GUEST CONTENT 

For decades, investment in infrastructure has been viewed as a key mechanism for stimulating economic growth by creating jobs and helping to revitalize communities. Absent an economic crisis, the world typically spends over $2 trillion every year on infrastructure. In light of a global pandemic, stagnant investment, growing unemployment, and rock-bottom interest rates, investment in infrastructure—including our built environment as well as energy, transportation, water and telecom systems—is perceived by many as a prime opportunity to kick start growth. 

 As Chief Investment Officer at the Canada Infrastructure Bank (CIB), John Casola is at the forefront of key initiatives put in place by the CIB to help drive economic recovery. At GLOBE Capital in April 2021, he joined the Reimagining our Infrastructure session to share the CIB’s progress to date. We caught up with him to learn more about the progress they’ve made over the last three months and what a ‘green recovery’ means for Canada. 

As so many others have remarked, we are living in unprecedented times in a plethora of ways. You’ve been in this business for over 20 years now. Have you ever seen so much public attention on infrastructure? 

I think infrastructure is currently front and centre for so many reasons. It tends to be a government go-to during down economic cycles, mainly because it provides jobs. I’ve been in this business long enough to see a few of those cycles and I think this time is different. There’s a recognition of the importance of infrastructure for long-term growth, for future well-being, and a recognition of the importance of quality. We’re no longer building things for the sake of building things. All levels of government across the country are really focusing on what’s going to make a long-term difference for their communities, citizens, and growth. They’re not opting for short-term fixes that create jobs, but don’t add anything to society. 

“Green recovery” is an ideal that the CIB is truly putting into practice. Could you tell us more about that?  

The green part of what we’re doing is critical. Our shareholder, the federal government, has established five priority sectors for us: trade and transportation, public transit, broadband, clean power, and green infrastructure. We have been allocated $35 billion to invest across these sectors, $10 billion of which is dedicated to our Growth Plan. This Plan is our response to the economic slowdown due to the pandemic. It aims to accelerate Canada’s transition to a low-carbon economy and strengthen economic growth. 

The past 16 months have shown us the critical need for sustainable infrastructure, and the importance of building up our economy to be resilient in the face of global challenges. At the beginning of the pandemic, our Chair challenged us to come up with a program that we could implement quickly with positive impacts on jobs, the environment, and the economy. We developed the Growth Plan—a $10 billion investment over three years, which is divided into the following components: 

• $2.5B for clean power 

• $2B for building retrofits 
• $1.5B for zero-emission buses 
• $2B for broadband 
• $1.5B for agricultural infrastructure 
• $500M for project acceleration 

With eight announcements in the last six months, we have an incredible start and we’re gaining strong momentum.  

At GLOBE Capital, the CIB announced an investment of up to $655 million in the Lake Erie Connector project as part of the Growth Plan. How will this investment help reduce greenhouse gas (GHG) emissions?  

That’s a fascinating project and a complex one. It provides a two-way highway for power, allowing Ontario’s clean energy producers to sell their power to the U.S. This is important, because emissions don’t recognize borders. The Connector also allows Ontario to buy American power in times of need, as determined by the regulator (Independent Electricity System Operator). This allows us to import clean power, instead of building back-up power sources. The most cost-efficient standby power is natural gas, but thanks to the Connector, we won’t have to rely on that emissions-intensive power source. This project is a win-win for all involved. 

What other progress have you made since GLOBE Capital in terms of projects that reduce GHG emissions? 

There is lots on the go. I’ll share the ones that are publicly announced to give you some sense of momentum. This is the second time in the last five months that we’ve had to schedule extra board meetings to approve projects, because they’re at that stage where they’re ready for investment. We recently approved an investment of up to $170 million in the Oneida Energy Storage project. Once completed, it will be the largest battery storage project in North America. The project will allow us to store energy that is produced at off-peak times and release it into the grid when demand is high. It will help Ontario reduce GHG emissions by 4.1 million tonnes, or the equivalent of taking 40,000 cars off the road every year. We’re also pleased that the Six Nations of the Grand River Development Corp., a First Nations group, are 50% equity participants in the project.  

