external risks to their business.

4) Personal Legacy Concentrating on the legacy of a business leader is a poignant argument to utilize when trying to convince the business community to be purpose-driven and stakeholder-centric. 7

Chapter 3: Making the Business Case 1) Linking Profit with Purpose There are economic and financial reasons why business leaders should lead their organizations to help combat societal challenges through the linking of profit with purpose by creating and sharing value with its stakeholders. Although it is not easy for business leaders, from a long-term risk-return perspective a business should take this approach.

2) Creating and Sharing Value with Stakeholders There is a strong business case for a stakeholder-centric model as there is a link between the impact a business has on its stakeholders and the long-term performance of the organization. Although stakeholder engagement is very much a part of the Canadian business model, there is increasing pressure from stakeholders for businesses to be more purpose-driven and stakeholder-centric. The adequacy with which a business responds to this mounting pressure will determine if it will be rewarded or penalized by stakeholders. i) Communities and Civil Society: The extent to which a business positively contributes to the communities in which it operates will have an impact on its ability to obtain and maintain its social license as well as determine the level of support it will have if and when it goes through difficult times. ii) Employees: Business leaders are feeling increasing pressure from employees to be more purpose-driven and stakeholder-centric. The level to which organizations are seen to be stepping up will influence their employee recruitment, retention, and productivity. iii) Customers: Although business leaders feel customers are not yet applying as much pressure as they could be, there is a sense that this will change as younger generations take up more of the consumer markets. Customer attraction and loyalty will increasingly be correlated with the efforts to be purpose-driven and stakeholder-centric. iv) Investors: Stakeholder-centric business leaders believe that pressure from investors to become more purpose-driven and stakeholder-centric is growing; however, the overwhelming emphasis of investors is still largely on achieving short-term financial results. v) Governments: There is risk of governmental interference and regulatory intervention if businesses are not seen to be purpose-driven and stakeholder-centric. vi) Media: If a business is not perceived to be purpose-driven and stakeholder-centric, it is exposing itself to reputational risk.

3) Future Prepping Even those who believe there is currently limited pressure on businesses to address global challenges through the linkage of profit with purpose still acknowledge that change is on the horizon for the role of business in society.

i) Generational Shifts The pressure on businesses to be purpose-driven and stakeholder-centric will increase as the demographics of the workforce, consumer market, and electorate change.

ii) The Importance of Preparing for the Future Today Given the looming changes to the role of business in society, there are benefits for a business to ‘future prep’. The collective impact of the business community ‘future prepping’ would be to bring the immense benefit of businesses significantly enhancing their efforts to help overcome global challenges.

Chapter 4: The Purpose of Business Today 1) The Need for Purpose Although some are of the opinion that businesses should only have economic or financial purposes, many are of the view that it is pivotal for a business to reflect, define, and implement a purpose that helps tackle societal challenges through creating and sharing value with stakeholders. The model in which a business continues to fixate on profit generation for capital providers whilst implementing corporate social responsibility and/or philanthropic practices does not equate to being a purpose-driven organization.

2) The Evolution of the Purpose of the Corporation The dynamics and elements of the conversation with respect to the ‘purpose of the corporation’ are relevant to the larger discussion concerning the evolving role of business in society. The Milton Friedman school of thought is that the purpose of a corporation is to generate profits and returns for shareholders. Since the financial crisis, there has been a slow but sure shift aided by the courts, governments, business, and other institutions away from shareholder primacy, and towards a more purpose-driven, stakeholder-centric approach.

3) The Purpose of the Canadian Corporation Due to clarifications and reinforcement stemming from the courts and governments, the interest of different stakeholders may be considered on the same level as shareholders by decision-makers leading Canadian corporations.

4) Stakeholder Approach in Theory, Shareholder Primacy in Practice Shareholder primacy still reigns in the corporate world – including in Canada. The financial structure in place and the culture it embodies lead to corporate leaders adhering to a shareholder primacy approach. Nonetheless, pressure will continue to mount for: the business community to embrace linking profit with purpose; business leaders to prioritize stakeholders’ interests and long-term considerations; businesses to create and share value that benefits society; and business leaders to speak out on social matters.

Chapter 5: Enhancing the Future Role of Business in Society 1) The Evolving Relationship Between Society and Business The role of business in society is shifting away from being about generating profits for capital providers to helping tackle the societal challenges through linking profit with purpose by creating and sharing value with stakeholders.

2) Increasing Focus on All Stakeholders There is significant pressure on business leaders to meet their respective organization’s financial targets which are often set quarterly. Even if generating profits for capital providers will continue to be a pivotal part of doing business, the future role of business in society will include delivering value and providing benefit to society more broadly.

3) Longer-Term Thinking Shareholders and other capital providers can exert immense pressure on business leaders to focus on profit maximization which in turn can place more emphasis on the short-term. ‘Short-termism’ is one of the most important challenges faced by business leaders seeking to lead purpose-driven and stakeholder-centric organizations. Nevertheless, there will be pressure for business leaders to focus more on the long-term.

4) Sharing Value Created It is not easy for business leaders to focus on their respective stakeholders’ well-being when they are consistently bombarded with short-term pressures regarding profit maximization. Nonetheless, there will be increasing pressure on businesses to share the value they create with their stakeholders.

5) Creating and Measuring Societal Value: The Role of the Sustainable Development Goals The United Nation’s Sustainable Development Goals provide an important, internationally developed, logical method to communicate what a business is doing to contribute to broader societal goals. However, there is not yet a high degree of engagement on the UN SDGs amongst the Canadian business community.

6) Leading on the Big Issues Despite the long-standing practice of business leaders staying out of the public discourse, to truly be a purpose-driven business that is stakeholder-centric, the organization’s leaders will need to voice their concerns, suggestions, and ideas on substantial societal issues on the public stage. i) Speaking Out on Social Issues: It is not easy for business leaders to speak out on social issues and injustices on account of potential backlash from stakeholders. Business leaders will, nevertheless, increasingly be expected to use their positions of influence to publicly speak out on societal matters. ii) Encouraging Other Business Leaders to Act: Peer groups will be needed to offer support to business leaders going through the journey of transforming their businesses into purpose-driven organizations. Peer pressure will also be needed to encourage business leaders to step up, which includes using an organization’s sphere of influence to enable change. Many believe it would be a demonstration of leadership to other businesses in the country and around the globe if business leaders signed a Canadian version of the U.S. Business Roundtable statement of 2019 which would be substantive and supported in action and follow-up.

Conclusion: The Imperative to Act With an increased economic focus as countries emerge from the COVID-19 pandemic, there will be a temptation for business leaders to revert to the old focus of profit generation and shareholders. Nevertheless, Canadian business leaders agree that there is still an imperative to act. The business community must linking profit with purpose by creating and sharing value with stakeholders with the goal of helping to tackle societal challenges if it hopes to repair and strengthen the relationship between society and business. These five recommendations are submitted to provide concrete ways in which Canadian business leaders and thought leaders can advance linking profit with purpose while strengthening the relationship between society and business: 1. Every Canadian business should have a clear purpose beyond making money 2. Canadian businesses should align their key metrics with the United Nation’s Sustainable Development Goals 3. The Canadian business community should collectively stand up to be counted: making concrete, time-bound commitments that are refined every three years 4. Canadian business leaders should help develop and actively participate in structured national cooperation and collaboration 5. Canadian businesses should take a greater leadership role in global initiatives and organizations linking profit with purpose

Leadership Profiles In total, 90 interviews were conducted to inform this report. The Survey Participants represent a diverse set of leaders across the business, non-profit, and academic fields from all Canadian provinces and one territory. Please see Appendix 1 for a profile of all interviewees. Please see Appendix 2 for a full description of the methodology and Interview Guide. At times, this report will distinguish between ‘Business Leaders’ and ‘Accelerators’ to illustrate some differences and similarities in views and opinions of the two groups.

Business Leaders: These leaders serve in senior roles within businesses. They are most often leaders from private and public for-profit businesses across Canada along with some co-operatives, credit unions, and not-for-profit organizations. Of the Survey Participants, 66% are identified as being in the Business Leaders group.

Accelerators: These leaders serve in organizations or positions which can help businesses and the business community, in general, accelerate their transition from the status quo to a world in which businesses increasingly link profit with purpose. They are often leaders from non-governmental organizations, professional services firms, government agencies, academia, and labour unions. Of the Survey Participants, 34% are deemed to be in the Accelerators group.

Figure 1: Survey Participants’ titles breakdown

Figure 2: Survey Participants’ regional breakdown

The Survey Participants from the business community include CEOs, presidents, vice-presidents, chairs of boards of directors, and board directors. The Survey Participants represent different types of businesses namely public, private, co-ops, credit unions, start-ups, B Corps, and small and large businesses alike. The Survey Participants stem from different industries such as energy, financial services, mining, entertainment, health care, information technology and more. Efforts were made to secure interviews with a diverse set of Canadians to ensure that an effective mix of experiences, backgrounds, and viewpoints would later inform the report. The majority of Survey Participants are based in Ontario (42%) and Quebec (20%). 17% of Survey Participants are based in British Columbia and the Territories, 14% from the Prairies and 7% from Atlantic Canada.

Figure 3: Survey Participants’ gender breakdown

Efforts were made to have diversity among the types of businesses and organizations that were to participate in the interview process. More than half of all Survey Participants represent either privately held businesses (37%) or publicly traded businesses (22%). The remainder of the Survey Participants represented non-governmental organizations (22%), universities (10%), co-ops or credit unions (7%), or governmental agencies (3%). The title of CEO was the most common among Survey Participants with 40% of all interviews being conducted with a CEO. Of the Survey Participants, 37% identify as female while approximately 15% of the Survey Participants represent racialized groups. All interviews were held on a not-for-attribution basis to allow for a maximum of frankness. All attributed quotes were subsequently explicitly approved by the interviewee. 13

Chapter 1: The Relationship Between Society and Business Matters “It’s not that often that we have so many big issues that come on the table at the same time.” – Michael Sabia, former CEO Caisse de dépôt et placement du Québec

Figure 4: Weighted word cloud representing Survey Participant answers to the question “What are the most pressing challenges in the world?”

Survey Participants - Business Leaders and Accelerators alike - expressed deep concerns about the state of the world. The COVID-19 pandemic is currently an acute and enormous global challenge. Beyond this, Survey Participants highlight the overarching importance of the challenges of climate change, inequality and inequity, lack of trust and social cohesion, Canada’s deteriorating place in the world, and Indigenous reconciliation. Survey Participants agree that business has an essential role to play in addressing these issues. An argument brought forward by some Survey Participants is that the significance and complexities of global challenges call for a concerted effort by all institutions to address them, including businesses. Another argument frequently expressed is that businesses have played a substantial role in creating these challenges - or at the very least exacerbating them - and, consequently, should support the efforts to combat them. Possibly one of the strongest arguments submitted by some of the Survey Participants is that businesses are able to have a massive impact on the effectiveness of collective effort to overcome the most pressing challenges facing this generation.

1) The Status Quo is Not Sustainable “We have essentially mortgaged the future of the next generation already.” – Yung Wu, CEO of MaRS Discovery District There are immense and consequential challenges facing the globe. Many participants argued that that the current generation is not leaving a better world for the next generations. The first question Survey Participants were asked when interviewed was: “What are the most pressing challenges in the world?” Even though Survey Participants often name more than one challenge, there are clearly challenges that are more top of mind than others. With most interviews being done before the COVID-19 pandemic hit Canada, the most pressing challenges facing the world ranked by frequency of being named by the Survey Participants are climate change, inequality and inequity, a lack of trust and social cohesion, and Canada’s place in the world.

i. Climate Change “We live in a finite world with problems and it’s starting to be clear that we’re reaching the end of those resources, they’re not infinite as was initially thought.” – Monika Marcovici, Strategist at the Social Purpose Institute Climate change emerges as the number one challenge facing the globe in the opinions of the Survey Participants. Joel Solomon, Founding Partner of Renewal Funds remarks, “We’re beyond our current capacity as a species to think about and manage the whole in an effective way.” Climate change is named by 62% of the Survey Participants. On top of being the most frequently identified global challenge, Survey Participants often make a point to explicitly rank it the most significant challenge. Michael Sabia, former CEO of the Caisse de dépôt et placement du Québec (CDPQ) and current Deputy Minister of Finance for the Government of Canada (Michael Sabia was interviewed as the CEO of the CDPQ), sums up this sentiment by pointing out that there is “only one problem that is existential”. Both the Business Leaders and Accelerators groups identified climate change most often as a pressing global challenge.

Figure 5: Breakdown of how frequently Survey Participants named different challenges when asked “What is the most pressing challenge facing the globe?”

Figure 6: Breakdown of how frequently Business Leaders and Accelerators named different challenges when asked “What is the most pressing challenge facing the globe?”

ii. Inequality and Inequity “Right now I’d say [the biggest problem facing the globe is] the growing chasm between the rich and the poor.” – Jean La Rose, former CEO of APTN The challenge of inequality and inequity is brought forward by 50% of the Survey Participants as one of the most important challenges facing the world today - making it the challenge named the second most times by Survey Participants. The challenge of inequality and inequity encapsulates various terms used to describe different issues raised by the Survey Participants. The sentiment most of them seem to be trying to convey is the disparity of wealth, income, and opportunity between countries or within countries. Figure 7: List of terms used by Survey participants to describe various forms of inequalities and inequities 17

Inequality and inequity are often brought up by Survey Participants right after - almost in the same breath - as the challenge of climate change. Further, a good number of the Survey Participants explain they see the two challenges as being interrelated. These Survey Participants argue that global inequalities and inequities will worsen moving forward due to climate change while the world’s ability to fight climate change will be weakened by existing inequalities and inequities. It is quite similar to how inequalities and inequities have been worsened due to the COVID-19 pandemic while the response to COVID-19 is rendered more complicated due to inequalities and inequities5.

iii. Lack of Trust and Social Cohesion “It’s remarkable to me, in a world where we’ve become so interconnected, that we’ve grown so far apart.” – Walied Soliman, Canadian Chair of Norton Rose Fulbright “Lack of trust and social cohesion” encompasses different ways people expressed challenges with respect to mistrust within society and in institutions: lack of understanding of each other; geopolitical tension, risks, and uncertainty; polarization, isolation, and populism; and more. It is named the third most often as a top global challenge by Survey Participants. A version of lack of trust and social cohesion is named by 47% of the Survey Participants. The Survey participants describe this challenge as one being international in scope, but which also applies within Canada. Lisa Kimmel, Chair and CEO of Edelman’s Canadian and Latin American operations, points out that the Edelman Trust barometer shows that in all countries including Canada there has been a steady decline in trust in institutions. Louis Audet, Executive Chairperson of Cogeco Inc., is of the opinion that the lack of trust and social cohesion is an important problem, “We have become concerned that a significant percentage of the population is on the fringes of the social project. In society, when you have a big percentage protesting instead of participating, you have a Figure 8: List of terms used by Survey Participants to describe problem.” Sophie Brochu, President various challenges related to social cohesion and mistrust and CEO of Hydro Québec (Sophie Brochu was interviewed prior to being named CEO of Hydro Québec), affirms this challenge can have consequential negative impacts, “Canadians feel they no longer have control over their destinies.” She adds that the lack of trust and social cohesion can divide communities, “When the majority feels alone, the minority becomes a threat.” 18

Some Survey Participants linked the challenges of inequalities and inequities with the lack of trust and social cohesion. In their view, the inequality of opportunity and inequities in the treatment of individuals play an immense role in creating the current societal tension and environment of mistrust.

iv. Canada’s Place in the World “What is our long-term plan for prosperity for Canada?” – Chuck Magro, President & CEO of Nutrien The fourth most frequently named challenge by the Survey Participants is Canada’s place in the world. It is named by 20% of Survey Participants.

Figure 9: List of terms used by Survey Participants to describe various challenges related to Canada’s Place in the World

It is mentioned by some Survey Participants in the context of the perceived tension between the global powers of the United States and China and the impact it is having on Canada’s international standing. Other Survey Participants speak of this challenge in view of the fact that Canada - as a middle power which they argue has earned its level of influence over the last century through its relationships with key allies such as the United Kingdom and the United States may be fending for itself on the world stage moving forward.

Some of the Business Leaders raise concerns regarding Canada’s global competitiveness - especially when compared to its neighbour to the South. On this topic, Goldy Hyder, President and Chief Executive Officer of the Business Council of Canada notes, “We need more reliability and confidence in our regulatory regimes that encourage Canadian and foreign businesses to invest even more in Canada.”

v: Indigenous Reconciliation In a deeper dive, it becomes clear that a fifth challenge is brought forward quite frequently, but under the purview of the other four most frequently identified challenges. Several Survey Participants speak of ‘Indigenous reconciliation in Canada’ in their responses to the question with regards to the most pressing challenges facing the globe. It is mentioned by about one in ten Survey Participants. These interviews took place before Canadians were shaken by the finding of unmarked graves of Indigenous children at former residential schools by the Tk’emlúps te Secwépemc First Nation and the Cowessess First Nation. We expect Indigenous reconciliation would be an even higher priority for Survey Participants today. The challenge of Indigenous reconciliation is often brought up by Survey Participants as deeply intertwined with other challenges. 19

More effort to advance Indigenous reconciliation is seen as a necessity if Canada is to have any hope in effectively tackling inequalities, inequities, and systemic racism. On top of that, the lack of advancement of Indigenous reconciliation is argued to be contributing to the lack of trust and social cohesion in the country. Further, a few Survey Participants make the argument that Canada’s colonial past and lack of Indigenous reconciliation in the present will affect its ability to exert global influence on questions of human rights in the future. Moreover, one Accelerator brings forward the idea that by advancing Indigenous reconciliation, Canada would be better positioned to learn from the Indigenous knowledge of the lands and environment passed on from generation to generation which would assist in the fight against climate change. Business leaders have clearly identified pressing global challenges: the question then becomes: will they take action to help overcome them? Fortunately, the Survey Participants voice numerous arguments as to why business leaders should act.

2) Business is Critical to Solving Today’s Toughest Challenges “Global climate change is probably the toughest problem we’ve ever had to face, beyond any world war, because solutions are extremely complicated, they are global in nature and they call for cultural, economic, and political change and there’s no single jurisdiction that can solve it.” – Martin LeBlanc, co-founder and CEO of Caprion Biosciences Survey Participants point out that there is a need for a holistic and concerted effort to solve the global challenges facing this generation as they are complex and consequential. For these reasons, many Survey Participants argue there needs to be a full-court press in order to have a chance to overcome these challenges. The logic is clear: to tackle great complex challenges, the world will need to enact great holistic collaboration. Upkar Arora, CEO of Rally Assets, is of the opinion that “The problems we’re trying to solve cannot be solved by one party, alone.” Michael Trebilcock, Professor of Law and Economics at the University of Toronto, is of the same point of view, “The challenges we face are so daunting - which will have such an impact on the economy and employment - it’s up to people, governments, and corporations to mitigate the negative impact of these challenges.” There is rarely unanimity among the Survey Participants. Arguably the closest the Survey Participants come to reaching a unanimous consensus is on the fact that businesses need to play a role to combat climate change and reduce inequalities and inequities. This is a departure from the traditional view that it is the responsibility of governments to tackle societal challenges while businesses devote their efforts to generating wealth and innovation. Michael Sabia opines that the world cannot wait for governments to solve these problems and that everyone needs to step up, “This is more a thousand points of light than it is two silver bullets”. Lisa Kimmel declares, “Government alone can’t solve all of the ills of society.” Danny Murphy, the President of D.P. Murphy Inc., advocates for an approach in which governments and businesses collaborate, “Businesses and government need to work together more so than ever before for the betterment of society.”

