CLEAN EARNINGS

Canadian suppliers realize profits in low-carbon business activities

Product and service suppliers to the property and facilities management sector are among eight Canadian companies on the recently released list of the 200 publicly traded companies earning the highest global revenues tied to clean economic enterprise in 2019. The annual rankings — jointly undertaken by the Canadian and U.S. research firms, Corporate Knights and As You Sow — also compare the investment performance of this Clean200 against MSCI’s world (ACWI) and world energy indices.

“While tech companies like Amazon and Zoom have had a good run through this pandemic period, the broad-based trend of outperformance has been dominated by companies providing sustainable solutions,” reports Toby Heaps, Corporate Knights Chief Executive Officer.

From July 1, 2016 to January 31, 2021 the Clean200 have generated a 113.4% total return, surpassing the ACWI’s 78.7% total return. Meanwhile, fossil fuel companies in MSCI’s energy index experienced a 13.8% drop in value during the same period.

To illustrate, $10,000 invested in the Clean200 in July 2016 would since have grown to $21,340 whereas $10,000 invested in fossil fuel companies would have diminished to $8,617.

“There is now clear financial evidence showing a broad spectrum of companies and market forces making the economic transformation, which is our greatest hope in controlling climate change,” submits Andrew Behar, Chief Executive Officer of As You Sow.

The Clean200 is drawn from approximately 8,080 publicly listed entities with annual earnings in excess of USD $1 billion. To qualify, companies must derive at least 10% of their annual revenue from business activities aligned with a low-carbon economy. That includes: energy efficiency; green energy; electric vehicles; financing low-carbon ventures; low-carbon real estate footprints; environmentally responsible forestry, mining and resource management; low-carbon food and apparel production; and information and communications technology that supports such endeavours.

Some other types of listed companies are disqualified from consideration, including: oil, gas and other fossil fuel companies; utilities earning less than 50% of revenue from green energy sources; companies with earnings tied to deforestation, climate change denial, weaponry or private prisons; and/or companies with track records of worker exploitation, racial and/or gender discrimination or criminal activity.

Collectively, the Clean200 generated about 39% of revenue from clean economy earnings — placing three Canadian suppliers to the property and infrastructure sectors as above-average standouts: • Cascades Inc., a Quebec-based manufacturer and distributor of paper products and hygiene-related amenities, ranked 86th with CAD $5.2 billion (USD $3.9 billion) in clean earnings, representing more than 93% of company revenue in 2019. • Canadian Solar Inc., a manufacturer and distributor of solar modules, inverters and energy storage systems, headquartered in Guelph, Ontario, derived all CAD $4.2 billion (USD $3.2 billion) of its annual revenue from clean economy activity, placing 105th. It is also one of just 16 companies in the Clean200 with a racially diverse chief executive officer. • Brookfield Renewable Partners LP, headquartered in Toronto, literally generated 100% of CAD $3.95 billion (USD $2.98 billion) in 2019 earnings from clean power. Ranked 194th, it is the only power generation company in the Clean200 list.

Railway operators, Canadian National and Canadian Pacific, are the highest ranked Canadian companies on the list at 35th and 62nd respectively. Both also surpass the Clean200 average quotient for clean economy revenue with CN’s 85% share translating to CAD $12.88 billion (USD $9.7 billion) and CP’s 77.6% stake equating to CAD $7.39 billion (USD 5.57 billion) in 2019.

Bombardier Inc., Telus Corp. and Hydro One Ltd. complete the Canadian contingent in the Clean200. Of these, Hydro One, ranked 175th, has the highest percentage of clean earnings at 30% or CAD $2.16 billion (USD $1.63 billion), while Bombardier’s 26.3% portion translates into the highest dollar amount at CAD $5.5 billion (USD $4.15 billion), earning it 80th position. Telus Corp. is slotted at 167th with about 14.4% or CAD $2.33 billion (USD $1.76 billion) of 2019 income in clean earnings. ■

___________________________________________ FOR MORE INFORMATION ABOUT THE CLEAN200 SEE WWW.ASYOUSOW.ORG/ REPORT-PAGE/2021-CLEAN200.

BRANDING WORDPLAY

Canada Pension Plan Investment Board (CPP Investments) has rolled its holdings in energy, resources, power and renewables into a newly dubbed sustainable energy group (SEG) with approximately $18 billion in assets — including some related to conventional power, upstream oil and gas production, midstream processing, storage and transportation activities and liquefied natural gas.

In addition to stretching the definition of sustainable, an accompanying announcement states the new entity will consolidate capital and expertise for a stronger position in the global energy sector.

“The energy sector is one of the most important enablers of the global economy and is composed of a wide spectrum of suppliers from conventional to renewable,” says Deborah Orida, Senior Managing Director and head of real assets with CPP Investments. “Along our unique investment horizon, we see a dramatic opportunity to invest in, and support the evolution and innovation occurring across the sector.”

