The age of incrementalism is over
Twenty years after our first Best 50, a lot has changed for the better and a lot hasn’t. We need our top corporate citizens to harness the engine of business in service of people and the planet.
Twenty years ago, Corporate Knights launched its quest for a more humane form of capitalism, placing people and planet ahead of profits, with the Best 50 Corporate Citizens sitting at the head of the roundtable to make business a force for good.
A lot has changed for the better in that time and a lot hasn’t.
Thankfully, the glass ceilings in Canada’s corporate boardrooms have been breached, with non-male members now making up almost a third of directors, double their one-sixth share in 2002. Based on current trends, we are on track for 40% of directors to be non-male by 2030. In order to meet the Government of Canada’s 50% challenge to reach board gender diversity by 2030, we will need to double the pace this decade at which we add non-male directors to boards.
Racial diversity on large corporate boards has also improved: 9% of members are now non-white, double the 4% level in 2011, when we first started tracking this metric. This number still needs to double for it to more fairly reflect Canada’s total population mosaic (27% of which is racially diverse including Indigenous peoples, as of the most recent census). That means adding non-white directors at an annual clip that is three times faster this decade than we did last decade.
While one workplace fatality is too many, it is encouraging that on a national level, a third less people died on the job in 2019 than was the case in 2002, when 465 people paid the ultimate price because of a workplace accident. Reducing the number of workplace deaths (now 335 per year) to zero by 2030 means getting a lot more vigilant about safety.
Over the last two decades, corporate profits have doubled, workers have been left behind and emissions have stalled, but the Best 50 firms are leading the way with 50% more gender diversity and triple the investments aligned with the clean economy.
While high profits at a firm level can indicate economic vitality, at a national level it’s usually a sign of economic rot and oligopolistic market structures (five big banks, four big grocery stores, three big telcos, one big fertilizer company serving 36 million people). In Canada’s case, sky-
high profits have been accompanied by meagre investment and poor productivity in relation to our G7 peers. Instead of making Canada wealthier, these profits have mostly been flowing to a tiny fraction of the population that owns the majority of company shares, half of whom are foreign investors.
While taxes are the price we pay for civilization, large Canadian companies are getting a better bargain than ever, paying a quarter less taxes as a percentage of their profits than they were 20 years ago.
The average CEO of a large company is making out better than ever, too, taking home $5.6 million in total compensation, or about 106 times as much as their average employee (a ratio that has grown by more than 50% since 2002). For reference, in 1977, the late management thinker Peter F. Drucker suggested the pay ratio between CEOs and employees be a maximum of 25-to-1 (later revising that to 20-to-1, saying at the time, “I have often advised managers that a 20-to-1 salary ratio is a limit beyond which they cannot go if they don’t want resentment and falling morale to hit their companies.” Getting to 20-to-1 in Canada by 2030 would mean slimming down average CEO pay to a quarter of today’s levels and boosting average worker pay by 50% over that time period (or 5% per year).
On the one measure we have put the most emphasis, greenhouse gas (GHG) emissions, there is good news and bad news. The bad news is our national emissions have barely budged since we began our mission 20 years ago (nudging up 2% from 724 million tonnes in 2002 to 738 in 2019 – the most recent base year before the COVID pandemic). But it could be a lot worse. Had emissions grown at the same clip in the past 20 years as they did in the 1990s, Canada’s GHG emissions would be over one billion tonnes today. That is some consolation, but to achieve Canada’s 2030 goal (roughly cutting emissions in half by 2030), we will need to reduce emissions 15 times faster than we are at the moment.
To sum things up, profits have surged, people have been left behind (albeit boardrooms are a little less pale and male), and we’re stuck in neutral on the planetary issue of GHG emissions.
It has never been more possible to make a radical shift.
Those are the facts we cannot ignore.
And at the same time, it has never been more possible to make a radical shift: to harness the engine of business to put our economy in service of people and the planet. It is a tall order, but there’s no reason why we could not right this ship by the end of this decade.
The solutions are on the shelf: thanks to engineers, the price of solar, wind and storage has plunged by 90% over the past 20 years, finally making it economical to end our addiction to burning fossil fuels.