Chris Coulter, the CEO of GlobeScan, admits the solutions to what he ranks to be the world’s greatest challenge – climate change - would ideally come from government, but that governments’ track records in leading the transition to sustainability are too “spotty”. Vic Huard, former Executive Vice President for Customer Experience and Stakeholder Relations for Federated Co-operatives Limited, affirms that it is not so much that the public has more trust in business; it just perceives business to be more competent than other groups namely governments. Either way, Marcelo Lu, President of BASF Canada, is of the view that “A huge opportunity exists for business to drive social change. We operate with agility and sense of urgency, which helps to meet social challenges that the public sector alone cannot meet.” Martin LeBlanc, for his part, observes that giants in their respective industries can have huge impacts. Marcelo Lu concurs with this principle, “Corporations play an important role in contributing to the well-being of communities in which we operate. If we continue doing the right things, and can also be seen to do the right things, we can move the needle.” Chris Coulter goes further and states it will have to be the big global businesses that step up to essentially ‘save the world’. Chris Coulter estimates 70-75% of global impact takes place through business. With the timeline science says humanity has to fix climate change, Chris Coulter suggests it will be up to “disruptive startups and radical incumbents” of the business community to act boldly and swiftly. Similarly, according to Suzanne Bergeron, President of Sodexo Canada, the challenge of inequality and inequity must be tackled by businesses or it will get worse, “If we don’t act, the gap will continue to grow because of us ignoring it and not addressing it. There may be more success, but only for a very small part of the population while it makes it a lot tougher for a large part of the population.” To the same effect, Scott Banda, CEO of Federated Co-operatives Limited, is of the opinion that the lack of trust and social cohesion is a challenge that needs to be addressed by businesses, “There is a lot of discomfort, a lot of uncertainty, some real, some not. People are looking for comfort somewhere in their lives, and business has an opportunity to restore that confidence, and in some cases, that’s happening and in other cases, it’s making the problem worse.” Several Survey Participants affirm that the business community has a vital role to play in the advancement of Indigenous reconciliation. Vicki Wallace-Godbout, an entrepreneur and lawyer from the Madawaska Maliseet First Nation outlines a number of ways in which business can help with Indigenous reconciliation. She advocates that businesses should: make significant efforts to be aware and informed about Indigenous reconciliation; train and hire Indigenous people as this will provide employment opportunities along with an implicit message that the business is more open to working with Indigenous people; work with Indigenous communities which starts with the need to understand the challenges and opportunities of the communities; and consult with Indigenous people which should include having more Indigenous people included in the decision making process of the business. A few Survey Participants argue that businesses need to do more to be positive contributors to society considering the challenges of climate change, inequalities, and inequities are the direct result of the current role of business in society and the way in which the global economic system is set up. Jerry Dias, National President of Unifor, believes this to be the case and states, “We’ve ended up in this predicament because of greed”. Brianna Brown, co-founder of Decade Impact Strategy, agrees but tries to see the glass as half full, “Businesses are the biggest contributor and represent the biggest opportunities to address these challenges.” 21

Marc-André Blanchard, Executive Vice-President and Head of CDPQ Global at the Caisse de dépôt et placement du Québec and former Canadian Ambassador and Permanent Representative to the United Nations in New York (Marc-André Blanchard was interviewed prior to his role with the CDPQ when he was a UN representative), argues businesses have helped create the circumstances where they are the only ones that can, “For 40 years, people in business have wanted fewer regulations, fewer taxes and have said government needs to stick to its core mandate. The results? Climate change and inequalities. Once you have fewer taxes as a government then businesses need to step up. We have decided to leave capital in the hands of businesses.” Cathy Glover, former Change-maker in Residence at Mount Royal University, is of the view that climate change is an outcome of values, beliefs, and actions. She adds that multiple systems must be disrupted to create change and different outcomes. Similarly, when asked to identify what are the largest challenges facing the globe, Peter Wrinch, CEO of Hollyhock, responds “I could just say climate change, but I think climate change is just a symptom of this disconnection [between business and society].” Darcy Riddell, an instructor in Simon Fraser’s University’s Social Innovation Certificate, forcefully conveys the point of view that the current role of business in society and the economic system are root causes of the challenge of climate change, “Unless work is happening in ways that also can affect cancerous underlying economic assumptions and incentives that are incompatible with planetary thriving, it’s not enough, given our moment in history. We can’t just continue to showcase the relatively small actions of a handful of leaders — I personally feel it’s not ethical to engage anymore in incremental change efforts with the business community.” Further, Kasha Huk, Country Manager of B Lab – Canada, laments that the economic system plays a role in producing disparities, “Not everyone is included in the way that the economy is set up.” Many Survey Participants hypothesize that the degradation in trust and social cohesion has been picking up steam in Western democracies on account of the financial crisis of 2008. Consequently, the lack of trust and social cohesion could be linked to the current role of business in society and the fact that it is - or is perceived by the public to be - exacerbating the challenges of climate change, inequalities, and inequities instead of helping address them. Sean Drygas, President of Bullfrog Power and Executive Vice President of Sustainability Solutions at Spark Power, observes, “business is seen as complicit in the challenges of climate change and inequality.” Chris Coulter acknowledges it will not be easy for business to be credible catalysts of change. He nevertheless believes it is possible, “Given the perniciously low levels of trust in businesses, the only way to build social capital is through bold, progressive moves that signal to stakeholders that companies can be a part of the future we all want and are critical to achieving it.” Shayna Bleeker, co-founder of and Partnerships Manager for 7 Generation Capital Corp, notes that it is probable that in order to convince business people to get on board with a new way of viewing the purpose of business, there is most likely a need to start with an economic argument. Dr. Marie Delorme, CEO of the Imagination Group of Companies, is of the same view, “Business cases that focus on altruism to the exclusion of financials will not capture the attention of decision-makers.” Thankfully, as the following pages note, Survey Participants voice many arguments as to why it is in the best interest of business leaders to instill a purpose within their organizations that will positively contribute to societal efforts to address societal challenges.

Chapter 2: Why Business Leaders Should Care “Corporate Canada has the power to help build a more inclusive future. We need to get closer to the problems society is facing and move to a model that prioritizes purpose versus just profit.” - Rola Dagher, Global Channel Chief at Dell Technologies and former President and CEO of Cisco Canada

If one agrees that everyone needs to play an enhanced role to overcome major global challenges, it by definition includes members of the business community. There is a moral obligation for business leaders to increase their contributions by using all levers at their disposal to combat climate change, address inequalities and inequities, strengthen social cohesion and societal trust, maintain and improve Canada’s place in the world, and advance Indigenous reconciliation. Keith McIntosh, CEO of PQA Testing, puts it quite simply, “People have an obligation to leave the world in a better place than they find it.” It is indeed the quasi-unanimous view among Survey Participants that businesses need to do more to help tackle societal challenges. Survey Participants provided four sets of reasons.

1) The Fraying Relationship Between Society and Business “I think there’s a growing distrust that the interests of business aren’t necessarily aligned with the interests of society.” – Max Koeune, the President and CEO of McCain Foods The vast majority of the Survey Participants are of the view that the relationship between society and business is strained. Yung Wu is of the opinion that the relationship has “not been built on trust.” Sophie Brochu does not mince words when describing the relationship, “Some business leaders are out of touch with society.” Louis Audet adds, “The relationship between business and society is generally not very good. Businesses are seen as exploiters. Leaders are seen as people who act only in their personal interests.” (It is worth noting that a small minority of Survey Participants feel the relationship between society and business is strong and has been going in a positive direction over the last few years.) It is the belief of a number of Survey Participants that the degradation of the relationship started with the financial crisis of 2008. André Beaulieu, Senior Vice President of BCE Inc. argues that the chasm has expanded over the last 10 years, “I think it’s gotten worse. I think some of it is on business, some of it is on politicians, and some of it is on the fact that people are upset, angry, and anxious.” Helen Antoniou, Executive Coach and Chair of the Board of Governors of Concordia University, points out that “the impact of the fraying relationship between business and society is the polarization of the discourse.” Indira Samarasekera, a member of the board of directors for Scotiabank, Magna International, TC Energy, and 23

Stelco, and Senior Advisor at Bennett Jones LLP, laments that there is such an abundance of misinformation and disinformation that citizens are unsure who to trust. She is of the view that this leaves society with non-rational discourse as there are no agreed-upon principles or facts. A notable number of the Survey Participants explain that they suspect this can lead to poor decision making on important topics such as the appropriate and desired role of business in society. Brianna Brown thinks that this same type of division is happening between businesses and their employees as well, “There’s a growing disconnect, not only between business and society in a broad sense, but also businesses and their employees when employees notice a wide gap between what the corporation is doing versus what they care about as an employee and as an individual”. Most Survey Participants agree that the reputation of industries as a whole and even the business community, in general, can be tarnished on account of a few ‘bad apples’ acting irresponsibly or selfishly. Some Survey Participants argue this is yet another reason business leaders should care deeply about strengthening the relationship between society and business, and they voice optimism that this represents an opportunity for businesses to do more, which can be beneficial to society and to a business’ bottom line. “Business creates jobs, wealth, and investment. That’s what we do. So, if people lose trust in us, what will they trust in?” – Louis Audet, Executive Chairperson of Cogeco Inc.

2) Growing Criticisms of Capitalism “I think the population broadly understands and believes that the capitalist system is a good one for the creation of wealth, and for economic development, but there’s increasing concerns about concentration, privacy, and income disparity.” – John Manley, the Chair of the Board at CAE The state and rules of the economic system in which a business operates will clearly have an impact on the economic and financial success of the said business. For this reason, it is paramount for business leaders to care about the conversation concerning the role of business in society as any outcomes stemming from the conversation will most likely have a profound impact on the way in which capitalism functions moving forward. A significant number of the Survey Participants point out the benefits produced by capitalism, namely the prosperity it has generated along with the human ingenuity and innovation it has unlocked. All the same, many of the Survey Participants acknowledge it has shortcomings in its current form. Tariq Fancy, a former Managing Director at BlackRock Investments, comments, “While much progress has been made in human development in recent years, the world still faces many large-scale challenges – ranging from climate change to the growing inequality of wealth and opportunity. And while capitalism has unlocked significant progress and prosperity, in recent years many have started to question a system whose side effects have put increasing strain on both people and planet.” The idea that capitalism needs to be modernized seems to be enjoying broad public support – even in the heart of the capitalist system. A poll conducted in May 2020 by JUST Capital and The Harris Poll in the United States concluded: “It’s clear the American people – across all demographics and political persuasions – want change. Our six years of polling has always supported this, but our latest survey results (…) are loud, clear, and urgent. Only 25% of Americans think capitalism is working for society today.” 24

According to most of the Survey Participants, it is no different in Canada as there is added pressure and expectations on Canadian businesses as well. Mark Little, President and CEO of Suncor Energy Inc., states, “I think there is some pressure. And I think some of it is just people view the existing system has failed so much.” The President of the Business Council of Alberta, Adam Legge, mentions there is recent data suggesting that a notable percentage of Canadians do not necessarily believe their lives will be better if business in the country does better. A recent research survey supports the view of many Survey Participants in that there is an appetite amongst Canadians to have capitalism reformed. It found that 55% of Canadians “believe capitalism should be reformed so that it is more inclusive, fairer and more sustainable” while 17% are of the view that capitalism should be replaced altogether.6 Some Survey Participants flat out suggest that capitalism needs to change. Peter Wrinch advocates change is necessary, “I don’t even think that business as usual is possible anymore. I think that the inequality that is so embedded in our business culture is no longer forgivable. And people aren’t willing to have it anymore.” Darcy Riddell is advocating for capitalism to be replaced altogether, “I feel like capitalism is not a sustainable solution on this planet.” Often, the defenders of the principles of capitalism point out how it rewards positive behaviours such as working hard, furthering one’s education and training, and taking calculated risks. Joel Solomon states these concepts may make more sense theoretically than they do practically, “We have built what sounds excellent on paper, which is to reward those who work hard and are the smartest, but we’re enabling extreme concentration of resources in the few, with no limits.” Quite a few Survey Participants warn there is some type of change coming. Some add that they worry it may be a change that drastically throws away capitalism instead of merely modernizing it. Tariq Fancy explains that there is “a growing public perception that there is only one version of capitalism – one that is rigged toward elites and corporations that benefit from monopolistic and rent-seeking activities, often leading to the conclusion that capitalism itself is the problem.” A noteworthy number of Survey Participants warn that if capitalism is not modernized by the business community willingly soon, it may have modernization thrust upon it. Mary Ellen Schaafsma, Director of the Social Purpose Institute, sounds the alarm that the current gap levels of wealth and inequality match the problems of the times societies saw great societal upheaval. Lloyd M. Segal, CEO of Repare Therapeutics, advises to take this possibility seriously, “History has shown us that when the income and wealth gap gets too big, the systems such as they are at the time fall apart.” The Right Honourable David Johnston, former Governor General of Canada, implores leaders to learn from the past, “The Roman Empire began to fall not simply when it extended supply lines too far, but when it needed to have watchmen to watch the watchmen. And when the inequalities of wealth, and therefore the power, became so great that they had inner rot.” Jean La Rose who is of the view that there is currently substantial disparity between the rich and the poor and that this disparity is being put on display during the COVID-19 pandemic points out, “Every time there have been major upheavals in the world, they happen when the people that have nothing to lose decided that they weren’t going to accept the status quo anymore. I’m seeing us drifting towards that.” Some of the Survey Participants point out that in some ways the world is seeing this upheaval commence with many of the world’s

significant social movements of late having at their core people who are fed up with systemic inequalities and inequities they face – the Survey Participants point to such movements as the protests in Hong Kong and Brazil, Occupy Wall Street, and Black Lives Matter. Meanwhile, some Survey Participants worry about a society’s ability to address the systemic issues with a given economic system. For instance, Vic Huard worries about, “The challenge of our current economic system in adjusting to address inequality.” Moreover, a great number of people across the globe are of the opinion that one of the impacts of the COVID-19 pandemic is the enhanced pressure to not only modernize capitalism but also accelerate the reform. A U.S based poll conducted in May 2020 by JUST Capital and The Harris Poll found that “85% of respondents believe that the coronavirus crisis exposed underlying structural inequalities in our society. It is undeniable that COVID-19 and its fallout, coupled with the nationwide protests spurred by the killing of George Floyd, are catalytic moments in U.S. history.” Lisa Kimmel affirms the same phenomenon is happening in Canada, “COVID-19 has really shed a spotlight on the systemic issues of social injustice and income inequality that exist in every country around the globe…60% of Canadian respondents said the pandemic actually made them realize just how big of a gap exists in our country between the rich and the working class and that something actually has to be done to more fairly distribute the country’s wealth and prosperity.” With the world in flux on account of the COVID-19 pandemic, there are considerable global uncertainties. However, one conclusion is clear: the voices demanding capitalism be modernized are getting louder.

3) Impact on Their Business “We can’t have healthy businesses without healthy communities.” – Scott Banda, CEO of Federated Co-operatives Limited Some Survey Participants argue that a challenge that is truly global will by its definition directly or indirectly impact all businesses. Thus, they are of the view that business leaders should care about and help to address the challenges facing this generation. Hélène V. Gagnon, Vice President of Public Affairs and Global Communications at CAE, warns that the businesses which do not look at the trends and societal movements such as the climate movement that brought one of the largest protests in Canadian history to Montreal will be in trouble, “When there are 150,000 people walking in the streets, it is starting to be a big deal. Global companies must care about the environment. Stakeholders are telling businesses that the environment is important to them.” Helen Antoniou warns that the divide between the “haves” and the “have-nots” appears to be increasing wider and if big business is perceived as deepening this wedge of inequality, the rest of civil society may grow restless. Keith Halliday, a Director at Boston Consulting Group, argues, “You can’t have a knowledge-based industry in Canada unless the public education system is well-funded and turning out good graduates, and you can’t get access to global talent, unless there’s enough social cohesion in the country that you can maintain an open immigration system. So, that just means, business has a broad interest in the success of society.” Louis Audet argues that business leaders should care about these challenges, “because when 26

people become unhappy, they make bad decisions and they vote for Donald Trump and for Brexit. I should care because we need harmonious societies built on lasting democracies where people make rational choices.” A few Survey Participants from the Business Leaders group argue that Canada’s geo-political influence, brand, and competitiveness is deteriorating and that this degradation of Canada’s place in the world is influencing the success of Canadian businesses internationally. Similarly, some Survey Participants underline how the lack of Indigenous reconciliation in Canada is hindering the Canadian economy’s competitiveness and productivity and is hurting Canada’s global standing. A number of the Survey Participants see the challenges of this generation as an opportunity for businesses. Tamara Vrooman, President and CEO of the Vancouver International Airport and Chair of the Canada Infrastructure Bank, puts forward the idea that rebalancing inequality would help all businesses. Additionally, several the Survey Participants such as Vic Huard believe the fight against climate change is not only a pivotal challenge; it also represents a major business opportunity. Sean Drygas is of the same opinion, “Energy is the defining challenge of our time and is the largest business opportunity.” A handful of Survey Participants advocate that by strengthening the social cohesion and trust within a society, businesses will benefit from enhanced productivity of their workforce and will more easily obtain social licenses to advance projects. In the same vein, some Survey Participants observe that the advancement of Indigenous reconciliation represents an opportunity for businesses to be better positioned to obtain social licenses and could help strengthen their workforce if they are able to recruit, train, and employ more Indigenous people as a result. Plus, it is the view of some of the Survey Participants that if Canada were to aggressively move forward with the modernization of capitalism and the improvement of the relationship between society and business through businesses making their purpose one in which they give prominence to contributing positively to society, it would afford Canada an opportunity to strengthen its global influence and strengthen its economy. Michael McKnight who is the President and CEO of the United Way of the Lower Mainland, for instance, affirms, “We need to have a value proposition to bring human and financial capital here. We can build a branded economy on social purpose that I think will be more and more attractive.” When businesses augment their efforts to help tackle societal challenges, they are helping mitigate external risks to their business and their stakeholders. In addition, these efforts can turn into economic and financial opportunities for businesses. Moreover, business leaders and the members of their respective organizations will potentially find their voice and feel more of a sense of accomplishment, fulfillment, and purpose knowing that the legacy of their work is contributing positively to society and the planet.

4) Personal Legacy “For CEOs, they look at ‘someday I’m going to be 75’ I’ve got one shot at this, you don’t get a do-over. How am I going to be remembered? Is it going to be simply for how much money I made or is it that society is better as a consequence?’” – Perrin Beatty, President and CEO of the Canadian Chamber of Commerce One last and poignant argument as to why a business leader should care about its organization’s purpose and impact on societal matters is their legacy. Several Survey Participants argue there are two different types of people that want their business to link profit with purpose: people at the start of their careers and those in the latter stages. Lois Nahirney, President and CEO of dnaPower Inc., thinks, “the two things you’ve got, are people who have earned their money and are now ready to make an impact, and second, is millennials who are saying ‘I want a different model.’ Both Brianna Brown and Michael McKnight are of the opinion that the younger entrepreneurs see linking profit with purpose as being good for their business moving forward and want to have their values embedded in their careers while the more seasoned business people are in legacy-building mode and/or are trying to correct a value they may have been missing while they were making their money and building their businesses. Keith McIntosh, CEO of PQA Testing, admits one can become rich without linking profit with purpose, but implores business leaders to question what legacy they are leaving, “You can get very rich not caring. But people won’t remember how big your T.V. was. They will remember if you made a difference.” Several Survey Participants note that generally, business leaders want to do work that family members approve of. Michael Denham, the Vice-Chair of Commercial Banking and Financial Markets of National Bank and the former President and CEO of BDC (Michael Denham did the interview while he was the President and CEO of BDC), puts forward the idea that a great number of businesses leaders will look for a job that would make their children or grandchildren proud. A notable proportion of the Survey Participants voice the idea that the legacy business leaders are individually leaving is a poignant argument to link profit with purpose as a means to help tackle the challenges facing the globe. From a pure risk-return assessment point of view, it is in the best interest of businesses to contribute to tackling the immense challenges facing the world. If business leaders choose to not contribute more and in different ways to combat global challenges, the relationship between society and business risks deteriorating even further.

Chapter 3: The Business Case “The businesses with the most sustainable and long-term success are businesses that have managed the dimensions of social and environmental responsibilities well.” – Monique Leroux, Chair of the Industry Strategy Council of Canada and Vice-Chair of Fiera Holdings Inc.

Due to the reasons outlined above, a growing number of CEOs may be convinced of the need to link profit with purpose. Even so, they still need to convince their boards of directors and investors. As Dr. Marie Delorme notes “Societal issues are not top of mind for most corporations”. However, most Survey Participants believe that the business case for linking profit with purpose is becoming increasingly clear. The vast majority of Survey Participants conclude there is a business case for a business to do more to tackle societal challenges. All the same, there are some Survey Participants like Darcy Riddell who want business leaders to step up out of a moral obligation to do so, “If it is limited by framing like ‘what’s the value proposition for our business?’ or ‘profit and do good at the same time’ then it’s incremental. The value proposition is we are all headed over a cliff together and we all need to stop it. I want to see business advance more aggressively in this way and also to raise their voices to lobby for strong regulations that are likely against their short-term economic interests.” Isabelle Adjahi, Vice-President of Investor Relations and Sustainable Development at Lion Electric adds, “It shouldn’t be seen as a financial issue. The way a business acts in this area is above all linked to its corporate culture and its culture as a corporate citizen.”