Bruce Hogg, Managing Director and previously head of CPP Investments’ power and renewables group, has been named SEG head. Avik Dey, Managing Director and head of the former energy and resources group, will continue to serve as senior advisor to SEG and the office of the chief executive officer for six months before moving on to his own entrepreneurial projects.

“The creation of the sustainable energy group with significant, flexible capital, positions us extremely well to pursue the best market opportunities across the entire energy spectrum,” Hogg maintains.

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UNEVEN FALLOUT

Gender split of real estate jobs losses draws special mention in Ontario report

Women suffered more than 89% per cent of job losses recorded in Ontario’s real estate, rental and leasing sector last year. Recently released labour force data from the provincial Financial Accountability Office (FAO) shows that COVID-19 delivered a relatively glancing blow to men in real estate roles, who accounted for less than 0.5% of the 355,300 jobs Ontario shed in 2020.

In comparison, women were jettisoned from 14,300 of the roughly 16,000 positions the real estate sector trimmed, making up more than 4% of the province’s newly unemployed. That’s generally in keeping with reported trends across the entire labour force.

Women absorbed 57% of the layoffs in Ontario, translating to a 5.8% drop from pre-pandemic employment levels, while men experienced a 3.9% decline in employment. The pace of recovery has also been slower for women.

That’s most noticeable in the 15-to-24 age cohort, in which women were still 13.2% below February 2020 employment levels at the end of year, while their male contemporaries were 2.2% shy of the pre-pandemic count. Meanwhile, 49% more women than men in the 25-to-54 age cohort — 104,900 versus 70,200 — simply exited the labour force last year.

“In particular, core-age (25-54) working mothers with children under the age of 18 faced greater labour market attachment challenges compared to fathers,” the FAO report states. “Nearly one-fifth of core-age mothers with children under the age of 18 were absent from work, more than twice the share of absence among fathers (9.1%).”

Real estate is one of three sectors the FAO report highlights for the disproportionate gender split of layoffs. The others are: Information, Culture and Recreation, in which 27,800 women lost jobs, while 3,000 men were newly employed; and Services other than Public Administration, in which 16,400 women lost jobs and 2,700 additional men were hired.

The report notes “job losses among males and females were largely proportional” for Accommodation and Food Services — the hardest hit sector, which lost 110,700 jobs or nearly 25% of its pre-pandemic workforce — and for Retail Trade, which shed 47,000 jobs, equating to a 5.6% reduction in employment.

Beyond permanent job loss, the FAO report tallies more than 410,000 employees who experienced at least a 50% reduction in working hours last year, equating to an estimated 9% decrease across Ontario’s labour force. It also cautions that Ontario’s 9.6% unemployment rate does not capture those who have dropped out of the labour force, and points to the shrinking labour force participation rate, which fell to 63.6% per cent from 64.9% in 2019, for greater context.

“Combined, the total number of employees impacted by the pandemic was 765,340 in 2020,” the report states. “Ontario’s labour underutilization rate reached an unprecedented 22.1% in 2020, meaning one in five workers were either unemployed, did not look for a job although they wanted one, or worked fewer hours than they desired.”

ASSOCIATED JOB FIELDS

Given its multidisciplinary reach, not all employment tied to commercial real estate is classified as directly in the Real Estate, Rental and Leasing sector. Five other overlapping fields offer a wider and more varied picture of COVID-19’s impact — ranging from the beleaguered Accommodation and Food Services sector to Finance and Insurance, which gained 32,700 jobs over the course of the year.

Construction — a sector in which men are the acknowledged vast majority — tallied 25,200 layoffs, representing 4.7% of the prepandemic workforce. However, the FAO places much of that unemployment in the subset of self-employed individuals less likely to be working on major commercial development sites. (Province-wide, self-employed workers accounted for about 14% of job losses versus 81% with private sector employers and just 5% in the public sector.)

Building operations personnel would presumably be classified among Business, Building and Other Support Services, which lost 17,700 jobs in 2020. The sector has been slower to recover, with year-end employment levels still more than 15% below the prepandemic benchmark.

In contrast, a range of consultants and skilled trades contracted to the commercial real estate industry would fall into the Professional, Scientific and Technical Services sector. It recorded a more modest slip of 3,200 jobs or less than 1% of new unemployment in Ontario.

Drilling down to commercial real estate asset types, retail job loss appears in sync with retail properties’ flagging investment returns. There’s perhaps more dissonance between the 38,200 lost jobs in the Transportation and Warehousing sector, representing 9.7% of prepandemic employment, and current vibrant market dynamics for warehouse/distribution and logistics sites. ■

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Our goal is to provide outstanding leadership and to set higher standards for elevator contractors to meet the needs and exceed the expectations of building owners, property managers and development companies.

We aim to demonstrate to each and every client that they are the single most important aspect of our business.