As the standard bearers for sustainable capitalism, the Best 50 Corporate Citizens in Canada have a special role to set the pace. This year’s Best 50 is leading the way with 50% more gender diversity, and almost triple the rate of investment and sixfold the proportion of revenues aligned with the clean economy, as compared to the other large Canadian companies.
The pay gap between Best 50 CEOs and their average worker is less than half that of run-of-the-mill big businesses. And their carbon productivity (which measures how much revenue a company generates per tonne of emissions) is double their peers. This approach has stood the test of time, proving that better corporate citizens can beat the market year over year. The Best Corporate Citizens’ stock market performance has outperformed its peers earning 499% gross return since it was first launched in June 2002, versus 366% for S&P/TSX Composite.
The 2022 Best 50 Corporate Citizens vs. the rest*
|Indicator||2022 Best 50||Average Large Canadian Company (minus Best 50)|
|CEO–Average Worker Pay Ratio||74:1||160:1|
|Board Gender Diversity||36.7%||23.3%|
|Executive Gender Diversity||26.6%||13.1%|
|Board Racial Diversity||8.8%||8.2%|
|Executive Racial Diversity||12.0%||6.6%|
|Cash Taxes Paid (% of EBITDA)||11.6%||8.9%|
|**Clean Revenue (% Total Revenue)||36.8%||6.2%|
|**Clean Investment (% Total Investment)||33.8%||12.7%|
|Carbon Productivity ($ sales/tonnes GHGs)||$1,517,909||$641,183|
*Large Canadian companies (with more than $1b in annual revenue) excluding the Best 50
**Based on Corporate Knights’ Clean Taxonomy
With a national net worth of $15 trillion, Canada has never had more money in the coffers. We have pension funds bulging with $4 trillion, and our Big Five banks have total assets approaching $6 trillion. Now that sustainable low-carbon streams in every sector, from transport and buildings to food and energy, are growing faster than the economy at large. Financial regulators should make the tax subsidies that banks and pension funds receive conditional on alignment with the net-zero economy. This could help unlock $80 to $200 billion of fresh annual investment into global climate solutions from the pension fund sector alone.
In the recent federal budget, the government included a chart showing the annual investment required to hit our net-zero-emissions targets. It was a sobering picture: to shift to a net-zero economy, we’d need investment of $125 to $140 billion per year from all sectors, and yet actual investments total just a fraction of that: $15 to $25 billion per year. That means we need to ramp up the annual rate at which we are pouring money into climate solutions by a factor of six, which would amount to about 1% of net worth per year. On average, this means we need Canadian businesses to step up and increase their clean capital expenditures by about 40% per year each year to the end of this decade.
In Corporate Knights’ Climate and Economic Renewal Plan, we estimate that by investing $126 billion per year from 2023 through 2030 driven by both the private and public sector (with the latter playing a catalytic role in the first three years), we could boost Canada’s GDP by 10% (higher than business as usual forecasts) while decreasing Canada’s greenhouse gases by 45%, and saving consumers over $32 billion in annual fuel and heating costs.
Money and solutions are not the barrier; we have them. The barrier is an incrementalist mindset. It’s a way of thinking that worked fine in the 20th century, but it is no longer fit for purpose in an age where the global economy is undergoing a sustainable revolution on the scale of the Industrial Revolution and at the pace of the digital transformation.
No business can succeed in a society that fails. We encourage all Best 50 companies to double down on their sustainable edge and make this decade count for people and the planet.
Meet this year's Best 50 Corporate Citizens in Canada
Corporate Knights’ 2022 ranking of the world’s 50 Best Canadian corporate citizens is based on a rigorous assessment of nearly 7,000 public companies with revenue over US$1 billion. Who made the cut in 2022?