1) Achieving Profit through Purpose “There is nothing more profitable than purpose.” – Yung Wu, CEO of MaRS Discovery District Linking profit with purpose may sound like a good approach to make a positive difference, but some may argue it is not beneficial to the bottom line. Many of the Survey Participants, however, suggest that profit and purpose are interrelated and having a business contribute positively to society and/or the communities in which it operates is good for its bottom line. Frequently, Survey Participants link between having a business be a positive contributor to society and its profitability through the risk/return lens. Accordingly, an important segment of the Survey Participants warn that the failure to act decisively and swiftly to address the pressure on businesses to help tackle the challenges facing this generation will most likely mean a hit to a business’ plans and operations, and ultimately its profitability. A noteworthy number of thought leaders have been voicing this sentiment for quite some time. Mark Carney, for instance, while holding the position of Governor of the Bank of England, turned heads with the following public statement concerning the need for businesses to adequately respond to the pressure 29

being applied with regards to climate change, “Companies that don’t adapt will go bankrupt without question.”7 Meanwhile, the inverse is argued by Survey Participants to be just as true; businesses that do appropriately address these pressures will enjoy better performance in the long-term. Judy Cotte, CEO of ESG Global Advisors, explains, “There is a lot of academic research showing that companies that manage their material ESG issues well have lower risk, lower cost of capital, better operational performance across a wide variety of measures and better share price performance over the longer-term.” According to Lloyd M. Segal, “Being a responsible member of our community, being good to our employees, doing the right thing at all times is the best way to generate corporate returns.” Keith Halliday concurs, “The best route in many cases to maximize shareholder return, is to contribute to your local economy or your local society.” Senator Hassan Yussuff, the former President of the Canadian Labour Congress (Hassan Yussuff did the interview while he was President of the Canadian Labour Congress and thus prior to being named senator), also has the same view, “A business which enjoys long-term survival and high performance are those that have a social impact.” Granted, practically speaking it is not always easy for business leaders to give prominence to helping tackle global challenges through linking profit with purpose. Michael Trebilcock provides a reminder of the complexities of doing so, “I agree with Mark Carney that corporations are going to need to factor in a reduced dependence on fossil fuels, but we have to also focus our minds on the labour market impacts of a contracting fossil fuel sector.” Danny Murphy eloquently encapsulates the difficulties of balancing profit with purpose, “What is being done to the environment now is not sustainable. Everyone being unemployed is not sustainable either.” Despite the implementation challenges, most Survey Participants saw a closer link between profit and purpose as key to a company’s long-term prosperity. One Business Leader surveyed sums up the calculation with the risk/return lens well, “[These things] will enhance your bottom line, or if you don’t to it, it’ll detract from your bottom line. It will put you at a competitive disadvantage.” Many Survey Participants voiced their belief in the business case because they are of the view that a business’ stakeholders will speak up and most likely reward a business that links profit with purpose - and will potentially penalize it if it does not.

2) Creating and Sharing Value with Stakeholders “This is really about the stakeholders. Unless the stakeholders are all doing well, unless we can understand and work with them as things go on, then we’re not going to have long-term success and sustainability.” – Victor Thomas, President and CEO of the Canada-India Business Council Although stakeholder engagement is largely understood to be a part of doing business, it is not unanimous amongst the business community that a more stakeholder-centric approach will reap economic benefits for an organization. All the same, according to a significant number of the Survey Participants, much like the linking of profit with purpose, there is a strong business case for a stakeholder model. Many Survey Participants link the impacts a business has on its stakeholders with the long-term performance of the organization. Michael Hartmann, 30

Professor of Medicine and Management at McMaster University and Principal of the Directors College, opines that “In some ways, in order to think about a corporation’s long-term sustainability, one needs to think about a broader range of stakeholders, it’s no longer around shareholder primacy.” It is the view of some Survey Participants that a business that looks to do good for society will be rewarded by its stakeholders. The types of rewards vary: garnishing support of civil society; making it easier to obtain social licenses; improving employee recruitment, retention, and productivity; attracting more customers and enhancing customer loyalty; and more. Moreover, many of the Survey Participants believe the inverse to be true; a business that does not look to do good for society will be penalized by its stakeholders. Almost all Survey Participants agree that there is more pressure from stakeholders on businesses today than in the past. “Society is expecting more from business,” states Chuck Magro. The Right Honourable David Johnston goes even further submitting, “there’s more pressure on business today than there had been in many other times in history.” Scott Banda believes, “there’s pressure on business to step up. I believe it’s coming from civil society, from communities. I definitely believe there is pressure.” The pressure being put on businesses includes increased expectations that they will contribute more to societal projects and in particular, the fight against climate change, the efforts to dramatically reduce systemic inequalities and inequities in society, and the battle against the COVID-19 pandemic only to name a few. Brianna Brown explains how almost all stakeholders are applying this pressure on businesses, “Employees are demanding action on the societal challenges we face. Each stakeholder group is asking for change in their own ways.” There is no question that a large number of stakeholders are voicing their willingness to inflict consequences or grant rewards based on how effectively and genuinely they judge businesses to be reacting to their new and heightened expectations. We examine the perceived influence of different stakeholder groups in the following pages.

i) Communities and Civil Society “We would not be able to do the work that we do and scale the impact that we have without the relationships that we have with our community partners.” – Kevin Sitka, President & CEO of Assiniboine Credit Union Many Survey Participants note the importance of a business contributing to the communities in which it operates. Jean La Rose is of the view that it is pivotal for a business to do what it can to better its communities and declares, “There is nothing wrong with a business wanting to make money in order to survive, as long as it is done in a way that it also reflects and works well with the community.” Vicki Wallace-Godbout affirms, “You have to mix profit and the good of the community together. If a business isn’t listening to the community, it will hurt the business. If we don’t have the support of the community, we won’t go far.” Likewise, Cathy Glover believes it is a must for a business to share the value it creates with its community, “Your business will not succeed unless your community succeeds.” Jean La Rose goes even further and opines that businesses need to be involved with their communities and advocates that a business should not simply financially support good causes, they should also be a part of them. Goldy Hyder is of the same view, “It’s not sufficient to write a cheque to something anymore, people want to see you committed to the cause.” 31

Quite a few Survey Participants speak proudly of the goodwill they have built up with their communities as well as with civil society and how it helps their business. Moreover, a good proportion of the Survey Participants put forward the idea that a business that is there for its community will enjoy the support of the community when it goes through difficult times. Clarissa Desjardins, CEO of Clementia Pharmaceuticals, sums up this point of view succinctly when she says, “Goodwill is a real asset”. Hélène V. Gagnon argues the same principle applies to governments, “The government prefers to partner with businesses that are liked by the public.” For his part, former premier of New Brunswick and now CEO of Medavie in Moncton, Bernard Lord affirms that business and government clients alike want to partner with organizations that share their values. Several Survey Participants believe that businesses devoted to linking profit with purpose through creating and sharing value with their stakeholders will more easily obtain and maintain social licenses. As Michael Sabia points out, “A social license is a precious thing. What you do with it needs to be aligned with how [your stakeholders] think.” Comparatively, some Survey Participants describe how businesses that do not seek to link profit with purpose by creating and sharing value with their stakeholders could lose social licenses and find themselves with no stakeholders’ support during trying times. Marc-André Blanchard points out that in addition to legal and financial risks, there is now a risk that a business’ social license be revoked. He goes even further by stating a business could be facing new acute challenges and because it did not look to positively impact society during the good times, it will not be able to recover as there will be no one there to support it during the bad times.

ii) Employees “Employees always want to work for a company that they’re proud of.” – Senator Hassan Yussuff Frequently, Survey Participants stated that employees are applying immense pressure on businesses to espouse a purpose and values they believe in. Lisa Kimmel explains that “a business’ employees can be its biggest advocates or detractors – as we’re increasingly seeing the pressure that employees are taking in response to a company’s policies, decisions, and actions.” Of the Survey Participants, 70% state that ‘Employees’ are putting pressure on businesses to augment their engagement in solving societal issues. (‘Employees + ‘All of the Above’)

Figure 10: Percentage of all Survey Participants who highlighted various forms of pressure being put on businesses to become more purposeful

Numerous Survey Participants remark that a business’ purpose will have an impact on recruitment and retention. Suzanne Bergeron, for instance, states, “Potential employees won’t join us if we don’t have a sense of purpose.” Michael McCain, President and CEO of Maple Leaf Foods, is proud to say that the articulation of Maple Leaf Foods’ purpose has drawn talent, “I think all people today, in business, find more inspiration in an organization if there’s a purposeful journey attached to their work than if there isn’t.” Brianna Brown opines, “Everybody deserves to have sense of purpose - to feel the delight of action, change-making, and feeling like you’re doing something that’s bigger than yourself.” Phil Arrata, the former CEO of MEC, bluntly states, “Staff want to work for an organization that they feel is contributing positively to society”. Alison Loat, Managing Director, Sustainable Investing and Innovation at OPTrust, explains, “People are looking to work for companies who address an important purpose and who speak in inspiring ways about what they’re trying to do in the world.” Danny Murphy adds, “People want to work for businesses that are socially responsible.” Some Survey Participants even go as far as to suggest that in some cases employees are now willing to accept pay cuts to work for businesses they judge are contributing positively to society. Bernard Lord states that “Employees are coming here for our purpose - at times even for less pay just to be part of our culture.” Many Survey Participants argued a workforce will be more productive if the employees feel like they are a part of an organization that contributes positively to society. Kate White, President and CEO of the United Nations Association-Canada argues it boils down to the difference between agency theory and stewardship theory and opines that organizations that have a positive purpose will enjoy a workforce that cares more deeply about the organization which in turn will ultimately lead to improved productivity. Michael Penner, member of the Board of Directors at Scotiabank, Lead Operating Director for Partners Group Private Equity, and Chair of United States Infrastructure Corporation, adds, “Employment is no longer just an economic transaction between labour and capital. This is a social compact, between your stakeholders and the people running the organization. And the ones that don’t buy into that – they won’t be around in 20-30 years.” The substantial potential return or risk for a business in the recruitment of top talent, the retention of employees, and the productivity of its workforce provides a major financial incentive for it to produce and share value with its stakeholders through linking profit with purpose. 33

iii) Customers “People are starting to make decisions with their pocketbook as to who they want to buy from. They’re going to map their values, both personal and societal, on those companies and make decisions based on that.” – Elizabeth Cannon, President Emerita and Professor of Engineering at the University of Calgary Customers arguably wield a lot of power to demand change from the business community. After all, if a business does not have any customers, it will not last very long. A part of the Survey Participants says customers are starting to base choices on whether they feel a business is as concerned about communities and stakeholders’ well-being as it is about generating profits. Some Survey Participants speak about how this has changed over time. John Bragg, President and Co-CEO of Oxford Frozen Foods Limited says that nowadays on a sales call with a potential business client, it is not just the financial people attending on behalf of the client. The businesses they are trying to land as clients now have people in charge of sustainability join the meetings to ask questions with respect to things other than price. John Bragg admits questions around sustainability were not always asked in the past.

Customers + Consumers + Clients Throughout the interview process, Business Leaders generally answer questions that pertain to this subject from the viewpoint of their businesses’ customers, while Accelerators, in general, speak of consumers. At times, Business Leaders speak of clients – often this is when the Business Leader leads an organization with more of a business-to-business model. For the purposes of this report, the term Customers embodies the terms Consumers and Clients.

John Manley adds, “Not everyone buys on price alone. And not all goods are without differentiation. So, to the degree that you can differentiate yourself, you can demand a better price.” Bernard Lord admits that you need to have good quality products and services to be competitive but, all else being equal, clients will choose a business because of its purpose and impact. Additionally, Sean Drygas is of the opinion that a purpose-driven business will enjoy more loyalty from its customers. At the same time, it is the opinion of a number of Survey Participants that customers are not applying the ultimate pressure point at their disposal – their purchase choices. When asked if customers are applying pressure, Shayna Bleeker answers, “In voice, certainly. Not sufficiently enough with where our dollars are going now. There are pockets of very committed, values-aligned behaviour - that’s not the majority though. The majority are wanting convenience, they’re wanting affordability.” Michael McCain adds, “Consumers say that they care about climate change but are still very sensitive to price.” A few Survey Participants argue that this behaviour is induced from an economic system built on an overvaluation of money, the need for perpetual growth, and an addiction to consumerism. Zita Cobb, Canadian businessperson and social entrepreneur, puts it simply, “If you are overvaluing money, you’re going to buy the cheapest t-shirt.”

For those who want consumers to apply pressure on businesses to engage more on societal issues, there are reasons for optimism. The majority of Survey Participants are of the view that ‘Customers’ are applying pressure. Plus, Max Koeune, the President and CEO of McCain Foods, thinks that five years or so ago no one cared if a business was purpose-driven or not. He believes that customers are now in more of a reward state of mind: meaning customers will reward a business for being purpose-driven, but not necessarily penalize one for not being purpose-driven. Nonetheless, Max Koeune is of the opinion that this is changing and that customers will demand purpose-driven businesses in the future. Taking it one step further, Martin LeBlanc anticipates that “most companies that interact with the public at large will need to be seen to be more environmentally and socially responsible to continue to sell.” With customers being so crucial to businesses, it will be imperative for business leaders to stay on top of the wishes of their patrons and ensure their organizations will be able to meet their ever-expanding expectations.

DEEPER DIVE: Customers’ Pressure In a deeper dive it becomes evident that ‘Employees’ are the ones that are seen to be applying the most pressure on business leaders to step up and engage on societal issues. As noted above in figure 10, 70% of Survey Participants identify ‘Employees’ and 55% mention ‘Customers’. When comparing the Business Leaders and Accelerators groups (below), the frequency in which ‘Employees’ is raised is statistically about the same (68% and 73% respectively) while the frequency in which ‘Customers’ is put forward is 22 percentage points lower amongst the Business Leaders group compared with the Accelerators group (47% and 69% respectively). Further, the data suggests that the Accelerators are a tad overly optimistic on the number of stakeholders applying pressure on business leaders. Considering the percentage of each group that respond ‘All of the above’, it seems as though the Accelerators group believe business leaders are being pressured by all stakeholders (42% respond ‘All of the above’) more so than the Business Leaders themselves (26% respond ‘All of the above’).

Even further, when the response ‘All of the above’ is extracted, the percentage of the Business Leaders group which brings up ‘Customers’ goes down significantly while the percentage explicitly naming ‘Employees’ remains strong. A striking 42% of the Business Leaders group identifies ‘Employees’ as applying pressure on businesses which is the largest percentage of any of the stakeholders mentioned by either one of the groups. Potentially surprising to some who monitor social media and often see customers apparently applying pressure on businesses to be purposeful; according to the Business Leaders group, not all businesses feel pressure from their ‘Customers’. The percentage of Business Leaders explicitly naming ‘Customers’ (21%) is half that of the percentage explicitly naming ‘Employees’ (42%).

iv) Investors “Private equity has been a contributor to growing inequality because often jobs are lost or moved offshore and any economic gains have been disproportionately distributed to fund managers and investors as opposed to the workers.” – Bill Young, Founder and Chairperson of Social Capital Partners A considerable percentage of Survey Participants affirm that it is crucial for investors to step up in a serious manner if business leaders are going to be able to transform their businesses into purpose-driven organizations, as those investing in businesses and ultimately providing capital to the markets are undoubtedly in a strong position to influence businesses’ collective behaviour. A significant number of the Survey Participants are skeptical that investors are using their privileged positions to exert a positive influence on societal issues. While using the example of pension funds, Bill Young, Founder and Chairperson of Social Capital Partners, explains, “Pension funds see their role as earning the best possible return for their beneficiaries and likely feel they have no responsibility for what is their indirect role in the impact private equity is potentially having on our growing inequality.” Indeed, judging from the Survey Participants answers, it does not appear that investors are applying as much pressure as they could on Business Leaders to enhance their engagement on societal challenges. In fact, with the response ‘All of the above’ extracted, only 16% of the Business Leaders group and 4% of the Accelerators group explicitly bring up ‘Investors’ as one of the stakeholders applying pressure for businesses to do more on societal issues. (see ‘DEEPER DIVE: Customers’ Pressure’ above). Some of the Survey Participants lament that investors apply pressure for short-term growth rates instead of long-term performance or broader societal good. One Business Leader surveyed bluntly comments, “Every investor says they are long-term investors, but they are not.” Many Survey Participants argue that more pressure needs to come from investors if capitalism is going to modernize to include considerations with respect to societal impact on the same level as growth and profitability. Tamara Vrooman, who sings the praises of how employees are applying the right type of pressure, states that investors and shareholders are not doing enough in this regard and are essentially the “biggest nut to crack”. However, some are of the view that investors are starting to apply additional pressure on businesses to be more purpose-driven and address societal concerns. For instance, there is increasing pressure from investors for businesses to increase reporting on ESG (Environment, Social, Governance) metrics. One Business Leader surveyed affirms, “The expectations of investors are changing. The investment community is no longer simply looking for financial reporting of companies, they also really want to understand what a company does in the environmental, social, and governance realms.” Michael Sabia, who served as CEO of the CDPQ, postulates businesses are going to get more pressure to disclose carbon footprints on account of new regulations or investors getting together to demand it. Moreover, the number of institutional investors that have committed to reducing or eliminating fossil fuel investments from their portfolios has increased significantly over the last few years.8 Marc-André Blanchard foresees that in about a decade, impact investing will not exist as every investment will need to demonstrate impact.

v) Governments “Those who do not adequately take care of social issues will be regulated.” – Guy Cormier, President and CEO of Desjardins Group There are diverging views amongst the Survey Participants on whether society can rely on government intervention to solve the challenges of the times. Having said that, a notable proportion of the Survey Participants believe that there is growing pressure on government to force businesses to be more positive contributors to society. According to the Canadian Centre for the Purpose of the Corporation’s research, the public is prepared to provide immense latitude for governments to force businesses to do more on societal issues. In a recent survey the Centre conducted, it found that “a significant majority (65%) of Canadians are calling on government to force businesses and corporations to put environmental and stakeholder considerations on par with profits or shareholder return while making decisions. Two-thirds of Canadians agree that if we’re going to overcome climate change (69%) and inequalities (66%), governments in Canada need to get tougher with Canadian businesses and corporations through laws, regulations, and taxes.”9 It is for these reasons that a business should take into consideration the risk of regulatory intervention originating from businesses not stepping up to address societal issues. Accordingly, a couple of Survey Participants opine that governments and regulators represent a risk because if certain businesses or industries are seen to not be positively contributing to society, there risks being regulatory reforms that can represent extra costs, delays, or business projects being completely shelved. According to Guy Cormier, President and CEO of Desjardins Group, business leaders must ask themselves, “Not doing this creates what risk for the company?” Guy Cormier answers his own question by explaining that businesses that are seen to not be doing enough to contribute positively to society expose themselves to regulatory risk. Tariq Fancy is of the opinion that the current conditions lend themselves well to have the public quickly push for government intervention, “There’s a growing sense that the rules of the game that are set up by society, through the government, are not moving as fast as they need to preserve the long-term public interest.” Considering the public’s growing inclination for government action to push businesses to do more for societal challenges and stakeholders, businesses should act now before they are forced to.

vi) Media “There’s reputational risk from not doing anything, but there’s also reputational risk from being seen to be hypocritical. And the goalposts are moving all the time. People’s expectations are always changing.” – Sean Drygas, President of Bullfrog Power and Executive Vice President of Sustainability Solutions at Spark Power Most Survey Participants believe that corporations not seen as engaging in societal matters can be exposed to reputational risk. Indira Samarasekera warns that it only takes one bad media story to ruin a

business. Another Business Leader surveyed adds that a business can have the best ESG programs, but it can quickly lose a lot of goodwill if it is caught up in a ‘movement’. Some of the Survey Participants note that if a business wants to have the public perceive it to be a positive contributor to society, its efforts better be real. John Bragg remarks that business leaders need to be authentic in their efforts and consistent in their actions, “You won’t build it overnight. You need to be consistent. Don’t try to build your own image or the image of the company. Just tell the truth.” Michael McCain believes being purpose-driven can be a competitive advantage for a business, but that “it better be real” as an inauthentic purpose can have an “adverse effect”. He strongly advocates that when it comes to purpose “nothing is better than a fake one”. Paul Klein, the CEO and Founder at Impakt explains the need for a business’ purpose to be something that is “relevant to the business, leadership, and employees” and argues that concentrating on an authentic purpose is crucial for a business to make sure its efforts to link profit with purpose will be real, “It needs to be more than just communications”. Quite a few Survey Participants believe that stakeholders of a business should be able to effortlessly decipher the purpose of the organization. To that end, Paul Genest, Senior Vice President of Power Corporation of Canada, submits “We shouldn’t just be chasing after sixteen different policy priorities, there should be a general message.”