Other projects we’ve announced include an investment with Algoma Steel Inc. in Sault Ste. Marie, Ont.—up to $220 million to retrofit their operations and phase out coal-fired steelmaking processes. This electricity-based process is expected to reduce GHG emissions by over 3 million metric tonnes per year by 2030. We also recently announced an investment in zero-emission buses with the City of Ottawa—up to $400 million to help purchase approximately 450 buses. This a key initiative to help the city achieve its goal of reducing GHG emissions in its operations by 100% by 2040. We’re seeing lots of interest across the country in electric buses. The pandemic has drastically reduced public transit use, so many municipalities are revising their capital plans. This is where CIB can help. When it comes to sustainability, there is often a gap between the right thing to do and financial support. CIB can help bridge that gap. We can offer capital at an under-market rate of return to make green infrastructure more feasible. 

In the race to achieve net zero by 2050, how do we overcome the challenges of political cycles and changing visions and priorities? How do we select the right projects that will maximize economic, environmental, and societal benefits? 

Our entire team is very outcomes-focused. Those high-level outcomes are: reducing GHG emissions, connecting Canadians (i.e. broadband and transit), closing the Indigenous infrastructure gap, and improving GDP and jobs. We’re very methodical in choosing projects to invest in and keeping these outcomes top of mind. For example, with our retrofits program, we offer an interest rate between 1 and 3%. The greater the GHG reductions from the retrofit, the lower the interest rate. We want to incentivize people to go deeper. 

2050 is less than 30 years away. Looking ahead, what do you see as the biggest challenge and the biggest opportunity in clean infrastructure? 

It’s always going to be a challenge to compete with other government programs for scarce tax dollars. I think a lot of us could sit around a table and come up with a list of all the great things we would love for our society to have, but there’s a sprinkling of reality that needs to happen in terms of costs and resources. The challenge is building a consensus around which infrastructure projects to build and finding creative ways to fund them. 

Another opportunity is to synchronize the sticks and carrots of government regulation. Carbon pricing is absolutely critical, but it can’t be the only lever. We need to also provide affordable capital. 

The other obvious opportunity is broadband. You asked me if I’ve ever heard so much mention of infrastructure? The answer is probably yes. Have I ever heard so much mention of the importance of a broadband network? No, I don’t think I have. The pandemic has shown us that internet access is vital. This isn’t just about YouTube and Netflix. For some remote communities, this is vital for access to healthcare and education. 

I truly believe there are some silver threads of good that have come from the pandemic. Increased broadband is one of them. We’re ready to build on that. 

For  more insights  on the road to 2050, join our  Destination Net Zero Events:  

ENERGY AND TRANSPORTATION DAYS  

Sept 28-29, 2021 | Virtual | Complimentary 
 
NATURE AND BIOECONOMY DAYS  

Nov 23-24, 2021 | Virtual | Complimentary 
 
GLOBE FORUM  

Mar 29-31, 2022 | Host Hub: Vancouver Convention Centre West | Virtual Programming | Partner Hubs Across Canada  

Sign up for our email list to be the first to register. 

By Mike Rowlands, President and CEO, Junxion Strategy

The global pandemic continues to unfold around the world, showing us the fragility of economies, social systems, and even ourselves. As we think about how we might ‘emerge stronger’ and ‘build back better,’ many of us are calling for recovery planning to carry us into a purpose-led, 21st century economy.

We know now, beyond doubt, that businesses that put social purpose at the centre of their strategies perform better: B Corp businesses—businesses that meet the highest standards of uniting profit and purpose—are growing 28 times faster than the average company. And early in the pandemic, JUST Capital reported that the 20% of companies ranked highest on stakeholder leadership have outperformed the bottom 20% by 4.7% through the current bear market and the first signs of recovery.

A just, sustainable recovery will be achieved by businesses working together with government, NGOs, and other stakeholders to design a purpose-led economy.

This is a story with a long history…

It’s been nearly 40 years since a raucous group of misfits first got together to talk about a new approach to business, ultimately forming Social Venture Circle (SVC). They were responding in part to American economist Milton Friedman’s statement that the “one and only… social responsibility of business [is to] increase its profits.”

Impatient with an economic model that valued growth above all else, they sought to understand how their ventures might support communities, regenerate landscapes, and create equitable prosperity for all—rather than concentrating wealth in the hands of a privileged few. Instead of seeing communities as groups of “individuals pursuing their separate interests,” SVC’s founders saw communities as groups with shared interests committed to mutual benefit and collective wellbeing.

The early luminaries that founded SVC—folks like Ben Cohen and Jerry Greenfield of Ben & Jerry’s fame, Anita Roderick of The Body Shop, and Joel Solomon, Chair of Renewal Funds, Canada’s biggest social venture capital firm—built enterprises that showed how social purpose and financial success reinforce each other. They worked across sectors in business, government, academia, and charities to create a powerful network that continues to grow today.

