CEO Viewpoints podcast | Season 1

Jason: Hello and welcome back to another episode of PwC Canada's CEO Viewpoints podcast series, where we discuss key themes from PwC's 25th Annual Global CEO Survey. According to Canadian CEOs, driving clear and purposeful strategies plays a critical role in differentiating their organizations. I'm Jason Boggs, National Banking and Capital Markets Leader at PwC Canada. And today I'm joined with Anthony Ostler, President and CEO of the Canadian Bankers Association, to talk about transformation in banking for an increasingly digital world. Thank you for joining us, Anthony.

Anthony: Thanks, Jason. I'm delighted to be here, and it's great to see you again.

Jason: First, I wanted to say congratulations. You joined the CBA in February as CEO. Tell us a little bit about the journey that brought you here and what you're looking forward to most in this new role.

Anthony: Thank you. And I'm really thankful to be part of it. Leading the CBA, it's a fantastic organization. From a background perspective, I originally grew up in Vancouver, did my undergrad at Western, and then did my MBA at Ivey, which is Western. After my undergrad, I did some work. Before my MBA, I started as a bank teller, 30 years ago. I've spent 30 years in financial services. And post MBA in Toronto, I did strategy consulting, which I really enjoyed two banks, and then rejoined Royal Bank, work for them for a while, had some really interesting roles. And those experiences have given me a breadth and depth of exposure, both globally, internationally, nationally and across different sort of dimensions of the industry that really complement the skill sets of the great team I have at the CBA. And to feel it's a great match to come in with 30 years of experience and join all the great people at CBA to try and help advance the industry. So I feel very fortunate. It's also a really important time for the industry. Bank's employed 300,000 people, have a really big impact. The four percent of the GDP, it's key to what we're dealing with right now. The environment is challenging. Banks are going to be key to helping fund growth and solutions and dealing with climate. We'll be talking a bit about that, but it's an exciting time.

Jason: Thank you. I think you'll agree, just based on your experience in the banking industry, we're experiencing a pace of change we've never experienced before. So just interested in your reflections in relation to what's different about the banking industry now versus five years ago and where do you see it going in the next five years?

Anthony: That's a great question, Jason. Thank you very much. And there's no doubt that the pace of change is faster than anyone has imagined five years ago, and this will continue going forward. And I keep part of that, I think, is because of the impact and the changes associated with the pandemic. If you think about it from a banking perspective, there's sort of three main drivers of change, technology, regulatory environment and then of course, number one is what are our customers preferences. And so the pace of change in the industry is usually dictated by the customer, but that's obviously applies to all industries. Customers are driving innovation. And so it's interesting to see because it takes a significant amount of investment to digitalize and modernize elements. And the banks have been doing that and working on that for some time. What's interesting is from a consumer perspective is that our Canadians have unprecedented access to numerous digital channels that are given convenience through technology. So what we've seen is nine in ten Canadians, say that banking has become a lot more convenient for them. Three quarters of them are now relying on digital banking. And three out of four customers are also meeting to keep digital banking habits that they've developed over that pandemic. Those changes have become permanent. What's amazing is how we've been able to, as an industry, to be versatile and knowing where we're well prepared for the needs that came, but we're also had to learn and evolve and how people use things and improve things, and also enable and drive change for our employees to help our customers. And what's exciting for me is that rate of change isn't going to slow down. A key thing in the interim is we as an industry are always concerned about is making sure that we're connecting with our customers and understanding their needs and being there for them so we can continue to grow, evolve, but we're also making sure they're being protected.

Jason: Yeah, I'd like to pick on the investments that people have made in technology and we know from our survey a number of CEOs commented in relation to just where that returns in a come from of making those investments. So I just in your thoughts with regards to specifically looking at the banking industry, where do they go beyond digital in terms of leveraging those technology investments, in terms of interacting with their customers?

Anthony: I sometimes think about banking as having four pillars. One is people, one is capital, another is our systems and processes, which include technology and then the fourth just kind of fundamental is trust. If we take a step back and you think about technology, it's not really just technology. It's how we connect and serve. And so in the decade leading up to 2019, the big six banks had invested over 100 billion in technology. But around now what they're doing is they're looking at systems and processes, and they're going, okay, so we serve our clients this way. Can we automate this step? Can we change how we do this? What are their behaviors? What is their perspective? What are their needs? How do we change that? That then results in a whole new policy or the elimination of a policy because control has been eliminated. It's been automated. And then changes how the employees work is actually getting more interesting. So we're spending less time on moving paperwork and more time interact with the client and think about the client's issues. And so you have this sort of embryonic evolutionary growing element. And so technology is an enabler for increasing and enhancing the experience. And so those investments have actually paid significant dividends for the banks. And thankfully they'd spent 100 billion pre-pandemic because their ability to serve and meet customers where they needed to be was off the charts. For our employees in the industry, their work has gotten more interesting. It's become much more sophisticated. If you think about what people do in banking and how to serve customers and solutions are developing and the tools in the process enhancements, it's quite different from when I was a bank teller 30 years ago.