3) Future Prepping “I think over time, people will choose to buy from and work for companies whose values match their own, and that’s more important now for young people.” – Michael Denham, President and CEO of BDC The concept of ‘future prepping’ is one in which a business makes decisions to change not just based on the requirements and pressures of today, but also those of the future. Some Survey Participants who believe there is currently limited pressure on businesses to create and share value with stakeholders through the linkage of profit with purpose still acknowledge that it is hard to deny that changes loom for the role of business in society. “The pressure might be generational,” notes Helen Antoniou.

i) Generational Shifts “The sense I have, the younger generation coming up, need a more balanced workplace. Yes, they want to work, [they want to enjoy life], but they also want to know that when they’re working that they’re doing something meaningful.” – Bernard Lord, CEO of Medavie Rarely did Survey Participants speak of the pressures being felt by the business community to be more purpose-driven without bringing up youth or younger generations. It is the strong belief of the vast majority of Survey Participants that the pressures stemming from employees and customers will intensify as millennials and Gen Z take up larger percentages of the workforce and consumer market. Adam Legge points to recent data that shows how younger

generations, as both employees and as customers, are indeed demanding that businesses pursue impact and a greater purpose.10 “People 35 and under often have very clear convictions and will express them, these are pressures that will accelerate,” states Monique Leroux, Chair of the Industry Strategy Council of Canada and Vice-Chair of Fiera Holdings Inc. Suzanne Bergeron is of the same opinion and sees these concepts in action when hiring young people, “Today you can’t recruit young people these days if you can’t give them more than a paycheck.” Keith McIntosh explains, “Young people in Canada and around the world want to be part of doing something good.” The idea that employees will even take pay cuts to work for a purpose-driven organization seems to be more palatable with certain generations. Michael McKnight submits it is an empirical fact, “If you look at the research and if you look at what’s important to millennials in employment, everything points to the fact that they look at the values of the company as much as they do the compensation that they’re going to get.” A 2019 poll provides some research to confirm this view as it found that 80% of the 25-34 year-old cohort in the United States are looking to work for “engaged companies”. Faisal Kazi, President and CEO of Siemens Canada, shares this opinion, “As we move into the world of digitalization, and it becomes all about the talent, the young generation wants to know what you’re doing for society. I look at my own kids - they will compromise on salaries, they’re purpose-driven.” Comparably, a noteworthy number of Survey Participants state that moving forward - as millennials and Gen Z take up more room in the consumer market - ensuring a business is having an overall positive impact on societal issues will be increasingly consequential on a business’ long-term performance. A couple of Survey Participants add that women who are expanding in numbers in the workforce and leadership positions as younger generations make their way into the workforce is another demographic trend that will bring about change. Upkar Arora explains that “In our business we see women and millennials driving investment decisions that are more socially aligned, values-based and long-term oriented.” Leo Wong, Associate Dean of the Undergraduate Program at the Alberta School of Business in Edmonton, is of the view that the next generations will enhance the pressure on businesses as employees, customers, and investors, “I think we have a new generation of consumers and employees that will be investors down the road, that are all demanding something that has a greater purpose to it.” No one has a crystal ball. Nevertheless, these generational shifts should make it crystal clear for businesses that change is on the horizon for the role they will be expected to play in society. If this is the world the next generations are trying to build, even if some business leaders do not believe this new world is here yet, they must still prepare their business for when this future is built.

ii) The Importance of Preparing for the Future Today “The largest risk is staying with the status quo” – Yung Wu, CEO of MaRS Discovery District Due to the generational trends regarding linking profit with purpose, the importance of the concept of ‘future prepping’ a business is accepted by the vast majority of the Survey Participants. Accordingly, several Survey Participants anticipate that if a business does not ‘future prep’, it will face negative consequences. Elizabeth Cannon states, “Putting your head down and doing business ‘for business’ sake won’t be good enough anymore.” 39

A handful of Survey Participants argue that all businesses need to ‘future prep’ by starting to engage on societal issues now. Marc-André Blanchard predicts that “few companies will be immune to this movement”. Michael Penner goes as far as to say that the businesses which do not buy into the concept of doing more to provide a positive impact to society will not be around in a few decades. Even further, some of the Survey Participants speak of how there are positive consequences to ‘future prepping’ a business. For instance, Suzanne Bergeron does not believe that the business she leads has received more contracts as a result of its purpose or its contributions to its stakeholders. She does believe, however, this approach will eventually become a prerequisite to doing business and once it does, the organization she leads will be ahead of the curve and for this reason, will consequently be able to secure more contracts. In addition to the substantial future benefits that will ensue from ‘future prepping’, the collective impact of all businesses ‘future prepping’ would bring the immediate benefit of businesses immensely contributing to the fight against the direst of global challenges, today. All the same, a noteworthy number of the Survey Participants voice their concern that even though the business case to link profit with purpose has been around for a long time, no major reform has occurred. Dr. Marie Delorme is one of those people, “The business case has been evident for a long time. The issue is more likely willful ignorance. Most organizations have statements (vision, mission, values) and strategic priorities that concentrate on a broader societal purpose. However, implementation and monitoring of results are generally lacking. The greater, collective good is too often superseded by the bottom line and the primacy of shareholder value.” There is certainly reason to be hopeful about the role businesses will play in society in the future in addressing the challenges facing the globe when one hears of the shifting attitudes of employees, customers, and investors stemming from demographic changes. Even so, it is evident that the prioritization of profits and shareholders is judged to be a problem for those who would like to see businesses link profit with purpose by contributing more to the efforts to tackle the pressing global challenges through creating and sharing value with stakeholders. Survey Participants expressed strong views on the current role of business in society and what it might become in the future.

Chapter 4: The Purpose of Business Today “It’s not good enough just to make profits for your shareholders if stakeholders and communities in which you operate are not moving ahead.” – Indira Samarasekera, member of the board of directors for Scotiabank, Magna International, TC Energy, and Stelco, and Senior Advisor at Bennett Jones LLP

The current debate whether corporations should link profit with purpose and engage more on societal issues also raises broader issues over the “raison d’être” of business: ‘what is the current purpose of business and what will be the role of business in society moving forward?’ These fundamental questions are at the heart of a key debate concerning the purpose of the corporation. Michael Penner, who equates a business’ purpose to being its ‘soul’, remarks, “If you don’t have a soul of your business, you don’t have a business”. Furthermore, a business’ chosen purpose will help or hinder its ability to generate and share value.11 Just as it is important for an organization to have a purpose, it is important to properly define that purpose.

1) The Need for Purpose “I’m pretty sure that profit without purpose is kind of immoral.” - Clarissa Desjardins, CEO of Clementia Pharmaceuticals. Survey Participants often point out the importance for a business to reflect, define, and implement a purpose that goes beyond profits. Zita Cobb rhetorically asks, “What is the sustainability of your business if you can’t demonstrate a purpose beyond financial return?” Hassan Yussuff agrees and encourages business leaders to ask themselves, “What is the purpose of this company other than to make money?” At first glance, it may seem out of place for certain businesses to search for a deeper meaning to what it is that they do. Nevertheless, quite a few Survey Participants argue that a successful business will determine a non-monetary purpose and link its operations to this purpose. For instance, Lawrence Tanenbaum, OC, who is a leader in the international sports community as Chairperson of Maple Leaf Sports and Entertainment, a Governor and member of the Executive Committees of the NBA, the NHL and Major League Soccer, and a member of the Board and Executive Committee of the Hockey Hall of Fame, is proud that sports can help unify a community, “It is impossible to remain doubtful about the power of sport to bring people together”.

Several terms are being used to describe the yearning for the purpose of business to be about contributing an overall positive impact on society. Coro Strandberg, President of Strandberg Consulting and an influential sustainability strategist, would define it as a business’ “societal or humanitarian reason for being” while Faisal Kazi defines the purpose of a business as being to create “societal impact with profit”. The principle behind many of the definitions circulating is the idea that the purpose of a business links profits to the creation and sharing of value with stakeholders. Monique Leroux, who says the “raison d’être” of a business should be more than just generating profits for shareholders comments, “There has to be a value to society.” Monika Marcovici explains what this means practically, “Transforming businesses into engines for good, so that the more business they do, the more good they do.” Karen Sander, Head of Giving – Hollyburn Properties Limited is of the same view, “Profitability and growth while doing good are what this is all about. Ideally we want to reach a place where the community is better off with the existence of our business than without it.” Notwithstanding, a few Survey Participants are of the opinion that businesses should not have purposes that are not economic or financial in nature. Chris Ragan, Associate Professor of Economics and the Director of the Max Bell School of Public Policy at McGill University, author and economist, postulates that corporations were not created to be concerned about the public interest, “Corporations aren’t very good at thinking about the public interest, nor should they be. Governments are quite good at thinking about the public interest, but not so good at determining what’s good for business.” Those who agree with this principle prescribe that government should be the ones to put a frame around the purposes of businesses through laws, regulations, and policies. Chris Ragan vocalizes this concept by suggesting governments ask themselves, “How do we modify the rules to incentivize private businesses to take actions that are in their interest but also in the public interest?” Chuck Magro adds a consideration regarding the complexity of the mounting expectations on businesses stating, “Business is intended to do certain things well and will not be good at everything.” The Survey Participants who are not of the view that corporations should be in the business of the public interest still agree that having a purpose judged to be providing societal value makes good business sense. Chris Ragan remarks, “being a good corporate citizen and being a profit-maximizing business can go hand in hand.” There is a key distinction in regard to the purpose of a business made by a lot of the Survey Participants; a business can be financially supportive of valid and helpful societal causes without truly linking profit with purpose. The model in which a business continues to fixate on profit generation for shareholders, owners and/or investors, but also donates a percentage of those profits to ‘good’ causes is often referred to as corporate social responsibility (hereinafter “CSR”). The need for a business to practice CSR is generally accepted by all Survey Participants. The vast majority of members of the Accelerators group, however, see CSR as mere table stakes and a minimum requirement for businesses. A great number of the members of the Accelerators group are adamant that business leaders and decision-makers must avoid confounding a business that follows good CSR practices and a purpose-driven business. Coro Strandberg cautions that a societal purpose must transcend profit and not simply be to assist the pursuit of profit, “We need to make a distinction between CSR and a business that has a purpose, a social purpose, these are very different undertakings.” Karen Sander comments, “A lot of people still aren’t aware of

how this concept differentiates from charitable giving or corporate social responsibility. This is the key distinction between charitable giving and social purpose. With social purpose, the growth of the business itself is inherently meant to lead to greater social good.” A challenge regarding a business utilizing a CSR and/or a philanthropic model numerous Survey Participants note is that the efforts to do ‘good’ are often on the side and not a part of the core of the organization. This model and mindset can essentially lead to a business producing profits in whichever way best suits the shareholders, owners, or investors - even if it has an overall negative impact on society - as long as a percentage of its profits are donated to a philanthropic cause. Furthermore, this model and mindset mean that strategic decisions of the business can be made without consideration to the organization’s efforts to do ‘good’. It is noted by some Survey Participants that the influence of those working on CSR and/or philanthropy can exercise within large organizations is limited. Kate White provides a helpful reminder that they are not the ones “bringing in the revenue for the business.” Allyson Hewitt, Vice President of Impact at MaRS Discovery District is of the view that the mindset that says the role of business is “to make money and then give back through philanthropy” is the old mentality. The new approach is realizing and capitalizing on the fact that people - through the work they do and the businesses they work for - want to live their values. There is no doubt that business leaders are proud to donate to causes valued by them and their organizations. To the same effect, the organizations and causes who receive this financial support are certainly thankful. That said, times are changing, and businesses are being asked to help - more so than ever before - to secure a sustainable and inclusive future on top of a prosperous one. Creating this alternative future is no small feat which is yet another reason why businesses are being drafted to assist in this collective project. The significance and complexities of the challenges of the day call for a concerted effort from all leaders, including business leaders. During the response to the COVID-19 pandemic, when the world voiced a need for help to overcome a massive global challenge, a remarkable number of businesses stepped up in more and different ways. It was certainly noted by many that they had an immense positive societal impact in doing so.12

2) The Evolution of the Purpose of the Corporation “I don’t think a corporation’s purpose is about making profit. It’s about changing people’s lives for the better with what you deliver and how you go about delivering that.” – Upkar Arora, CEO of Rally Assets As of late, the ‘purpose of the corporation’ seems to be the prevailing topic within the larger discussion of what is the purpose of business. The dynamics and elements of the conversation with respect to the ‘purpose of the corporation’ are very relevant to the larger discussion concerning the evolving role of business in society. In fact, the clarification of the legal responsibilities and fiduciary duties of corporate leaders is an evident subset of the larger movement to have businesses of all legal structures more positively contribute to society. Consequently, exploring the history and state of the legal framework influencing the decisions of corporate leaders helps determine the systemic challenges facing the transition from the status quo to a world in which all businesses’ core purpose is to link profit with the creation and sharing of value with stakeholders.

Over the last few decades, there is no question that profit generation for shareholders has been synonymous with the ‘purpose of the corporation’. Many would argue that shareholder primacy stems from what is known today as the ‘Chicago School’ of economics.13 It was made to be widely known and utilized by Milton Friedman in the second half of the 20th century. Eric Posner, writing for The Atlantic, explained that Friedman submitted in a 1970 New York Times article the idea that the CEO of a corporation is an employee of the shareholders and consequently, must act in the interest of the shareholders which means to generate and provide them with the “highest returns possible”.14 The concept pushed by Friedman can date its origins to at least the early part of the 1900s.15 The idea that corporate leaders must solely focus on providing profits to shareholders was refuted as early as in the start of the second half of the 20th century and more frequently in the latter part of the 20th century. Thus, there has been a debate raging on for decades; is the purpose of the corporation to generate profits for shareholders or is it to contribute to the betterment of a broader range of stakeholders? The 20th century can arguably be pegged as the “golden age” for the ‘Chicago School’ of thought. Even so, near the start of the 21st century, things would start to change.16 As a matter of fact, several Survey Participants hark back to the financial crisis of 2008 as a defining moment for the relationship between society and business in Western democracies and the views with regards to the purpose of the corporation. Perrin Beatty and Goldy Hyder, who respectively represent the Canadian Chamber of Commerce and the Business Council of Canada, raise the negative consequences of the financial crisis on society’s social cohesion. Perrin Beatty deduces that there has been, since 2008, a “loss of confidence in institutions in general”. Goldy Hyder concludes, “Really, with what I date back to 2008, is the loss of trust, by the public, in our institutions.” Moreover, it is the view of some thought leaders that due to the financial crisis of 2008, the rejection of shareholder primacy has gained momentum.17 There are undoubtedly signs that the movement to include a broader range of stakeholders on the same level of importance as shareholders is gaining steam amongst an array of groups and institutions. Numerous CEOs of some of the largest corporations in the world have been denouncing the ‘Chicago School’ of thought. An example of this is when a significant number of the CEOs of some of the largest corporations in the United States joined forces to debunk the Friedman doctrine. The U.S. Business Roundtable (hereinafter referred to as “BRT”), a business advocacy organization comprised of CEOs of leading corporations in the United States, issued a statement in August 2019 which the Economist Magazine observed, “seemed to represent quite a U-turn – nothing short of a repudiation of America Inc.’s shareholder-first orthodoxy .” The large business CEOs who are the signatories of this statement declare that a corporation not only has a duty to deliver value for shareholders, but that it also has the responsibility - on the same footing - to create value for its employees, customers, and suppliers as well as the communities in which it operates.19

To date, more than 150 business leaders, such as Jeff Bezos, Larry Fink, and Jamie Dimon have become signatories to the statement20. How much it changes the actual behaviour of their corporations remains to be seen. Just as some business leaders are playing a role in clarifying the purpose of the corporation, the courts are doing so as well. Take for instance the fact that in 2008, the Supreme Court of Canada helped debunk the long-standing prevalent view of the 20th century of shareholder primacy in BCE Inc. v 1976 Debentures21 (hereinafter referred to as “BCE”). The decision is widely cited as shedding much-needed light on the legal obligations of corporate leaders in Canada. Additionally, governments are trying to help clarify the purpose of the corporation. Several governments within Western democracies are attempting to apply a legislative framework to enable – and in some cases force – the purpose of the corporation to be about more than just profits for shareholders.22 Different institutions are chiming in and reforming the purpose of the corporation to be more stakeholder-centric and less about profits for shareholders. Institutions in Canada have been voicing their opinions and acting as well.

3) The Purpose of the Canadian Corporation “Canada’s responsibility is to support all stakeholders, not just shareholders. That means the stakeholder group is much broader. Our employers, our customers, our suppliers, of course our shareholders, and the communities we live and work in.” – Chuck Magro, President and CEO of Nutrien Much like other Western countries, Canadian business leaders, courts, and governments are pushing forward the idea that the purpose of the corporation must include the interest of all stakeholders and not simply the interest of shareholders which drives corporate leaders to prioritize the maximization of profits. To that end, most Survey Participants advocate that Canadian businesses do unquestionably have a responsibility towards all stakeholders and not just shareholders. Goldy Hyder observes, “I actually think that Canadian businesses have long ago, believed that their role in society is well beyond the shareholder. We want to do good.” Further, the Supreme Court of Canada rendered a decision in the 2008 BCE case that members of a corporate board must act for the interest of the corporation itself and not solely in the interest of the shareholders. Even further, in doing so, the court clarified that corporate directors may consider other stakeholders of the corporation while exercising their responsibility to decide what is in the best interest of the corporation. Moreover, there are governments in Canada seeking to enable corporations to espouse a stakeholder model or a more purpose-driven approach instead of a simple focus on generating profits for shareholders. Most likely the most impactful example is the fact that the Government of Canada has further cemented the principles of the BCE decision when it amended the Canada Business Corporations Act in 201923. The Federal government’s amendments effectively codified the BCE decision by legislating the concept that directors and officers, while deliberating on what is in the best interest of the corporation, may take into

account other considerations such as the environment; the long-term best interest of the corporation; and the interests of shareholders, employees, retirees and pensioners, creditors, consumers, and governments24. The wording of the amendment not only explicitly places other stakeholders and considerations on the same footing as shareholders; it also leaves the door open to an even larger list of stakeholders to be considered. As a result, the interest of different stakeholders may now be considered on the same level as profits for shareholders as corporate leaders in Canada decide what is best for the corporations they lead. Despite this newfound latitude, not all corporate leaders are living the stakeholder-centric model.

4) Stakeholder Approach in Theory, Shareholder Primacy in Practice “I see that shareholders and corporate structures trump societal values. We do have some companies out there that care, but they’re a minority.” – Jerry Dias, National President of Unifor With the latest string of developments stemming from statements made and steps taken by business leaders, the courts, and decision-makers, it appears that shareholder primacy has officially died. Be that as it may, this does not seem to be the case in practice. Even if there has been considerable movement in talk and action regarding the rebuking of the Friedman doctrine, there is still work to be done for other stakeholders’ interests to be considered with the same importance as shareholders. Several of the Survey Participants believe that still to this day, the overwhelming majority of corporate leaders are utilizing a model based on shareholder primacy. It is pointed out by a couple of Survey Participants that even the businesses which are signatories to the much-publicized BRT statement have not been adhering to the principles contained therein – and most likely will not be moving forward either. Eric Posner explained in The Atlantic, “While the statement is a welcome repudiation of a highly influential but spurious theory of corporate responsibility, this new philosophy will not likely change the way corporations behave.”25 In fact, Lucian Bebchuk and Roberto Tallarita of Harvard Law School have analyzed businesses that were signatories of the BRT statement of 2019 - only to find “little evidence (so far) that the declaration has altered corporate behaviour”.26 Despite the concept of a stakeholder model fermenting for decades, being supported by a large number of Canadian business leaders, and even being confirmed to some extent by Canadian courts and legislators, numerous Survey Participants exclaim it is still being ignored – or at least not fully implemented - by a large majority of business leaders in Canada. Walied Soliman, Canadian Chair of Norton Rose Fulbright, admits, “Ultimately, I think every CEO thinks about ownership first. And when they’re making a concession to customers, or a concession to employees, it’s with a view to this is going to make ownership happy.” It may be frustrating and even confusing for some to be told there is still much work to be done to have the role of business in society evolve when there is legislation in place which allows for Canadian corporate leaders to employ a more stakeholder model. Even so, it is the case.