|2022||2021||Companies||CK Peer Group||$ Sales/ Tonne CO2e||% Taxes Paid||Ceo-Average Worker Pay Ratio||% Non-Male Board Directors||% Clean Revenue||Final Score||Climate Committments|
|2||20||Innergex Renewable Energy Inc||Power generation||$110,324.00||1.8%||27.3%||100.0%||84.6%|
|3||14||Brookfield Renewable Partners LP||Power Generation||$11,390.00||4.5%||25.0%||99.3%||82.5%|
|4||BCE Inc||Telecom providers||$61,897.00||7.5%||110.6||33.3%||57.6%||70.2%||1.5°C|
|5||19||Kruger Products LP||Forest Products||$3,996.00||1.7%||20.9||20.0%||58.5%||69.1%|
|6||24||WSP Global Inc||Engineering construction||$174,951.00||8.4%||59.1||37.5%||42.5%||68.8%||SBTi, 1.5°C|
|7||17||Telus Corp||Telecom providers||$48,136.00||7.5%||236.1||42.9%||59.9%||68.7%||SBTi, 1.5°C|
|9||9||Toronto Hydro Corporation||Power transmission and distribution||$134,210.00||4.1%||7.6||36.4%||38.0%||67.1%|
|10||12||Societe de Transport de Montreal||Transit and ground transportation||$13,698.00||0.0%||4.9||50.0%||70.6%||66.8%|
|11||7||EPCOR Utilities||Natural gas transmission and distribution||$8,631.00||0.0%||22.2||36.4%||37.5%||66.3%|
|12||11||Northland Power Inc||Power Generation||$1,246.00||3.7%||27.4||44.4%||78.4%||65.5%|
|13||6||Stantec Inc||Personal and business services||$115,869.00||10.3%||38.2||37.5%||46.2%||64.8%||SBTi, 1.5°C|
|14||3||The Co-Operators||Insurance companies||$709,608.00||27.8%||17.7||36.4%||19.0%||64.1%||NZAM, NZAO|
|15||8||Vancouver City Savings Credit Union||Banks||$1,202,835.00||2.8%||6.3||55.6%||21.7%||62.6%||NZAM, NZBA|
|16||30||Transcontinental Inc||Plastic and rubber product manufacturing||$11,262.00||15.8%||88.4||35.7%||43.3%||61.3%|
|17||25||Canadian Pacific Railway Ltd||Freight transport, all modes||$2,136.00||10.9%||122.1||45.5%||44.2%||60.4%||SBTi|
|18||2||Energir||Natural gas transmission and distribution||$38,884.00||0.4%||40.7||25.0%||29.2%||59.7%|
|19||39||Hydro One Ltd||Power transmission and distribution||$17,756.00||29.3%||6.9||50.0%||36.8%||58.2%|
|20||EcoSynthetix Inc||Basic inorganic chemicals and synthetics||0.0%||40.0%||100.0%||57.4%|
|21||28||Sun Life Financial Inc||Insurance companies||$570,021.00||12.7%||54.1||30.0%||3.8%||56.3%||NZAM|
|22||41||Royal Canadian Mint||Metal products manufacturing||$319,710.00||13.4%||4.3||63.6%||42.1%||54.8%|
|23||Boralex Inc||Power generation||$8,920.00||1.8%||9.3||36.4%||96.0%||52.8%|
|24||22||Cogeco Communications Inc||Telecom providers||$86,964.00||7.1%||46.6||50.0%||28.7%||52.8%||SBTi, 1.5°C|
|25||26||IGM Financial Inc||Asset management||$9,827,286.00||16.6%||38.8||33.3%||4.4%||52.0%||NZAM|
|26||5||Celestica Inc||Semiconductor and electronic components manufacturing||$38,401.00||8.3%||281.7||22.2%||63.7%||51.8%||SBTi|
|27||33||British Columbia Hydro and Power Authority||Power Generation||$160,379.00||7.9%||50.0%||98.0%||51.3%|
|28||Enmax Corp||Power Generation||$736.00||2.7%||24.7||30.0%||16.6%||51.2%|
|29||38||TransAlta Renewables Inc.||Power generation||$183.00||1.5%||16.7%||62.6%||51.1%|
|30||31||Yamana Gold Inc||Metal and coal mining||$13,611.00||36.5%||90.8||33.3%||1.9%||50.4%|
|31||13||Bank of Montreal||Banks||$224,295.00||18.6%||50.6||50.0%||3.2%||48.9%||NZAM, NZBA|
|32||Wheaton Precious Metals Corp||Asset management||$32,413,483.00||0.2%||5.4||20.0%||3.4%||48.9%|
|33||34||Teck Resources Ltd||Metal and coal mining||$2,688.00||15.1%||85.8||25.0%||7.4%||48.1%|
|34||Eldorado Gold Corporation||Metal and coal mining||14.5%||50.0%||2.0%||47.5%|