Over the decades, SVC members founded many organizations equally committed to environmental stewardship and social progress: the American Sustainable Business Council; Business for Social Responsibility, which influenced the founders of CBSR; Net Impact, which engages graduate business students; B Lab, the nonprofit behind the B Corp Certification; and many more.

This is of course just a tiny sample of the purpose-led organizations emerging on every continent. In the past 20 years, their mandates have embraced environmental sustainability in the face of climate change, evolved to influence social entrepreneurship, and coalesced in the work of many to push businesses—and entire economies—toward a scope of social purpose much wider than Friedman’s.

Social purpose is already driving business success

Each January, the international public relations firm Edelman releases its annual ‘Trust Barometer,’ a global study of public trust in institutions of media, government and business. In 2020’s issue, the schism between the ‘haves’ and the ‘have-nots’ was starker than ever before. The central takeaway is this: societal discontent is now at a level that business cannot ignore.

As governments around the world are increasingly seen as part of the problem, rather than as providers of solutions, business has stepped into the void. The Business Roundtable’s commitment to social purpose is one result. Nearly 200 multinational corporations’ commitments to the UN Global Compact’s Business Ambition for 1.5ºC is another. But perhaps most significant is the extraordinarily rapid rise in stakeholders’ expectations of the corporate sector: “A stunning 92 percent of employees surveyed in the 2020 Edelman Trust Barometer say that they expect their employer’s CEO to speak up on one or more issues ranging from income inequality to diversity and training for jobs of the future.”

The world expects more of business leaders. Making a clear commitment to a social purpose is the new imperative for brand trust—and brand trust continues to be a litmus test for business health, driving employee engagement, stakeholder loyalty, and yes, quarterly returns. Centering business strategy in social purpose is a hallmark of 21st century leadership.

The importance of social purpose to business success is likely to become even more pronounced in the next decade with the rise of the millennial generation, the current demographic wave. A ten-year study by the Case Foundation found that millennials:

• Are everyday changemakers. They think about social change and progress all the time—in their work, but also at play, with their purchase decisions, and more.
• Believe in activism. They actively engage on the issues they care about—including through their elected representatives.
• Care about social issues. Millennials are a significantly empathetic generation; they support organizations and movements that improve the lives of others.
• Are passionate about issues, not institutions. More than 90% of surveyed millennials said they’d stop giving if they lost trust in a charity or nonprofit. They’re also happy to change their jobs, if their employer loses their trust.
• Value collective action and networks. Movements like #BlackLivesMatter, the climate action movement, and Extinction Rebellion have proven the value of collective action to lift issues to the top of governments’ and businesses’ priorities.

In short, any business (or organization) that wants to engage and retain millennials must pay attention to social purpose and align their actions with their values, and their employees’ sense of what’s right.

What’s next for Canada?

For nearly 40 years, efforts have been made through grassroots organizations on every continent to advance social purpose and environmental responsibility among businesses. These local efforts are coalescing in a broad, inclusive, and global shift in thinking about the role of business in society.

Were we writing this article 20 years ago, we would have been focused on sustainability, and strategies to reduce businesses’ negative impacts on the planet. Were we writing it 10 years ago, we may have been looking at social entrepreneurship as a means to inclusive employment. Today, these movements have fused with others to put the social purpose of business at the forefront of what it means to be a leader.

As we navigate through COVID-19’s devastating effects on health, our economies, and on society as a whole, business has a fundamental and essential role to play. If we’re to emerge stronger, or ‘build back better,’ we must also think about a social purpose economy.

As emergency responses give way to economic recovery, we encourage leaders to think about economic renewal, as well. Let’s rebuild with well-being at the centre of our economic thinking. Let’s create the incentives for businesses and citizens alike to make choices that are better for people and the planet.

We encourage you to join us in our support for a purpose-led recovery as we call on the Government of Canada to put well-being first, and rebuild with a social purpose economy.

A strong, healthy, purpose-led recovery is my business. It’s your business. It’s our business.

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Please plan on joining us next April at GLOBE Capital 2021 to continue this timely discussion. The theme is “Delivering Returns for People and the Planet,” and among other critical topics we will be unpacking how and why “purpose pays” – for our economy, for our environment, and for society. If you are interested in partnering with us for this first-of-its-kind hybrid virtual and in-person event, please contact Claire Melanson.

We also invite you to join Junxion Strategy, GLOBE Series and many other Canadian leaders in adding your name to this statement of support for a purpose-led recovery.