Some Survey Participants offer a potential answer as to why it is so. They are of the view that due to the lack of comprehension or adoption of the concepts of the stakeholder model which are under the guise of the ‘best interest of the corporation’, that a great number of businesses in Canada are still without question concentrated almost solely on the interest of shareholders. It is the view of Walied Soliman that the public and even many business leaders are not aware of the state of the legal framework for corporate leaders. Robert Yalden, who is a professor in Corporate Law and Finance at Queen’s University and while working in private practice, worked on some of Canada’s most ground-breaking corporate transactions, agrees, “One layer of this is just education. Educating people to understand that under Canadian law your fiduciary duty is not in fact to maximize shareholder value, that’s been a misconception for quite some time. The reality of your obligation is that it is to act with a view to the best interests of the corporation, and what that means is becoming a richer conversation.” Defining how to approach the concept of deciding what is best for the corporation is certainly becoming a richer conversation. Be that as it may, it is an incredibly slow-moving one. It was approximately 70 years ago when Peter Drucker, a consultant, educator and author – considered by many to be the founder of modern management27, argued that corporate leadership is responsible to the corporation “rather than to any one group: owners, workers, or consumers.”28 Carl Kaysen, a Harvard economist, even suggested as early as the middle of the 20th century, that in addition to a responsibility to shareholders and the corporation itself, corporate leadership should feel responsible to a wide range of stakeholders including the general public stating that a corporate management’s mentality should be that it has responsibilities towards, “stockholders, employees, customers, the general public, and, perhaps most important, the firm itself as an institution.”29 There is most likely a list of reasons for the continued resistance to change, namely the simple concept of inertia coupled with the fact the pressures stemming from the financial markets have not necessarily followed the legislative changes’ evolution. There are several moral and economic reasons voiced by Survey Participants as to why the business community should prioritize positively contributing to society and their organizations’ stakeholders as much as they do shareholders and the generation of profits. Nonetheless, the financial structure in place and the culture it embodies lead to business leaders placing immense emphasis on the classic elements of the Friedman doctrine. An important segment of the Survey Participants is not surprised that in some corners corporate leaders still view their sole role as being to create profits for shareholders above all else. Kevin Sitka, President & CEO of Assiniboine Credit Union, remarks, “Maximizing shareholder value runs pretty deep.”

Chapter 5: Enhancing the Future Role of Business in Society “The role of a business in society needs to be redefined to include a social dimension so it is intrinsic to the very mission of the business.” - Guy Cormier, President and CEO of Desjardins Group

Presently, there is an evident propensity for corporate leaders to solely concentrate on shareholders and business leaders to concentrate on profit generation. Guy Cormier admits the ‘Chicago school’ of thought is “strong since the 70s and 80s. It is at the very heart of the private sector. It justified offshoring, automation, downsizing, and tax havens.” Yet, he believes that lately, businesses are starting to stray away from the Friedman doctrine. Like Guy Cormier, numerous thought leaders over the last few years have been advocating that change is necessary30. To that point, Business Leaders acknowledge they are already feeling the pressure for business practices to change. It is the view of a large proportion of the Survey Participants that the pressure will continue to mount for stakeholders’ interests and long-term considerations to carry more weight in business decision making; for businesses to share the value they create and to create value that benefits society; and for business leaders to voice their opinions on important matters in order to influence others. Indeed, although it is clear that the current role of business in society still includes a large place for shareholder primacy in Canada, it is equally clear that there will be great pressure applied for it to evolve – and quickly.

1) The Evolving Relationship Between Society and Business “I do think we’ve changed the way we think about the role we play in society - the way I think about it today versus the way I viewed the corporation 20 years ago has changed quite a bit.” – Mark Little, President and CEO of Suncor Energy Inc. The evolution of the role of business in society is visibly altering the purpose of businesses from being about generating profits for the shareholders, owners, or capital providers to something focalized more on the long-term benefit to the business’ stakeholders and to society as a whole. As a matter of fact, almost all Survey Participants acknowledge that business concepts are ever-evolving. “I think that the equation to maximize shareholder value isn’t the same as it was when today’s business leaders went to business school. By doing the right things, we’ll create value,” says Phil Arrata. Several Survey Participants highlighted examples of how things in the business world have been evolving for quite some time. Isabelle Adjahi recalls, “I have been involved in investor relations for over 20 years. In the last few years, a big 48

change has taken place. A few years ago, analysts were the ones who informed, at a high level, portfolio managers about a business’ ESG efforts. Now ESG questions are the first questions of the portfolio managers themselves, which they directly ask to businesses.” Additionally, Survey Participants are of the view that societies are demanding a change in priorities and that businesses do more than just the ‘bare minimum’. Marc-André Blanchard opines that the public is asking business leaders to meet a new threshold, “Compliance used to just be you acting legally. It is now morphing into are you acting legally and ethically?” Karen Sander adds, “The standards that society is expecting businesses to live up to are increasing with time. Things that businesses did 50 years ago would be deemed completely unacceptable today.” The majority of Survey Participants speculate the trend towards businesses being more engaged on societal matters will continue. Danny Murphy is of the opinion that pressure on business leaders has increased and there is more to come, stating, “Business is harder than it was thirty years ago. Disrupters are changing behaviours. Environmental concerns are a freight train coming at businesses.” No one can predict the future with certainty, but there are obvious trends, discussions, and movements that can provide us with a window into what is to come.

2) Increasing Focus on All Stakeholders “Board members need to be assessing the performance of a company beyond just shareholder value” – Lisa Kimmel, Chair and CEO of Edelman’s Canadian and Latin American operations There are currently strong movements to reject the Friedman doctrine which espouses the principle that the exclusive duty of corporate leaders is to maximize profits for shareholders (see ‘The Evolution of the Purpose of the Corporation’ above). Victor Thomas, President and CEO of the Canada-India Business Council, explains, “There’s a fundamental shift away from the old-school Friedman model, of shareholder value being the utmost and exclusive thing that companies are beholden to.” Nonetheless, a large part of Survey Participants views these movements as to not mean shareholders are unimportant, but that shareholders should now have other stakeholders on the same level of importance as them. A significant number of the Survey Participants believe this is the future purpose of the corporation. Robert Yalden offers an explanation, “Shareholders are very often the linchpin in a company’s financing strategy, and the rest of your capital providers are obviously also important. You’ve got to think about how to keep all of them happy if you expect to have access to capital on the best terms possible. But I think it’s integrating that reality into a bigger picture and accepting that there is a bigger picture that’s also legitimate. Ultimately, it is a good thing for shareholders for there to be a well-conceived and well-executed vision for long-term value creation.” Likewise, virtually none of the Survey Participants argue that a business should not put great importance on profit generation. As a matter of fact, many point out the immense pressure that exists to hit financial targets quarterly and to deliver profits. For instance, a Business Leader surveyed declares profits are essential to being able to continue the work a business leader is doing, “The bottom line: It’s all fine and dandy - you can have the best ESG programs, but if your share price isn’t performing, you’re in trouble.”

Hassan Yussuff comments, “Make sure the business is successful which will give you a whole lot of leverage to do a bunch of other things.” John Bragg puts it simply, “Pay attention to the business. Make your numbers.” Another Business Leader is of the view that “Unless the rules of capitalism and the underlying assumptions are completely re-written – and I don’t see that happening anytime soon – you need to perform.” Nevertheless, most of the Survey Participants recognize that delivering profits to shareholders, capital providers, or owners albeit crucial to a successful business, will no longer be enough to be deemed successful or to maximize value creation in the long-term. They predict that the future role of business in society will go beyond profit creation and include delivering value and providing benefit to society more broadly. Martin LeBlanc submits, “There needs to be a definition of what it means to be a business that goes beyond pure profit growth.” The Right Honourable David Johnston believes this model to be necessary, “One must look beyond the bottom line, profit, and the reward of shareholders and look at something more long-lasting.” To this point, ‘misguided’, ‘short-sighted’, and ‘the wrong approach’ are just some of the negative reactions from Survey Participants when asked what they thought of the idea that the ‘leadership of a business needs to focus first on generating a profit and if they are successful in doing so can then think to support other things deemed important, such as the environment and social challenges’. The reaction of the Survey Participants to this assertion is yet another indication of what the role of business in society will be in the future and is a repudiation of the views put forward by Milton Friedman that the only social responsibility of a business is to “engage in activities designed to increase its profits.”31

3) Longer-Term Thinking “Short-termism is often a problem, but many investors would probably not invest in a business that doesn’t have quarterly reports.” – Helen Antoniou, Executive Coach and Chair of the Board of Governors of Concordia University Shareholders can ultimately apply considerable pressure on a corporation’s leaders and CEO. Plus, shareholders are ultimately investing in a given corporation – often, for a short duration - to see a return on their investment. This equation leads to shareholders applying immense pressure on corporate leaders and CEOs to concentrate on profit maximization which in turn can push a more short-term agenda and focus throughout an organization. As a matter of fact, ‘short-termism’ was raised as one of the largest challenges business leaders face to having their organization be more purpose-driven. “The whole system of a public company is geared towards the short-term,” cautions one Business Leader. “You don’t need a purpose for the next 90 days or the next quarter,” remarks André Beaulieu. Be all that as it may, plenty of the Survey Participants believe there will be pressure for business leaders to place a larger emphasis on long-term thinking. An important number of the Survey Participants advocate that it will be necessary to have businesses thinking more about the long-term for the world to overcome the global challenges before it. Some Survey Participants argue that as the public cares more and more about the challenges facing the world, the more pressure there will be on businesses to change their ways and think

longer-term. Upkar Arora warns, “You can’t solve systemic fundamental long-term problems of climate change and income inequalities with short-term thinking.” Some of the Survey Participants are of the opinion that for business leaders to not prioritize the short-term as much as they currently do, there is a need for organizations to stray away from the typical fixation on profits and to enhance the focus given to other stakeholders. These same Survey Participants are concerned that if the only element of the frame used by business leaders to make decisions is profit, they will inevitably gravitate towards short-term interests – which in a corporate setting is often the short-term interest of the shareholder to see profit growth. Christine Bergeron, CEO of Vancity observes, “You often hear about ‘stakeholders’ in business, but what leaders are most often thinking of when they make key decisions is ‘shareholders’ and the maximum value a company can return to them in profits. This skews the way leaders think about both risk and return. I think we need to move beyond this and think about how we incentivize decisions that ensure a reasonable return for shareholders and that includes a long-term view of the risks we should be taking to build the world we need.” Paul Klein comments that compensation is playing a role in driving short-term thinking. Many of the Survey Participants agree that the structures for remuneration often incentivize business leaders to focus on profit maximization in the short-term. To allow a CEO some flexibility to pay attention to matters of importance other than profits and lead for the long-term, Sophie Brochu suggests there should be a modification to the role of the CEO by offering a small but important nuance, “The CEO’s responsibility is to optimize profits, not to maximize profits.” Some Survey Participants are of the view that it will in all probability take other stakeholders demanding businesses take a longer-term approach for there to be any real changes. A few go further and remark that it will take the government forcing the hands of business leaders to espouse a longer-term mentality. Shawn Smith, co-founder and Executive Director of RADIUS and Adjunct Professor at the Beedie School of Business, comments, “I think a lot of people have levers. I think we can think about regulatory and tax incentives that help companies think a little bit longer-term.” The short-term pressures will undoubtedly make it tougher for business leaders to place more importance on long-term considerations. That is bad news for those who would like to see businesses be more purpose-driven. At the same time, businesses that concentrate more on all stakeholders instead of simply profits and shareholders have a better chance of prioritizing the long-term over the short-term according to a significant proportion of the Survey Participants. Thus, one can arguably conclude that linking profit with purpose by creating and sharing value with stakeholders can help a business perform better in the long-term.

4) Sharing Value Created “The age of the primacy of shareholder value has passed. The principles of shared value have emerged.” – Michael McCain, President and CEO of Maple Leaf Foods There is momentum for the movement to have businesses generate and share value with their stakeholders and even with society as a whole. To that end, one element many of the Survey Participants include in their descriptions of what the future holds for the role of business in society is that on top of value generation, businesses will need to share that value with stakeholders. Some Survey Participants affirm there is an important nuance to point out: a business could arguably be preoccupied with a given purpose yet is still not sharing the value created. Consequently, a noteworthy number of Survey Participants are championing that the business community must shift from a philanthropic model to a purpose-driven one. Sophie Brochu urges, “We have to move from a philanthropic system to a truly social system.” Some warn the shift will happen regardless of whether businesses help to make it happen. For instance, Marc-André Blanchard anticipates that soon businesses that are simply practicing CSR will no longer be seen as doing enough for society. Zita Cobb takes this point even further and states that one of the problems with the current economic model that really needs to be addressed is that too many business leaders are making decisions to pull operations out of communities leaving these often smaller communities high and dry. Zita Cobb argues businesses are consolidating under the guise of efficiency and necessity when it is really about the need to feed shareholders’ and investors’ unquenchable thirst for perpetual growth. Zita Cobb advocates for a new type of capitalism extremely focused on sharing value with communities, “We need to find a way to make our system look more like community capitalism and not corporate capitalism.” It seems to be for these reasons that a handful of Survey Participants bring forward the idea that business leaders should be adopting the concept of ‘shared value’. In Cathy Glover’s opinion “Defining purpose feels like a public relations exercise” and businesses should be more concentrated on adhering to the Michael Porter/Mark Kramer school of ‘shared value’.32 For Porter and Kramer, ‘shared value’ is about “creating economic value in a way that also creates value for society by addressing its needs and challenges.”33 Michael McCain is of the view that both ‘purpose’ and ‘shared value’ must be a part of a business’ core operations for it to claim to contribute positively to society in an authentic and real manner. Michael McCain puts the two on an axis, providing four quadrants that determine if the business has a purpose and is creating shared value.

Figure 11: Shared Value & Purpose continuum

Jillian Goltz, Chair of the organizing committee for the local community of B Corps in Alberta, implicitly explains the importance for a business to aspire to be in the top-right quadrant, “I think everyone has a role to play. I think it’s one thing for businesses to say, ‘we want to align our profit with purpose’, but you also need to look at the community that the business is in. Because if they’re not addressing the needs within their communities, from a purpose perspective, then it’s kind of irrelevant.” In addition, it is the opinion of a number of the Accelerators that in the future when determining the value a business is seeking to deliver other than profits it will need to look beyond its stakeholders and consider providing value for all of society. This approach may sound rational, but there are undoubtedly challenges for business leaders to get away from the day-to-day and short-term pressures of maximizing profits for their organizations’ next quarterly report with the goal of investing more time, effort, and resources into ameliorating their stakeholders’ well-being.

5) Creating and Measuring Societal Value: The Role of the Sustainable Development Goals “If it can’t create a societal benefit, then a business does not have a right to exist.” Faisal Kazi, President and CEO of Siemens Canada If a business leader accepts that in the not-too-distant future the purpose of a business will go beyond generating profits for shareholders, owners, and/or investors and will be about creating and sharing value with society, the next question becomes ‘What type of value for society should a business create?’ A few Survey Participants submit there is a pivotal nuance to be aware of: it is conceivable for a business to be concentrated on a given purpose and to be sharing the value it is creating, yet not be creating ‘value’ that is a net positive for society. To illustrate, Kasha Huk, points out that there is an important movement afoot to have businesses internalize the externalities of creating their products or providing their services that before now, were never taken into account. A couple of Survey Participants exclaimed that if this movement picks up steam, businesses better start to ‘future prep’ as their business models will potentially be completely outdated. Some Survey Participants - like Tamara Vrooman – explain that if the true cost that goes into producing products and services would need to be paid in totality by businesses, a significant proportion of them would not be as profitable as they are with the cost of the externalities being covered by government and ultimately the general public. There are several Survey Participants, however, expressing uncertainty regarding how best to determine what is ‘value’ for society. A notable percentage of the Business Leaders argue that determining what type of ‘value’ for society is deemed positive is subjective and thus makes it difficult for a business to deliver on something that is ill-defined. Although many of the Accelerators acknowledge that it is not necessarily easy, they believe there is a way to determine what is of ‘value’ to society objectively using the United Nation’s Sustainable Development Goals (hereinafter referred to as the “SDGs”).

It is remarked by many of the Survey Participants that the SDGs are an international consensus on what the world needs and are, therefore, a logical way in which to determine what type of value a business should create for society. The former Canada Ambassador and Permanent Representative to the United Nations in New York, Marc-André Blanchard, flags that business leaders should refrain from searching for a better guide and use this internationally recognized one that “already exists and is all-encompassing”. An Accelerator surveyed is of the same opinion, “They are the right goals and the (UN) has put forward a comprehensive set of goals not just for governments but also for businesses.” Mary Ellen Schaafsma opines, “They’re an excellent framework to align efforts all in the same direction.” A Business Leader surveyed agrees, “It’s an extremely useful set of goals that allows everybody to orient themselves quite nicely.” A challenge, however, is that the SDGs seem to suffer from low awareness amongst the Canadian business community. Chris Ragan estimates a very low proportion of the business community is engaged with the SDGs, “I’d be shocked if 10% of Canadian businesses understood the SDGs.” Marc-André Blanchard admits there is not a high level of awareness of the SDGs amongst the Canadian business community.

Figure 12: Breakdown of Survey Participants’ assessment of the level of awareness of the UN SDGs within the Canadian business community

The majority of Survey Participants believe the SDGs suffer from limited awareness amongst the Canadian business community. In fact, 55% of Survey Participants state they judge there to be low or no awareness while only 8% believe there is high awareness and 32% are of the view that there is high awareness among some specific businesses, but low in most others. Amongst the Business Leaders group the percentage of those who respond low or no awareness jumps up to 61%.

Figure 13: Breakdown of Business Leaders’ and Accelerators’ assessment of the level of awareness of the UN SDGs within the Canadian business community

One-third of all Survey Participants - 23% amongst the Business Leaders and 43% amongst the Accelerators group - respond that there is a high awareness of some Canadian business leaders and low awareness in most others. This ‘mixed bag’ of an answer is most likely explained by the fact that a number of Survey Participants are of the opinion that overall, there is low awareness, but a small number of businesses are more aware of the SDGs out of necessity. They opine that the necessity is attributed to certain businesses needing to be engaged on the SDGs as a result of the industries and/or markets they are in. One business leader explains that in the resource industry, the SDGs are very much a focal point, therefore, Canadian businesses need to be engaged on the SDGs as they look to develop natural resource projects around the globe. Further, it is suggested by some participants that businesses with significant and diversified international operations and markets have higher awareness out of a requirement of doing business in regions that are more engaged on the SDGs. Mark Little explains, “Where we tend to see the UN SDGs a lot more is when we engage with the global business community.” Furthermore, it is concluded by some Survey Participants that the level of awareness of the SDGs in the United States is low. They argue this low awareness, in turn, leads Canadian businesses in which the United States is their primary – and for some, only - international market to not engage with the SDGs as much as other businesses that have considerable international markets in other regions other than the United States. One Business Leader surveyed declares that they judge the engagement of the SDGs of the business community in Canada as higher than that of the United States but lower than that of the European Union. 55

Should there be more SDGs? Some of the Accelerators are advocating for three new SDGs to be included in the UN’s framework; Aging, Indigenous people, and Sense of belonging.