|35||4||Canadian National Railway Co||Freight transport, all modes||$2,150.00||10.1%||96.8||42.9%||40.3%||47.1%||SBTi, 1.5°C|
|36||50||Mouvement des Caisses Desjardins||Banks||$1,975,124.00||20.3%||45.2||34.8%||3.0%||45.6%||1.5°C, NZAM|
|37||44||Iamgold Corp||Metal and coal mining||$2,596.00||11.1%||45.6||44.4%||1.0%||44.6%|
|38||27||Hsbc Bank Canada||Banks||16.4%||49.7||54.5%||1.6%||44.3%||NZAM|
|39||15||Alectra Inc||Power transmission and distribution||$105,907.00||1.9%||7.6||28.6%||4.9%||44.0%|
|40||23||Algonquin Power & Utilities Corp||Power generation||$768.00||1.4%||38.3||33.3%||23.4%||43.5%|
|41||Gildan Activewear Inc||Textiles and clothing manufacturing||$6,859.00||2.0%||902.9||30.0%||36.1%||43.2%|
|42||42||Agnico Eagle Mines Ltd||Metal and coal mining||$5,428.00||10.5%||98.2||33.3%||1.0%||42.2%|
|43||29||Canadian Imperial Bank of Commerce||Banks||$275,581.00||18.8%||37.4||50.0%||0.7%||42.1%||NZBA|
|44||32||Ontario Power Generation Inc||Power generation||$4,590.00||7.9%||11.1||40.0%||30.5%||41.6%|
|45||46||Manulife Financial Corp||Insurance companies||$81,863.00||17.6%||126.8||46.7%||2.1%||41.3%||1.5°C|
|46||Aecon Group Inc||Engineering construction||$15,630.00||4.8%||50.1||30.0%||35.2%||39.8%|
|47||Franco-Nevada Corp||Asset management||$20,820,408.00||6.7%||8.2||30.0%||1.5%||38.9%|
|48||40||BGIS||Real estate and leasing||$158,118.00||1.9%||35.0||0.0%||2.7%||37.8%|
|49||NFI Group Inc||Cars and trucks manufacturing, including parts||26.5%||30.0%||20.0%||37.4%|
|50||43||Paper Excellence||Forest Products||$1,117.00||24.0%*||0.0%||23.3%||36.8%|
Business Ambition for 1.5C
Science Based Targets initiative
Fashion Charter for Climate Action
Net-Zero Asset Managers Initiative
Net-Zero Asset Owners Alliance
Net-Zero Banking Alliance
Best 50 Key Performance Indicators
All companies are scored on 24 key performance indicators relative to their peers, with 50% of the weight assigned to Clean Revenue and Clean Investment. Nine of the indicators have fixed weights; the rest are assigned weights according to each industry’s relative impact in relation to the overall economy.
Percentage of total revenue derived from products and services categorized as “clean” under CK Clean Economy Taxonomy
Percentage of total investments in assets categorized as “clean” under CK Clean Economy Taxonomy
Board/Executive Gender Diversity
Percentage of non-male board members and executives
Board/Executive Racial Diversity
Percentage of racially diverse board members and executives
Sustainability Pay Link
At least one senior executive’s compensation tied to sustainability-themed performance targets
Percentage Tax Paid
Taxes paid in cash, as a percentage of EBITDA (operating income for financial services)
Total fines, penalties and settlements as a percentage of revenue
Paid Sick Leave
10 or more paid sick-leave days per year
Pension Fund Status
A series of calculations assessing the generosity/viability of defined contribution/defined benefit plans
$ revenue per unit (gigajoule/tonne/cubic metre/tonne of waste) of non-renewable energy consumption, direct/indirect CO2e, water withdrawal, non-recycled waste produced
$ revenue per tonne of VOC, NOx, SOx and particulate matter emissions
CEO–Average Worker Pay Ratio
How much more CEO gets paid (expressed as multiple compared to average worker)
Sustainability score of a company’s largest supplier by spend
Fatalities per total employee count
Lost-time injuries per 200,000 work hours
Number of departures divided by the average total employees
*For complete methodology, please click here.