Another Business Leader surveyed offers a hypothesis as to why there is lower engagement with the SDGs in the United States and Canada, “I think a lot of these SDGs are targeted towards a developing world.” Lisa Kimmel submits that even though some in the Canadian business community may be aware of the SDGs, whether the United Nations’ goals are at the heart of their business’ decision making and operations remains questionable, “Companies that are multinationals with Canadian subsidiaries may be signatories to the principles, but are they living them and are they part of what guides them?” Indeed, it is worth underlining that a noteworthy number of the Survey Participants note that an important number of Canadian businesses demonstrate an interest in advancing the SDGs by often using them in CSR reports or annual reports. It is hypothesized by some Survey Participants such as Allyson Hewitt and Judy Cotte, however, that this is due in part to the fact that the businesses are reverse engineering desirable results with the corresponding SDGs. Meaning, instead of being intentional about advancing a specific goal, they highlight the areas they are currently working on and then link them to an SDG. Vic Huard goes a step further and adds affirmatively that there are virtually no Canadian business leaders that can say the SDGs are truly serving as their guiding framework. Denis Carignan, President of the Professional Aboriginal Testing Organization, effectively encapsulates the Survey Participants’ impression of the Canadian business community’s utilization of the SDGs, “I think that there are elements within especially larger corporations that are aware of them, but it really depends on what you’re doing and who you’re talking with as to the degree of awareness. I don’t think that any businesses have incorporated all of that into their business mantra.” With all that said, most Survey Participants, even amongst those who are of the view that Canadian business leaders lack awareness concerning the SDGs, do believe the United Nations’ framework can play an enhanced role within the Canadian business community moving forward. Michael McKnight is of the view that “There’s more international recognition of it than there is local recognition of it in Canada, but it’s growing, it’s becoming a bigger and bigger topic.” Some Survey Participants suggest there are numerous potential benefits to yield from the further engagement of the Canadian business community on the SDGs. Kate White, the President and CEO of the United Nations Association in Canada, submits that the SDGs represent an economic opportunity for Canada while Marc-André Blanchard, who points out that China’s five-year plan is based on the SDGs, opines that the United Nations’ framework represent an opportunity for Canada to exert more influence on the world stage as many countries will need help delivering on the seventeen goals. Some Survey Participants observe that millennials and Gen Z are more aware of the SDGs. The Right Honourable David Johnston postulates, “I think the SDGs are impressive and good standard setters. I think they may not be nearly as well known in the business community in Canada, but I’ll tell you where they are - amongst young people.” Given the younger generations will increasingly find their voices as employees, customers, and investor groups moving forward, there is assuredly reason to be cautiously optimistic about the future of Canada’s commitment to the SDGs.

It would be good news if the SDGs were used to their full potential by the Canadian business community. Businesses would be linking profit with purpose while addressing major challenges facing the world by creating and sharing societal value with their stakeholders. There would be a reason to rejoice, yet businesses would be asked to go further by voicing their support for the need to have businesses be purpose-driven.

6) Leading on the Big Issues “Leaders are supposed to lead.” – Zita Cobb, Canadian businesswoman and social entrepreneur The year 2020 will be remembered for a list of reasons including the Black Lives Matter (BLM) movement which is centered on eliminating systemic racism and police brutality towards black individuals. With the BLM movement has come immense pressure for businesses to speak out against systemic racism and take concrete actions within their organizations and communities to help eradicate it. According to numerous Survey Participants, the types of expectations placed on businesses in 2020 and 2021 to step up on systemic racism will not be the exception in the future and will in fact become the rule. Quite a few of the Survey Participants are of the view that to truly be a purpose-driven business that gives prominence to all stakeholders means that in addition to the organization putting in efforts itself, it will also work to influence others to help address societal issues and any injustices towards its stakeholders. In other words, there is mounting pressure for business leaders to lead.

i) Speaking Out on Social Issues “No one has ever improved the world without making a few people uncomfortable” – Michael McAdoo, Partner and Associate Director at Boston Consulting Group It is the view of a number of Survey Participants that business leaders will increasingly need to use their positions of influence to voice their concerns, suggestions, and ideas on substantial social matters on the public stage. This is a departure from the long-standing practice of business leaders staying out of the public discourse. Although it is seen a tad more these days, it is quite abnormal for business leaders to voice their opinions and participate in public debate unless it is a topic that will directly impact their business and even in that scenario, it is often business associations, councils, or chambers of commerce doing the talking on their behalf. This is yet another corporate behaviour that was arguably born or at least enshrined out of the ‘Chicago School’ of thought. Milton Friedman did not believe corporate leaders should speak out on public issues. According to Eric Posner, Friedman claimed that “business executives, although ‘extremely far-sighted and clear-headed in matters that are internal to their business,’ evidently became ‘short-sighted and muddle-headed’ in matters of public import.34 Some business leaders appear to be dismissing this element of the Friedman doctrine as well. Chris Coulter implores business leaders to speak out, “Companies have got to speak up – to be an 57

advocate for positive change is an increasingly important expectation and dimension of corporate leadership. One of the most important impacts companies can have is to use their influence to drive for more systemic changes, within their supply chain, within their industry and within the regulatory and policy environment.” There is recognition amongst the Survey Participants that it is not always easy for business leaders to speak out on account of potential backlash from stakeholders, in particular customers, employees, shareholders, boards of directors, investors, and governments - which most likely explains their reticence to be heard. Regardless, some Survey Participants provide a reminder that making a difference is often not easy. Indeed, when asked about the considerations and challenges facing a business leader who wants to be publicly heard on a certain issue, some Survey Participants simply respond with a version of ‘so what?’. Louis Audet observes, “That’s the new world of democratized communications, if we’re afraid of that and take that as a reason to do nothing, then nobody will ever do anything.” Numerous Survey Participants are strongly advocating for business leaders to speak up and be heard on important societal issues more frequently moving forward. Alison Loat is of the opinion that civil society and the business world need to get used to business leaders speaking out, “There is a lot of care and scripting that goes into CEO’s statements, such that we’re often surprised when a CEO actually says something or speaks from the heart.” Sophie Brochu agrees and would like corporate boards to provide support to allow CEOs to speak out: It takes a board of directors that will allow the CEO to speak on things other than the business.” Lisa Kimmel, of Edelman, which annually releases the Edelman trust barometer, analyzing the public’s trust in certain institutions, believes there is an argument that CEOs not speaking out can thwart their ability to lead, “CEOs particularly in Canada are not willing to be in the spotlight and are generally not willing to take a stand on issues. And they don’t communicate frequently enough with stakeholders. It’s a key issue that prevents Canadians from trusting business leaders in this country.” It is the view of some Survey Participants that CEOs should start to get accustomed to commenting on important societal issues as the pressure for them to do so will continue to mount. Lisa Kimmel anticipates, “Canadian CEOs are ultimately going to be forced to take stands or to have a position on issues because there’s going to be a swell of grassroots pressure on them to do so.”

ii) Encouraging Other Business Leaders to Act “Creating a community of interest around purpose, helping business people find like-minded people to spend time with - that’s a pretty good start.” – André Beaulieu, Senior Vice President of BCE Inc. Some Business Leaders note that members of the business community are people who need support – or a nudge - from time to time just like anyone else. An interesting number of Survey Participants, including Business Leaders themselves, raise the idea that it would be nice to have peer groups supporting one another as they each go through the journey of transforming their businesses to purpose-driven organizations.

Further, a handful of Survey Participants submit that it will be necessary for there to be some peer pressure on business leaders to step up on linking profit with purpose by creating and sharing value with stakeholders if there is going to be any real change. These same Survey Participants often discuss the need for business leaders to publicly voice their support for the concept of linking profit with purpose. Some believe this could have many positive impacts including improving the relationship between society and business. “If we can get some business leaders together to really truly talk about this as being important to Canadians, we’re going to start to rebuild trust in capitalism, trust in the business community,” affirms Michael McKnight. The Business Leaders have certainly tried to lend their voice and raise awareness about the discussion regarding the linking of profit with purpose by participating in the interviews for this report. A considerable number of Survey Participants opine that Business Leaders should also support a similar initiative to that of the U.S. Business Roundtable (BRT) statement of 2019. On that note, Survey Participants were asked if they thought a Canadian version of the BRT statement would be helpful. It is frequently argued by Survey Participants that businesses in Canada already do what the BRT statement puts forward as they place an emphasis on all stakeholders rather than a sole focus on shareholders. Some Survey Participants argue this has been established in Canada through law and legal precedent or business practices. “I think the declaration in the US was far more important than it is in Canada because I think Canadian corporations just naturally have a disposition this way, just because our culture is quite different,” says Mark Little. Moreover, some Survey Participants point out the lack of follow-up to the BRT’s statement is a real problem. Indeed, there is empirical evidence that the BRT statement has not led to any concrete actions by its signatories.35 Louis Audet’s reaction to the BRT statement illustrates some of the concerns the Survey Participants raise, “In view of the state of the nation in the United States, it’s a little late - nice try, but you’ve just begun.” Consequently, Survey Participants frequently caution that it would be imperative for business leaders who would sign on to a Canadian version of the BRT statement go further on action and follow-ups than their counterparts in the United States. “Statements are important, they’re absolutely important. Today’s markets, today’s consumers are incredibly smart. So, they can see through statements into what’s really happening. If you’re going to put your name behind a statement, you had better be living it,” notes Kevin Sitka.

Figure 14: Views of all Survey Participants on whether a Canadian version of the US Business Roundtable statement would be doable and useful. 59

Guy Cormier is of the view that a Canadian version of the BRT statement could be helpful if it is sincere, an initiative to spark dialogue to influence decision-makers and not just a marketing ploy. Dr. Marie Delorme agrees and remarks that there have been inauthentic declarations made in the past, “A collective commitment is always a good start. But it is only a start. A statement, without meaningful action, becomes a vinyl trophy. One only needs to look at the commitment most corporations have made to diversity, but a scan of senior management and governance roles provides evidence that little progress has been made in the past 30 years.” Dan Kelly, President, CEO, and Chairperson of the Board of the Canadian Federation of Independent Business, adds skeptically that such a statement might not end up being real in action for many, “I would suspect that the first time an environmental goal or a labour goal got in the way of the share price of a large multinational, it would be ditched really fast.” Conversely, a part of the Survey Participants observes that although these points against a Canadian version might be true, Canada should still deliver a similar statement to that of the BRT. They argue that not only would a statement be helpful, but it is also needed as Canada is lagging on the narrative of this consequential issue when instead it could be global leaders. Michael Penner remarks, “We are eons’ ahead of the United States in practice and in spirit, but eons behind in PR and announcements.” Martin LeBlanc is of the view that it is of great importance for Canada to put out a statement that is even better in its declaration and in its follow-up because, in the absence of others, the BRT statement is “interpreted as the world’s capitalist system statement”. The majority of the Survey Participants believe a Canadian version of the BRT should be pursued. “The message that you have more than the shareholders to be accountable to is a great message.” comments one business leader. Suzanne Bergeron declares that “It is imperative and necessary.” Of the Survey Participants, 70% are of the opinion that a Canadian version of the BRT Statement would be useful compared to only 5% who are of the view that it would not be useful. One-quarter of Survey Participants are uncertain and feel that it would maybe be useful. Among Business Leaders 66% say a Canadian version of the BRT Statement would be useful while only 7% believe it would not be useful. A quarter of Business Leaders judge that it would maybe be useful. Even if it is not a solution in itself, some Business Leaders argue it can help. Michael Sabia remarks, “The more messages that get sent; it helps. It’s not a solution, but it helps.” Vicki Wallace-Godbout believes since business leaders are busy running their organizations, they often put their own prioritization on each of the stakeholder groups, a Canadian version of the BRT statement could be helpful as it could serve as a reminder of different issues and stakeholders the business leaders should be making time to consider. Among the Accelerators group 75% are of the view that it would be helpful compared to only 4% who are of the opinion it would not be. It would appear the Accelerators are quite keen to see the business community put out a statement like the BRT’s. Mary Ellen Schaafsma adds, “Yes, absolutely, Canada should do that. We need to step up. Unfortunately, we weren’t the first, but that doesn’t mean we don’t also put our stake in the ground.”

Figure 15: Views of Business Leaders and Accelerators on whether a Canadian version of the US Business Roundtable statement would be doable and useful.

There is a clear majority of the Survey Participants that are of the view that there should be a Canadian version of the statement. On the other hand, plenty of the Survey Participants advocate that a Canadian version would need to be a tad different. They suggest proactively addressing the main issue of the BRT statement by ensuring there is action and follow-up stemming from the statement. Moreover, it is suggested that any Canadian version include more small businesses instead of just large businesses as the BRT has done. Andrew Molson, Chairperson of Avenir Global and Chairperson of Molson Coors Beverage Company, remarks, “I quite frankly like the idea of making it less ‘big business’ in Canada. There are a lot of small businesses that care a lot about their communities.” Dan Kelly, who leads an organization representing small and medium-sized businesses thinks it would be easier for Canadian SMEs to sign on to such a declaration, “I really don’t think it would be a stretch to get buy-in from small and medium-sized businesses, I think in some ways they are already there.” Canadian business leaders signing on to a substantive statement that would be supported in action and follow-up would be a significant demonstration of leadership to other businesses in the country and around the globe. In addition to that, it is a great way for business leaders to convince their colleagues of the importance of linking profit with purpose by generating and sharing value with stakeholders. A few of the Survey Participants speak about how peer groups of business leaders would be helpful for those looking to assist in the effort to overcome challenges facing the globe by linking profit with purpose through generating and sharing value with stakeholders. Some Survey Participants explain that cooperation with other business leaders - even one’s competitors - can be a very helpful exercise. A Business Leader surveyed explains that even if competitors will most likely not collaborate when the topic or matter can represent a competitive advantage to a business, there is no problem to collaborate on issues that affect the industry or the larger community. Further, it is the view of Michael McCain that it is in the best interest of all stakeholders for businesses to collaborate when appropriate and points to the example that many in the food processing sector agree to not ‘compete’ on safety. Michael McCain speaks proudly of how Maple Leaf Foods will help competitors when it can ensure safety in their operations. 61

Meanwhile, Elizabeth Alves, Vice President, Enterprise Strategy and Social Responsibility at Cogeco and Nancy Bouffard, Senior Director of Corporate Communications at Cogeco believe one way in which peers can support each other is to have best practice sharing through a network of businesses. It is the belief of some Survey Participants, that there is a need for some of Canada’s business leaders to act boldly and articulate the value in stepping up to create and share value with society through linking profit with purpose by generating and sharing value with stakeholders with the aim to convince and even apply pressure on other business leaders to do the same. Clarissa Desjardins is of the view there is really no peer pressure at the moment on Canadian business leaders to step up. Accordingly, she says more peer pressure is needed and one way in which a business leader can apply some is to, “Set the standard on something.” She puts forward the idea that taking action and lifting the ‘bar’ on something will apply implicit pressure for others in the same industry or with similar operations to do the same. One Business leader suggests that a way to influence others in the business community to link profit with purpose is to use the organization’s sphere of influence. The idea is to apply pressure on a stakeholder, so they work on having a more positive impact. For instance, an organization could apply pressure on its suppliers to do more to create and share value with their respective stakeholders such as their employees, the communities in which they operate, and even customers – which has the added benefit of including the organization applying pressure. Zita Cobb adds another example saying that a business can exert influence through its procurement and tendering process, “For every dollar you spend, know where that money goes - and know its impact.” Some Survey Participants speak about the power of looking at where a business’ money goes and its impact. To illustrate, Louis Audet spoke about how the business he helps lead had done an assessment of who within the organization is the most likely to feel like they are being left behind. This exercise found it to be sub-contractors. Louis Audet argues it is a consequence of the typical tendering process normally putting a lot of weight on price which drives down the ability of the sub-contractor to provide better salaries and benefits to its workers. Even though a business leader who has successfully embarked on the journey to set up their business in a way that links profit with purpose by generating and sharing value with its stakeholders should be commended, one more thing is going to be asked of them in the future; they will be expected to use their voice and their influence as a business leader to encourage others to follow suit.

Conclusion: The Imperative to Act “Engaging young people will help you see where the future wants to go.” – Zita Cobb, Canadian businessperson and social entrepreneur

Canadians are concerned about inequalities, climate change, and inequities.36 As a result, more and more Canadians, especially younger generations, are living their values in their choices of who to work for, who to purchase from, who to invest in, and who to vote for. Consequently, it is in the self-interest of Canadian business leaders to join the conversation and act, so their organizations are linking profit with purpose by generating and sharing value with stakeholders as a means to address the challenges of the day. Fortunately, if there is a piece of positive news to take from the views of the Survey Participants in this report, it is that the Canadian business community is not only aware of the challenges of climate change, inequalities, and inequities, but the majority of them are also actively trying to figure out how to adapt their respective businesses with an eye to playing a larger role in overcoming these challenges. With that said, most of the interviews for this report were conducted pre-COVID-19 pandemic. Hopefully, the resolve of the business community in Canada to help address these challenges will not only remain post-pandemic but will be enhanced. With an increased economic focus as countries emerge from COVID-19, the temptation to revert to the old roles and responsibilities of the business community will be strong. If there is a prolonged economic slowdown and/or recession post-pandemic, there will be pressure on businesses to concentrate on withstanding the ‘storm’ by focusing on the traditional role of business in society: creating jobs, providing investment, driving innovation, creating products and services, and paying taxes to governments. This has the potential to divert the business community’s attention away from the fight against climate change, the rampant inequalities and inequities that must be addressed, the strained social fabric in our societies, and Indigenous reconciliation. If businesses were to ignore the calls to step up on these societal challenges, they risk further straining the relationship between society and business as was experienced after the financial crisis of 2008. Moreover, there will be a temptation for Canada to withdraw from supporting international efforts to address these challenges which will further erode Canada’s global influence. To sum it up: there is an imperative to act. There will still be an imperative to act post-pandemic.

Consequently, the following five recommendations are submitted to provide ideas to Canadian business leaders and thought leaders on how to rebuild trust and reconfirm the positive role of business in Canada in the 21st century:

1) Every Canadian business should have a clear purpose beyond making money Organizations need to show how their core processes - not just philanthropy - can address social ills and advance societal as well as economic goals. This purpose should be more than a general tagline: it should be clear and concrete, reflecting the realities, challenges, and opportunities of its particular line of business. It should reflect notions of strategic differentiation. It should be owned by the CEO and Board, but be developed in close collaboration with employees, customers and other stakeholders. There should be clear metrics and commitments associated with it. It should be integrated into the company’s strategic governance and annual risk assessment. Canadian businesses that source, operate, or sell internationally should ensure that their purpose, and purpose-based metrics, include their international impact.

2) Canadian businesses should align their key metrics with the United Nation’s Sustainable Development Goals This approach will provide a national and international language regarding purpose and impact. No set of metrics is ideal, but the United Nation’s Sustainable Development Goals are the most comprehensive, universally accepted measure today. They provide the best way of communicating commitments, and accomplishments, across stakeholder groups and across national boundaries. They provide the clearest way of linking accomplishments by individual businesses into global efforts to tackle some of the world’s greatest challenges by 2030.

3) The Canadian business community should collectively stand up to be counted: making concrete, time-bound commitments that are refined every three years By doing so, business leaders will enhance transparency and accountability with respect to their efforts of linking profit with purpose all while encouraging and inspiring their peers to do the same. A Canadian Business Declaration should be grounded in the particular challenges of our country and our time. Based on Survey Participants, climate change, diversity, Indigenous reconciliation should be key elements. Other closely related Canadian challenges, such as the provision of economic opportunities and social services to rural and remote communities, including Indigenous communities, could also be included. The declaration should make clear commitments with clear timelines. The 30% Club Canada’s clear, time-bound goal “for 30% of board seats and C-Suites to be held by women by 2022” is an example of the type of commitment that should be included in the Canadian Business Declaration.

4) Canadian business leaders should help develop and actively participate in structured national cooperation and collaboration At a time of great suspicion, and considerable mutual misunderstanding, it is imperative that senior business leaders and other key stakeholders have an opportunity to exchange in a structured, ongoing fashion. This will provide for formal peer support creating safe spaces for CEOs, board directors, and champions within organizations (Vice Presidents, Directors, etc.) to engage in honest dialogue regarding the changing role of business in society; sectoral and cross-sectoral best practice sharing on how to place stakeholders on the same level of priority as profits and shareholders; and opportunities to celebrate those on the journey of truly linking profit with purpose. At a global level, the World Economic Forum has provided this platform. There is no equivalent senior multistakeholder platform in Canada. There should be an annual Canadian Society and Business gathering, organized by stakeholders - not government - that allows honest sustained interaction.

5) Canadian businesses should take a greater leadership role in global initiatives and organizations linking profit with purpose Most of the critical issues affecting society and business, from diversity to climate change, are global in scope. Canadian business can learn from and contribute to global initiatives if proactively involved, or be blindsided by them if not. Beyond specific initiatives, global business and multistakeholder organizations provide important venues for exploring a more positive relationship between society and business. Both as investors and operators, Canadian businesses can make a distinct international contribution to aligning profit with purpose, thereby strengthening Canada’s global reputation and impact. Canadian businesses often played important early roles in international initiatives and groups, such as the World Business Council for Sustainable Development. However, with a few exceptions, Canadian businesses today are not leading global initiatives that link profit with purpose. Consequently, more Canadian businesses should take up leadership roles in initiatives and organizations addressing key global challenges by linking profit with purpose; these businesses should coordinate their actions and share lessons learned in an informal council; and Canadian business, government, and stakeholders should collaborate on ensuring that all Canadian businesses working or investing abroad consistently apply best practices in ESG. In listening to the Canadian Voices on the Role of Business in Society, the message becomes clear; Canadian business leaders must identify how their organizations will help solve societal problems by linking profit with purpose through sharing the value they create with their stakeholders. In doing so, their businesses will perform better in the long-term and will contribute to the betterment of society and the world.

Acknowledgements The authors and Global Canada would like to thank the McConnell Foundation for their support of this study, providing valuable encouragement and input, without imposing any conclusions or recommendations. The authors are extremely grateful for the time the Survey Participants so graciously provided during the interview process. The report is only as strong as the impressive list of Canadians who participated. The authors appreciate the support and work of Drew Cameron, Meriko Kubota, and Nathalie Hamel in the making of this report. Moreover, the authors thank Allyson Hewitt and the MaRS Discovery District team for their support and collaboration. The conclusions and recommendations of the report are the responsibility of the authors alone, not of any participant or of Global Canada. Although Survey Participants are extensively quoted, the authors decided how to incorporate their thoughts into the different chapters and sections. The views of this report are those of the authors only.

About the Authors Brian Gallant, former Premier of New Brunswick, led the research and preparation of this report as Chief Sustainability Officer of Global Canada. BrianGallant, is presently CEO of the Canadian Centre for the of the Brian former Premier of New Brunswick, ledPurpose the research Corporation. and preparation of this report as Chief Sustainability Officer of Global Canada. Brian is presently CEO of the Canadian Centre for the of theInternational Corporation.Group, President of Canada’s International Robert Greenhill, former President of Purpose Bombardier’s Development Agency, and Managing Director of the World Economic Forum, is the Executive Chair of Global Canada.

Robert Greenhill, former President of Bombardier’s International Group, President of Canada’s International Development Agency, and Managing Director of the World Economic Forum, is the Executive Chair of Global Canada.

AppendixAppendix 1: 1: Survey Participants’ Survey Participants’ Biographies Biographies NAME BIO Aaron Regent

Aaron Regent is Scotiabank’s Chairperson of the Board. In addition, Mr. Regent is the Founding Partner at Magris Resources Inc. and serves as the Chairperson and CEO of Niobec Inc.

Adam Legge

Adam Legge currently serves as the President of the Business Council of Alberta. Mr. Legge has spent more than 20 years leading organizations in the private sector, public policy and economic development.

Alison Loat

Alison Loat is the Managing Director, Sustainable Investing and Innovation at OPTrust, one of Canada’s largest pension funds. She is the co-founder of Samara Canada and the recipient of the Queen’s Gold and Diamond Jubilee Medals for her service to Canada.

Allyson Hewitt

Allyson Hewitt is the Vice President, Impact at MaRS Discovery District. In her role at MaRS, Ms. Hewitt helps lead the social innovation programs, including working with startups and corporates to help increase their social impact.

André Beaulieu

André Beaulieu is BCE Inc.’s Senior Vice President for Corporate Services, which includes one of Canada’s largest procurement operations, Corporate Security and Responsibility, Real Estate Services, as well the integration of corporate acquisitions and BCE’s major restructuring initiatives.

Andrew Molson

A lawyer by training, Mr. Molson is Chairperson of AVENIR GLOBAL, a network uniting seven strategic communications firms across Canada, the U.S., Europe and the Middle East. He is also Chairperson of Molson Coors Beverage Company and serves on several boards of directors, including Groupe Deschênes and the CH Group, owner of evenko and the Montreal Canadiens. Mr. Molson participates on several non-profit boards, including the Institute for Governance of Private and Public Organizations, Concordia University Foundation, the evenko foundation for emerging talent, Business for the Arts, the Québec Blue Cross, the Montreal General Hospital Foundation and the Molson Foundation, a family foundation dedicated to the betterment of Canadian society.

Bernard Lord

Bernard Lord is the CEO of Medavie, a health solutions partner. In his role, Mr. Lord provides strategic leadership to further the company’s mission of improving the wellbeing of Canadians. Mr. Lord served as Premier of New Brunswick from 1999 to 2006.

Bill Young

Bill Young is the Founder and Chairperson of Social Capital Partners, an organization he founded in 2001. Mr. Young is one of the leading voices advocating on behalf of Social Finance in Canada and sits on the Boards of Directors of several social enterprises and community organizations.

Brianna Brown

Brianna Brown is co-founder of Decade Impact Strategy & Activation. Decade Impact is a strategic consulting firm guiding small and medium enterprises across Canada to measure, manage, and communicate their impact strategies. Brianna is an expert in the B Corp movement and uses the UN SDGs to design better business practices.

Cathy Glover

Cathy Glover is the former Change-maker in Residence at Mount Royal University. Prior to joining MRU, Ms. Glover served for over 15 years in leadership roles with Suncor Energy and the Suncor Energy Foundation, retiring in 2017.

Chris Coulter

Chris Coulter is the CEO of GlobeScan. Mr. Coulter works with leading organizations to help them better understand and respond to shifting stakeholder expectations and to build trust with key constituencies.

Chris Ragan

Chris Ragan is an Associate Professor of Economics and the Director of the Max Bell School of Public Policy at McGill University and an accomplished author and economist. Mr. Ragan served as Chair of Canada’s Ecofiscal Commission and was also a member of the federal government’s Advisory Council on Economic Growth.

Christine Bergeron Christine Bergeron is the CEO of Vancity, Canada’s largest community credit union. In her previous role as the Chief Member Services Officer at Vancity, Ms. Bergeron led the Member Experience & Community Engagement division.

Chuck Magro

Chuck Magro is the President & CEO of Nutrien. In addition to this role, Mr. Magro also plays an active role on the boards of the Business Council of Canada, Business Council of Alberta and CPP Investments.

Clarissa Desjardins Dr. Clarissa Desjardins is the CEO of Clementia, a company she founded in 2011. Dr. Desjardins is an award-winning entrepreneur and has over 18 years experience in the Biotechnology industry.

Coro Strandberg

Coro Strandberg is the President of Strandberg Consulting and an influential sustainability strategist. Ms. Strandberg is a staunch advocate of innovation’s role in social, environmental, and financial progress and has played a leading role in advancing corporate social responsibility and now Social Purpose in Canada over her 30-year career.

Dan Kelly

Dan Kelly is President, CEO, and Chairperson of the Board of the Canadian Federation of Independent Business. Mr. Kelly plays a leading role in advocating on behalf of the CFIB’s 110,000 small and medium-sized member businesses. 68

Danny Murphy

Danny Murphy is the President of D.P. Murphy Inc., a leading hospitality business across Atlantic Canada.

Darcy Riddel

Darcy Riddell leads MakeWay’s BC program and is a designer and instructor in SFU’s Social Innovation Certificate. As a strategist, facilitator and activist she has spent 20 years advancing social change and sustainability initiatives.

David Johnston

The Right Honourable David Johnston served as Canada’s Governor General from 2010 until 2017. Mr. Johnston was appointed in 1995 as a Companion of the Order of Canada for his achievements in business, government, and academia.

Denis Carignan

Denis Carignan is the President of the Professional Aboriginal Testing Organization (PLATO Testing). Prior to joining PLATO, Mr. Carignan worked for many years in the public service with Indigenous Affairs and Northern Development Canada.

Elizabeth Alves

Elizabeth Alves was named Vice President, Enterprise Strategy and Social Responsibility in June 2019. Ms. Alves joined Cogeco as Senior Director, Internal Audit, in 2008. Ms. Alves was Chair of the Québec Regional Board of Canadian Women in Communications and Technology from 2014 to 2018. In June 2016, she was elected as Chair of the Board of the Fondation En Cœur, of which she has been a member since 2014.

Elizabeth Cannon

Dr. Elizabeth Cannon is President Emerita and Professor of Engineering at the University of Calgary. In addition to her position at the University of Calgary, Dr. Cannon serves as a fellow at the Creative Destruction Lab.

Faisal Kazi

Faisal Kazi is the President and CEO of Siemens Canada. Mr. Kazi leads all activities for Siemens Canada, including the organization’s overall strategic direction.

Goldy Hyder

Goldy Hyder is the President and Chief Executive Officer of the Business Council of Canada, a non-profit organization that represents 150 chief executives from leading Canadian businesses.

Guy Cormier

Guy Cormier has been President and CEO of Desjardins Group since 2016. He joined Desjardins in 1992 and was elected President and CEO in 2016. He has worked hard to develop a strong member- and client-focused corporate culture within the organization. He encourages innovation and has fast-tracked the organization’s shift into the digital space.

Hassan Yussuff

Hassan Yussuff is a Canadian Senator and the former President of the Canadian Labour Congress. After becoming the first person of colour to lead Canada’s union movement in the history of the organization in 2014, Mr. Yussuff was re-elected for a second term as President in 2017. 69

Helen Antoniou

Helen Antoniou is an executive coach for corporate leaders and family business owners, as well as a volunteer board member in the areas of health and education. Amongst other roles, she is Chair of the Board of Governors of Concordia University. Helen has practiced corporate law, management consulting and assumed leadership roles in various businesses.

Hélène V. Gagnon

Hélène V. Gagnon is the VP of Public Affairs and Global Communications at CAE. In her role, Ms. Gagnon manages communications and the company’s relationships with stakeholders, employees, the media, and governments, and leads Corporate Social Responsibility. In addition, she is a Board member of Hydro-Quebec and of the Montreal airports (ADM).

Indira Samarasekera Dr. Samarasekera is a member of the board of directors for Scotiabank, Magna International, TC Energy, and Stelco, and serves as a Senior Advisor on mining, oil and gas, and environmental matters at Bennett Jones LLP.

Isabelle Adjahi

Isabelle Adjahi has extensive experience in equity and debt financing, mergers and acquisitions, and investor relations in both Canadian and American markets. She is the Vice-President of Investor Relations and Sustainable Development at Lion Electric.

Jean La Rose

Jean La Rose is the former CEO of APTN, leaving the network in late 2019 after serving for more than 17 years. Under Mr. La Rose’s leadership, the world’s first national Indigenous broadcaster grew to new heights, including carrying the world’s first indigenous-language NHL hockey broadcast and becoming the first Indigenous television network to broadcast the 2010 Winter Olympic Games in Vancouver in English, French and eight Indigenous languages.

Jerry Dias

Jerry Dias is the National President of Unifor, representing more than 315,000 workers across Canada. In his role at Unifor, Mr. Dias is at the forefront of the fight for workers’ rights, equality, and social justice.

Jillian Goltz

Jillian has held various roles at the Ian Martin Group, a staffing firm that is a B Corp in Canada. She is the chair of the organizing committee for the local community of B Corps in Alberta.

Joel Solomon

Joel Solomon is a Founding Partner of Renewal Funds, Canada’s largest mission venture capital firm. In addition to his role at Renewal Funds, Mr. Solomon is an accomplished author and is a regular member of Vancouver Magazine’s “Power 50”.

John Bragg

John Bragg is the President and Co-CEO of Oxford Frozen Foods Limited, which he founded in 1968. Mr. Bragg’s company operates the largest fruit farm in the world with over 25,000 acres of wild blueberries. Mr. Bragg founded Bragg Communications in 1970 and under the Eastlink brand delivers telecommunication services across Canada. Mr. Bragg is a former director of TD Bank and former Chancellor of Mount Allison University. He was inducted into the Order of Canada in 1996.

John Manley

John Manley is the former Chair of the Board of Directors at CIBC and serves as Chair of CAE. In addition to his career in business, Mr. Manley has over 15 years of public service experience. He serves on the Board of Directors at Telus and is a former President and CEO of the Business Council of Canada. 70

Judy Cotte

Judy Cotte is the CEO of ESG Global Advisors. Prior to forming ESG Global Advisors, Ms. Cotte served as the V.P. & Head of Corporate Governance & Responsible Investment for RBC Global Asset Management. She is a globally recognized expert on ESG and responsible investment.

Karen Sander

Karen Sander is the Head of Corporate Giving at Hollyburn Properties Limited. Ms. Sander has over 15 years of experience in building cross-sector partnerships and is a strong believer in the ability of businesses to use their ingenuity and resources to be drivers of positive social change.

Kasha Huk

Kasha Huk is the Country Manager of B Lab - Canada. In her role at B Lab, Ms. Huk is a leading voice working on growing the B Corp movement across Canada.

Kate White

Kate White is the President and CEO of the United Nations Association-Canada. In her role at UNA-Canada, Ms. White’s mandate is to educate and engage Canadians in the work of the UN and help to support global citizens.

Keith Halliday

Keith Halliday is the Director of The Boston Consulting Group’s Centre for Canada’s Future. In his role at BCG, Mr. Halliday works to bring BCG’s consulting and analytical capabilities to Canada’s most pressing issues and opportunities, working in partnership with Canadian corporate, non-profit and government leaders.

Keith McIntosh

Keith McIntosh is a 20+ year IT industry veteran and President and CEO of PQA Testing, Canada’s largest software testing company. Mr. McIntosh is also the founder of PLATO Testing, Canada’s first Indigenous software testing company which trains and employs members of First Nations, Métis and Inuit communities.

Kevin Sitka

Kevin Sitka is the President & CEO of Assiniboine Credit Union, one of Canada’s largest. Under his leadership, ACU has increased its profitability and efficiency, while at the same time strengthening its commitment to values-based banking. In 2017, Mr. Sitka was appointed to the Board of Directors for the World Council of Credit Unions.

Larry Tanenbaum

Lawrence Tanenbaum, OC, is the Chairperson and CEO of Kilmer Van Nostrand Co. Limited. He is Chairperson of Maple Leaf Sports and Entertainment and is a Governor and member of the Executive Committees of the NBA, the NHL and Major League Soccer. He is also Chairperson of the NBA. He is a member of the Board and Executive Committee of the Hockey Hall of Fame.

Leo Wong

Leo Wong is the Associate Dean of the Undergraduate Program at the Alberta School of Business in Edmonton. In addition, Dr. Wong is an executive professor, teaching business concepts as it relates to sustainability and corporate social responsibility.

Lisa Kimmel

Lisa Kimmel is the Chair and CEO of Edelman’s Canadian and Latin American operations and sits on Edelman’s Global Operations Committee. Passionate about advancing women in business, Ms. Kimmel is also the chair of the firm’s GlobalWomen’s Equality Network.

Lloyd M. Segal

Lloyd M. Segal is the CEO of Repare Therapeutics. Previously a Managing Partner at Persistence Capital Partners and a serial biotechnology entrepreneur, Lloyd was honoured in 2013 by the Financial Times as Outstanding Director of the Year for global public companies and has served on several Nasdaq, TMX and NYSE boards.

Lois Nahirney

Dr. Lois Nahirney is the President and CEO of dnaPower Inc. Prior to becoming a biotech entrepreneur, Dr. Nahirney was the Executive Vice President, Corporate Resources for Teekay Corporation and a senior executive with BC Hydro.

Louis Audet

Louis Audet is the Executive Chairperson at Cogeco Inc., a member of the G7 Business for Inclusive Growth coalition, and Cogeco Communications Inc., after having served as both companies’ CEO for more than 25 years. Mr. Audet was appointed to the Order of Canada in 2013.

Marc-André Blanchard

Marc-André Blanchard is the Executive Vice President and Head of CDPQ Global at the Caisse de dépôt et placement du Québec. He served as Canada’s Ambassador and Permanent Representative to the United Nations in New York. Mr. Blanchard also served as a member of Canada’s North American Free Trade Agreement Council and was Canada’s representative to the Ismaili Imamat.

Marcelo Lu

Marcelo Lu is President of BASF Canada. Mr. Lu is responsible for the company’s global and regional strategic direction within Canada and Chairs BASF Canada’s Executive Committee.

Marie Delorme

Dr. Marie Delorme is the CEO of the Imagination Group of Companies. Dr. Delorme serves on the boards of the National Indigenous Economic Development Board, the Queen’s University Board of Trustees, Donner Canadian Foundation, The Canadian Centre to End Human Trafficking, and the Canadian Energy and Climate Nexus. In addition, Dr. Delorme is a member of the Order of Canada, has been named as one of Canada’s 100 Most Powerful Women.

Mark Little

Mark Little is the President and CEO of Suncor Energy Inc. In addition, Mr. Little serves as a member of the board of governors of the Canadian Association of Petroleum Producers and as a Board member for the Business Council of Canada.

Martin LeBlanc

Martin LeBlanc is the Co-Founder and CEO of Caprion Biosciences, a leading provider of innovative laboratory services to the global pharmaceutical and biotechnology industries. In addition, Mr. LeBlanc is a Director of numerous private companies and not-for-profit boards.

Mary Ellen Schaafsma

Mary Ellen Schaafsma is the Director of the Social Purpose Institute – a social innovation organization within the United Way of the Lower Mainland, focused on supporting for-profit businesses in British Columbia and across Canada to adopt, embed, and activate a social purpose for business growth and thriving communities. 72

Max Koeune

Max Koeune is the President and CEO of McCain Foods. Prior to being named CEO, Mr. Koeune served McCain Foods as the company’s CFO for 5 years and at Groupe Danone as the head of corporate development.

Michael Denham

Michael Denham is the Vice-Chair of Commercial Banking and Financial Markets of National Bank and the former President and CEO of BDC, Canada’s only bank devoted exclusively to entrepreneurs. A seasoned business leader with more than 30 years of senior management experience, Mr. Denham held senior roles at McKinsey, Bombardier, Accenture and AquaTerra before joining BDC.

Michael Hartmann

Dr. Michael Hartmann is a Professor of Medicine and an Adjunct Professor of Management at McMaster University. Prior to joining McMaster, Dr. Hartmann was the Deputy Director of the Manchester Business School and Assistant Dean at the Rotman School of Management.

Michael McAdoo

Michael McAdoo is a Partner and Associate Director at Boston Consulting Group. For more than 25 years, Mr. McAdoo has developed extensive experience in corporate strategy, public policy, and international relations.

Michael McCain

Michael McCain is the President and CEO of Maple Leaf Foods, a global leader in sustainable protein. In addition to his role at Maple Leaf Foods, Mr. McCain also serves as a director at the Royal Bank of Canada and Vice-Chair of CAMH Foundation.

Michael McKnight

Michael McKnight is the President and CEO of the United Way of the Lower Mainland. Mr. McKnight is a skilled business development professional with a demonstrated history of working in the not-for-profit industry.

Michael Penner

Michael Penner is a member of the Board of Directors at Scotiabank, Lead Operating Director for Partners Group Private Equity, and Chair of United States Infrastructure Corporation. Mr. Penner is the former Chairpersonof Hydro-Quebec and the President and CEO of Peds Legwear prior to its acquisition by Gildan Activewear Inc.

Michael Sabia

Michael Sabia is the Deputy Minister of Finance for the Government of Canada. Prior to joining the Government of Canada, Mr. Sabia served as the head of the Munk School of Global Affairs and Public Policy at the University of Toronto and as CEO of the Caisse de dépôt et placement du Québec as well as the CEO of BCE Inc.

Michael Trebilcock

Michael Trebilcock is a Professor of Law and Economics at the University of Toronto. Mr. Trebilcock is an accomplished author, including having been awarded the Owen Prize by the Foundation for Legal Research in 1989.

Monika Marcovici

As a Strategist at the Social Purpose Institute, Monika Marcovici is responsible for supporting businesses that participate in the various Social Purpose Institute programs and scaling the program across Canada.

Monique Leroux

Monique Leroux is the Chair of the Industry Strategy Council of Canada, Vice-Chair of Fiera Holdings Inc., and the Former Chair of the Board and Chief Executive Officer of Desjardins Group.

Nancy Bouffard

Nancy Bouffard is the Senior Director of Corporate Communications at Cogeco. She has more than 20 years of experience in internal and external communications within complex organizations in both the private and public sectors.

Paul Genest

Paul Genest is the Senior Vice President of Power Corporation of Canada. Mr. Genest is a Fellow at the Brookfield Institute for Innovation and Entrepreneurship at Ryerson University and has extensive experience in government, academia, and business.

Paul Klein

Paul Klein is the Founder & CEO of Impakt, a B Corp that helps corporations solve social problems. Mr. Klein is an internationally respected voice on the social purpose of business.

Perrin Beatty

Perrin Beatty is the President and CEO of the Canadian Chamber of Commerce, Canada’s largest national business association. He is a former Federal Cabinet Minister and an Officer of the Order of Canada.

Peter Wrinch

Peter Wrinch is the CEO of Hollyhock. Mr. Wrinch’s organization offers over 80 programs and conferences each year that help participants connect to themselves, nature, and their communities.

Phil Arrata

Phil Arrata is the former CEO of MEC and served on the Board of Directors at MEC from 2015 to 2018. Prior to joining MEC, Mr. Arrata served as CFO at Best Buy and has developed a reputation as a highly respected leader within the retail industry.

Robert Yalden

Robert Yalden is the inaugural holder of the Sigurdson Professorship at Queen’s Law. Previously, he held a number of senior positions as a business law partner with Osler. During his 25 years in practice, he advised numerous boards and worked on some of Canada’s most innovative and ground-breaking corporate transactions.

Rola Dagher

Rola Dagher is the Global Channel Chief at Dell Technologies and the former President and CEO of Cisco Canada. Ms. Dagher has more than two decades of experience in the technology sector and is a highly respected leader. A passionate believer in giving back to communities and connecting the unconnected, she sits on a number of boards including the Centre for Addiction and Mental Health Foundation and Kids Help Phone. In 2019, Ms. Dagher was named Woman of the Year by Women in Communications and Technology and one of Canada’s Most Powerful Women: Top 100 by WXN.

Scott Banda

Scott Banda is the CEO of Federated Co-operatives Limited (FCL), the largest non-financial cooperative in Canada. Under Mr. Banda’s leadership, FCL was recognized as Saskatchewan’s 2015 Business of the Year.

Sean Drygas

Sean Drygas the President of Bullfrog Power and Executive Vice President of Sustainability Solutions at Spark Power. During his time at Bullfrog Power, Mr. Drygas has helped build new lines of business, including green fuels and solar programs.

Shawn Smith

Shawn Smith the co-founder and Executive Director of RADIUS, a social innovation hub at Simon Fraser University. In addition, Mr. Smith is an Adjunct Professor at the Beedie School of Business and a Business in Vancouver top 40 under 40 recipient.

Shayna Bleeker

Shayna is a strategic and insightful communications professional with deep experience in climate, energy and partnerships for systems change. After a decade as an intrapreneur, she became an independent consultant focused on network weaving, capacity building and eco-system development, and is now mobilizing investment in low carbon transitions as co-founder of and Partnerships Manager for 7 Generation Capital Corp.

Sophie Brochu

Sophie Brochu is the President and CEO of Hydro Québec. In addition to her role at Hydro Québec, Ms. Brochu sits on the board of directors at the Bank of Montreal. She was inducted into the Order of Canada in 2015.

Suzanne Bergeron

Suzanne Bergeron is the President of Sodexo Canada. In her role, she works with the Canadian Leadership team and devoted employees to improve the quality of life for millions of Canadians.

Tamara Vrooman

Tamara Vrooman is the President and CEO of the Vancouver International Airport Authority, the Chairperson of the Canada Infrastructure Bank, and the Chancellor at Simon Fraser University in Burnaby, British Columbia. Mrs. Vrooman is the former President and CEO of Vancity, Canada’s largest community credit union.

Tariq Fancy

Tariq Fancy is the former Chief Investment Officer of Sustainable Investing at BlackRock. Mr. Fancy now serves as the CEO of Rumie, an education technology non-profit that lowers the barrier to learning for underserved communities globally.

Upkar Arora

Upkar Arora is the CEO of Rally Assets, an impact investment management and advisory firm. Rally helps institutions, foundations, family offices and philanthropists invest their capital to generate financial returns and positive social impact. Mr. Arora also serves on the Boards of the University of Waterloo and Vancity Community Investment Bank.

Vic Huard

Vic Huard is the former Executive Vice President for Customer Experience and Stakeholder Relations for Federated Co-operatives Limited, the largest non-financial cooperative in Canada. Now retired, Mr. Huard enjoys travelling and experiencing new cultures.

Vicki Wallace-Godbout

Vicki Wallace-Godbout was born and raised on the Madawaska Maliseet First Nation, New Brunswick. A lawyer and small business owner with extensive experience in business development and management, Ms. Wallace-Godbout is known for her ongoing efforts in economic development initiatives with First Nations communities. In 2016, she was named Female Entrepreneur of the year in Madawaska and has served on the board of directors at NB Power.

Victor Thomas

Victor Thomas is President and CEO of the Canada-India Business Council. Prior to taking on this role, Mr. Thomas served as Vice President, Prairie Region, for the Asia-Pacific Foundation of Canada. He is a Director Emeritus of the Rideau Hall Foundation Board of Directors, Chair of Saskatchewan’s Innovation Place, and Chair of CARE Canada.

Walied Soliman

Walied Soliman is the Canadian Chair of Norton Rose Fulbright. He is also co-chair of the Canadian special situations team, which encompasses Canada’s leading hostile M&A, shareholder activism and complex reorganization transactions.

Yung Wu

Yung Wu is the CEO of MaRS Discovery District. Mr. Wu is an entrepreneur, investor and experienced corporate director. He has a proven track record of founding, scaling and backing several breakthrough companies.

Zita Cobb

Zita Cobb is a Canadian businesswoman and social entrepreneur. She was most recognized for her work with JDS Fitel, subsequently JDS Uniphase, where she contributed to building the company into one of the most successful high-tech innovators in history until she founded a set of community development initiatives on Fogo Island which are now world-renowned.

Appendix 2: Methodology & Business Interview Guide This report is based on a series of interviews conducted either in person or virtually over an eight-month period between October 2019 and June 2020. All interviews were entirely voluntary and consisted of a free-flowing conversation about the state of the relationship between civil society and Canadian businesses. Brian Gallant led the discussion for all interviews aided only by a pre-prepared Interview Guide that was shared with all Survey Participants prior to their interview. The Interview Guide consists of 20 open ended questions which served to lead the discussion, although all questions were not always asked of all Survey Participants. In addition, some follow-up questions that do not appear in the Interview Guide were asked under the circumstances of particular interviews and the chronological order of the questions in the Interview Guide was not always followed. A subset of questions from the Interview Guide was asked of all Survey Participants and responses from those questions will form some of the data that is presented in this report. In total, 90 interviews were conducted. The Survey Participants represent a diverse set of leaders across the business, non-profit, and academic fields from all Canadian provinces and one territory. The interviews were conducted in the Canadian official language of choice of the Survey Participants. Quotes delivered by Survey Participants in French have been translated into English and vice-versa for the purposes of both the French and English versions of this report. Quotes from Survey Participants in this report have been provided to give the reader a firsthand look at the viewpoints of the Survey Participants. At times, these direct quotes and other viewpoints are not attributed to the participant as some have elected to permit attribution to one or more of their quotes, while preferring that one or more of their remaining quotes stemming from the interview process be left unattributed. All material that is included in this report that is attributed to an individual participant has been approved in advance.

Interview Guide Section 1: Society and Business 1. What are the most pressing challenges in the world? 2. What do you see as the challenges facing the relationship between business and society? 3. What implications do all these challenges have for your business and/or industry? Where are the biggest risks, the biggest opportunities? How does this link to competitive advantage and sustained profitability in your sector? 4. Are you hearing more demands for your engagement in solving societal issues from your employees / customers / supply chain / lenders/ investors? How has it changed over the years? 5. Some have argued that there’s a lack of evidence and/or a lack of a business case to convince senior executives and shareholders that linking profit with purpose is good for the bottom line. What would you say to that assertion? 6. Is there an opportunity to strengthen the business case and/or better communicate the evidence that the linkage of profit with purpose is good for the bottom line? 77

Section 2: Making Profit with a Purpose Real 7. Putting philanthropic efforts aside, can you share with us your business’ approach to linking profit with purpose? 8. Do you have any examples that come to mind of what your business has done to link profit with purpose? Please elaborate why you chose these measures and on how any hurdles that were faced to implement these measures were overcome. 9. How have you aligned corporate vision and goals, strategy and risk assessment processes, policies, and resource allocations of your organization to advance profit with purpose? What are the biggest challenges to implementation? 10. Considering it has been argued that getting the buy-in of key individuals is often a significant barrier to including linking profit with purpose amongst an organization’s core principles, how have you ensured the buy-in of shareholders, board members, senior management, and other employees? 11. How do you obtain the best, most recent thinking on effectively linking profit with purpose (e.g. consultants, advisors, business/industry associations, internal experts)? 12. Do the United Nations Sustainable Development Goals (often called SDGs) play any role within your business? Could the UN SDGs help your business to identify challenges, to measure success, to communicate vision and accomplishments? 13. Which SDGs are more important or relevant to your business and industry? How did you go about deciding which ones are more important?

Section 3: Collaborating for Impact 14. How should a business engage with stakeholders and even its competitors on shared challenges and opportunities with regards to profit with purpose? 15. Is the business involved in initiatives that have businesses, industries, and stakeholders working together to address societal issues? 16. It has been suggested that collaboration between businesses and civil society is strained due to distrust and cultural differences. Considering many people have signaled that there’s a need to further encourage multi-stakeholder collaboration on the subject of linking profit with purpose, how can the following groups strengthen effective collaboration with business:

a. NGOs and other civil society organizations; b. Community groups; c. Media; d. Academia; e. Governments or other regulators; f. Other industry players; and g. the Society & Business Initiative 17. What advice would you have for other business leaders that want to build profit with purpose into the core principles of their business? Are there areas where you have had key successes and lessons learned that should be more broadly shared? 18. Are there areas that your business is still wrestling with to advance linking profit with purpose? How could the Society & Business Initiative assist? 78

Section 4: Moving Forward 19. With the U.S. Business Roundtable Statement in mind, would a similar Canadian Statement be useful and doable? 20. Considering the challenges and opportunities mentioned in this interview, how can the Society & Business Initiative be of best use overall and for your business?

Appendix 3: Society and Business Initiatives Around the Globe

BSR (Business for Social Responsibility) is a global nonprofit organization that works with its network of more than 250 member companies and other partners to build a just and sustainable world.

CDP (Carbon disclosure project) is a nonprofit running the leading global platform for environmental disclosure, focusing investors, companies and cities on taking urgent action to build a sustainable economy.

Ceres is a sustainability nonprofit organization working with the most influential investors and companies to build leadership and drive solutions throughout the economy.

The Prince of Wales’s Corporate Leaders’ Group is a select group of European business leaders working to advocate solutions on climate change to policymakers and business peers.

The B Team is a nonprofit initiative formed by a global group of business leaders to catalyze a better way of doing business, for the wellbeing of people and the planet.

The Climate Group is an international nonprofit that specializes in bold, catalytic and high-impact climate and energy initiatives with the world’s leading businesses and regional governments.

The World Business Council for Sustainable Development is a global, CEO-led organization of over 200 leading businesses working to accelerate the transition to a sustainable world.

Certified B Corporations are a new kind of business that balances purpose and profit. They are legally required to consider the impact of their decisions on their workers, customers, suppliers, community, and the environment. This is a community of leaders, driving a global movement of people using business as a force for good.

Anchored by SDG 17, Partnerships for the Goals, IMPACT2030 is uniting the private sector to scale the impact of their human capital investments to advance the Sustainable Development Goals.

The Movement of Movements project is an initiative currently being incubated at the Skoll Centre with the support from the McConnell Foundation. Ultimately the team aims to enable intensive and deliberate mobilization of movement organizations to build critical mass and enable deep and lasting transformation, resulting in change at the system level.

Partners for a New Economy is an international donor collaborative that wants the economic system to generate positive environmental and social outcomes. It was founded in 2015 by the MAVA, Oak, Marisla and KR Foundations. Their vision is an economy that enables communities, people and nature to thrive.

Stockholm Resilience Centre is internationally recognized for its transdisciplinary research. It advances the understanding of complex social-ecological systems and generates new insights and development to improve ecosystem management practices and long-term sustainability.

The Aspen Institute Business and Society Program, founded in 1998, works with business executives and scholars to align business decisions and investments with the long-term health of society—and the planet.

A major research and engagement program examining the purpose of business and its role in society, led by Professor Colin Mayer FBA, Professor of Management at the Saїd Business School.

Appendix 4: The Sustainable Development Goals (United Nations SDGs)

Appendix 5: References and Footnotes Business Roundtable (2019, August 19). Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’. Retrieved from https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans 1

2 Schatschneider, B. (2020, March 9). The Purpose of a Corporation: A Brief History. Retrieved from https://www2.law.temple.edu/10q/purpose-corporation-brief-history/ 3 Murray, A. (2019, August 22). America’s CEOs Seek a New Purpose for the Corporation. Retrieved from https://fortune.com/longform/business-roundtable-ceos-corporations-purpose/ 4

Business & Society, The Aspen Institute and Future of the Corporation, British Academy.

Statement - Inequality amplified by COVID-19 crisis. (n.d.). Retrieved from https://www.chrc-ccdp.gc.ca/eng/content/statement-inequality-amplified-covid-19-crisis 5

6 Canadian Centre for the Purpose of the Corporation (2020, September 11). Canadians Want Capitalism Reformed and Demand that Businesses Step Up on Fairness and Sustainability. Retrieved from https://navltd.com/insights/ccpc/barometer-09-2020/ (please note: Brian Gallant is the CEO of the Canadian Centre for the Purpose of the Corporation)

Carrington, D. (2019, October 13). Firms ignoring climate crisis will go bankrupt, says Mark Carney. Retrieved from https://www.theguardian.com/environment/2019/oct/13/firms-ignoring-climate-crisis-bankrupt-mark-carney-bank-england-governor

Nauman, B. (2019, September 9). Sharp rise in number of investors dumping fossil fuel stocks. Retrieved from https://www.ft.com/content/4dec2ce0-d0fc-11e9-99a4-b5ded7a7fe3f

9 Canadian Centre for the Purpose of the Corporation (2020, September 11). Canadians Want Capitalism Reformed and Demand that Businesses Step Up on Fairness and Sustainability. Retrieved from https://navltd.com/insights/ccpc/barometer-09-2020/ (please note: Brian Gallant is the CEO of the Canadian Centre for the Purpose of the Corporation)

Consumer Culture [5W PR 2020 Report] - NY PR Agency 5W Public Relations Blog. (2020, February 20). Retrieved July 30, 2020, from https://www.5wpr.com/new/research/5wpr-2020-consumer-culture-report/

11 The Aspen Institute Business & Society Program argues it is also important for society in general that business define and understand its purpose; “The ways a company views its purpose are enormously consequential, not only to ensure corporate accountability, but perhaps more importantly as the architecture for value creation.” Retrieved from https://www.aspeninstitute.org/programs/business-and-society-program/purpose-of-the-corporation/.

Clift, K., & Court, A. (2020, March 23). COVID-19: How companies are responding. Retrieved from https://www.weforum.org/agenda/2020/03/how-are-companies-responding-to-the-coronavirus-crisis-d15bed6137/

Gelles, D., & Yaffe-bellany, D. (2019, August 19). Shareholder Value Is No Longer Everything, Top C.E.O.s Say. Retrieved from https://www.nytimes.com/2019/08/19/business/business-roundtable-ceos-corporations.html

Posner, E. (2019, August 22). Milton Friedman Was Wrong. Retrieved from https://www.theatlantic.com/ideas/archive/2019/08/milton-friedman-shareholder-wrong/596545/

Schatschneider, B. (2020, March 9). The Purpose of a Corporation: A Brief History. Retrieved from https://www2.law.temple.edu/10q/purpose-corporation-brief-history/

Lipton, Wachtell, Lipton, Rosen & Katz. (2018, April 11). Retrieved from https://corpgov.law.harvard.edu/2018/04/11/the-purpose-of-the-corporation/

The Economist (2020, March 14). Academics make an empirical case again stakeholderism. Retrieved from https://www.economist.com/business/2020/03/12/academics-make-an-empirical-case-again-stakeholderism 18

Business Roundtable (2019, August 19). Business Roundtable Redefines the Purpose of a Corporation to Promote ‘An Economy That Serves All Americans’. Retrieved from https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans

BCE Inc. v. 1976 Debentureholders, 2008 SCC 69 (CanLII), [2008] 3 SCR 560

Lipton, Wachtell, Lipton, Rosen & Katz. (2018, April 11). Retrieved from https://corpgov.law.harvard.edu/2018/04/11/the-purpose-of-the-corporation/

Canada Business Corporations Act, R.S.C., 1985, c. C-44 (1985)

Stakeholders’ primacy: paradigm shift confirmed. (2019, September). Retrieved from https://www.nortonrosefulbright.com/en-ca/knowledge/publications/a979357b/stakeholders-primacy-paradigm-shift-confirmed

Posner, E. (2019, August 22). Milton Friedman Was Wrong. Retrieved from https://www.theatlantic.com/ideas/archive/2019/08/milton-friedman-shareholder-wrong/596545/

26 The Economist (2020, March 14). Academics make an empirical case again stakeholderism. Retrieved from https://www.economist.com/business/2020/03/12/academics-make-an-empirical-case-again-stakeholderism 27 Denning, S. (2014, July 30). The Best Of Peter Drucker. Retrieved from https://www.forbes.com/sites/stevedenning/2014/07/29/the-best-of-peter-drucker/#5de43305a96e

Schatschneider, B. (2020, March 9). The Purpose of a Corporation: A Brief History. Retrieved from https://www2.law.temple.edu/10q/purpose-corporation-brief-history/

Lipton, Wachtell, Lipton, Rosen & Katz. (2018, April 11). Retrieved from https://corpgov.law.harvard.edu/2018/04/11/the-purpose-of-the-corporation/

31 Murray, A. (2019, August 22). America’s CEOs Seek a New Purpose for the Corporation. Retrieved from https://fortune.com/longform/business-roundtable-ceos-corporations-purpose/

Porter, M. E., & Kramer, M. R. (2015, August 25). Creating Shared Value. Retrieved from https://hbr.org/2011/01/the-big-idea-creating-shared-value

33 Porter, M. E., & Kramer, M. R. (2011, January-February). Creating Shared Value. Retrieved from https://hbr.org/2011/01/the-big-idea-creating-shared-value

Posner, E. (2019, August 22). Milton Friedman Was Wrong. Retrieved from https://www.theatlantic.com/ideas/archive/2019/08/milton-friedman-shareholder-wrong/596545/

35 The Economist (2020, March 14). Academics make an empirical case again stakeholderism. Retrieved from https://www.economist.com/business/2020/03/12/academics-make-an-empirical-case-again-stakeholderism

Canadian Centre for the Purpose of the Corporation (2020, September 11). Canadians Want Capitalism Reformed and Demand that Businesses Step Up on Fairness and Sustainability. Retrieved from https://navltd.com/insights/ccpc/barometer-09-2020/ (please note: Brian Gallant is the CEO of the Canadian Centre for the Purpose of the Corporation)

ARCH Canadian Voices on the Role of Business in Society

Articles inside

APPENDIX 3: SOCIETY AND BUSINESS INITIATIVES AROUND THE GLOBE

APPENDIX 5: REFERENCES AND FOOTNOTES

UNITED NATIONS SDGS

APPENDIX 1: SURVEY PARTICIPANTS’ BIOGRAPHIES

APPENDIX 2: METHODOLOGY & BUSINESS INTERVIEW GUIDE

ACKNOWLEDGEMENTS

CONCLUSION: THE IMPERATIVE TO ACT

6) Leading on the Big Issues

5) Creating and Measuring Societal Value: The Role of the Sustainable Development Goals

4) Sharing Value Created

3) Longer-Term Thinking

2) Increasing Focus on All Stakeholders

4) Stakeholder Approach in Theory, Shareholder Primacy in Practice

3) The Purpose of the Canadian Corporation

2) The Evolution of the Purpose of the Corporation

3) Future Prepping

iv) Investors

iii) Customers

i) Communities and Civil Society

ii) Employees

4) Personal Legacy

3) Impact on Their Business

2) Growing Criticisms of Capitalism

2) Creating and Sharing Value with Stakeholders

2) Business is Critical to Solving Today’s Toughest Challenges

iii) Lack of Trust and Social Cohesion

ii) Inequality and Inequity

INTRODUCTION

i) Climate Change

AND BUSINESS MATTERS

EXECUTIVE SUMMARY

LEADERSHIP PROFILES

1) The Status Quo is Not Sustainable

Who Is This For?