Jason: So picking up on that theme, just in terms of how the industry is evolving and that interaction with the customer, let's talk about open banking and payments modernization. Really interested in what the opportunities are for the Canadian banks, as well as the broader marketplace with those two topics.

Anthony: Open banking is about enabling customers to get ability to have their information shared with other fintechs so they can have a comprehensive view of all the different services they're using. And what the government is helping facilitate what the open banking lead is creating an environment where that information can be shared in an effective way and meet customers where their needs are. So there's a lot of work being done there. Payments modernization is a reflection of essentially updating the plumbing behind a lot of the stuff that happens in Canada. Canada actually has one of the, from a payments perspective is quite cashless compared to many environment. I just spent a couple of weeks in Italy. I was amazed at how advanced they are, but there's still a lot of cash. I've spent the last eight years living in the US, way more cash. A lot of what people see at the upfront has been quite advanced, and so Canadians have been open to adopting and using it. But the behind the scenes stuff needs to be updated and there's been some great progress. There was a large value transfer system that was done in 2021. We've got a lot of work to do on the real time rail retail elements. There's a lot of complexity there, because we already have Interac and so there's Payments Canada and all the different stakeholders are working closely with them to help and do the payments modernization work. It's not going as well as we'd hoped. There's been some delays. But the great thing is that there's we as a CBA are working with the Payments Canada and other stakeholders to help advance that and keep that on track. What we've really appreciated is a really open and supportive dialog to be able to ask some tough questions and how we can improve what we're doing and how we can get there. Because there's been a significant amount of investment. We have an environment where people are used to being cashless. We have an environment that people want to adopt tools. Now what we're doing is enhancing and improving the plumbing behind the scenes. And we get that right, that will enable that convergence we were talking about with open banking.

Jason: And just staying on that innovation theme, especially around payments and really thinking about the customer, obviously, there's been a lot of hype around crypto. So interesting your thoughts from a Canadian banking context, what's the opportunity or challenges that the introduction of crypto will have in terms of the Canadian marketplace?

Anthony: There's two different elements to crypto at the high level. I think about cryptocurrencies and then central bank digital currencies. Cryptocurrencies are generally outside of the banking realm, and our members where they can help clients with that, what's interesting is there's an expression regulatory perimeter. Peter Routledge often talks about it, right? And he's the superintendent of OSFI. And there's these things that don't necessarily always fall into his remit. But one area that does, are the banks. And so we operate in his macroprudential regulatory environment, and we're doing what we can to make sure that we're doing securely and things effectively for Canadians. If we take a step back and think about systems or locations, we're in an environment we just talked about, where we have a very cashless society already. People are used to adopting technologies. There's been hundreds of billions of investment in technology. We've continually developed and advanced things to be where our customers are. The challenge we have is with these things being introduced, what are the problem they're trying to solve? So if you're an emerging market, your banks and people don't trust, you weren't well-capitalized, or maybe, you know, only 20 percent of the population has access to bank accounts, or maybe a cryptocurrency or a central bank digital currency may make sense. Right. Yeah. Well, like over 98 percent of Canadians have a bank account. We have, thanks to OSFI prudent regulation over the years and the banks behavior within the system we have. We have the best banking system in the world. What is a central bank digital currency delivering or solving? And so what's interesting is the Bank of Canada is looking at it, because they're trying to figure out, like, do we do a retail central bank digital currency? I think it's a good intellectual exercise. We should always be evaluating alternatives. But when I look at it, I think about risk in a certain way. So risk is defined as impact times probability. The impact of the risk. What's the risk of not having a central bank digital currency? People may want to do crypto and that kind of stuff, but like it's your mother going to do crypto? Maybe your son would. Like, you're not going to pay your mortgage in crypto. You pay check. You don't want it to swing by the money in your bank account, swing by five percent every day. Right. And so what is the problem we're trying to solve? And you think the probability of having a system that needs that, we don't need it. We go back to our planet, but open banking. One of things about open banking is inherent in that is a philosophy of creating an environment of competition. If you're a fintech or a smaller bank and you create a great service, but the client that's using your service has their primary checking account and mortgage with big six banks, well, they get your service, and now with open banking, they can connect it all together and they can see what's going on. That's fostering competition and innovation. What's a good win? What is a central bank digital currency do? If we intellectually pull that apart, what it would mean is instead of people having a deposit at their bank, they would put their money in the central bank digital currency. So first of all, your deposit would go to the central bank. Go to bank, but what do banks do? We're in the business of collecting deposits, which we then put into creating loans for people to buy a home or a car or starting a business or fund a big climate transition project. You know, all those things that we do with those deposits. Now, if you're a big six bank, you could likely find a way to get funding. But what about the hundreds of small to medium sized banks that don't necessarily have a national brand, where their deposit source is going to come from? And so if we create a central bank digital currency, we're actually creating potentially an anti-competitive environment. So what's the point in doing open banking and doing all this time and effort and thinking about how we can make people's information secure and we protect privacy, but also give them the ability to access the services where they want to access them and then undermine all those small and innovative businesses ability to get funding.

Jason: Right. And hopefully we don't end up in a situation where we would need one just based on both how the banks are operating as well as the central bank. Just interested to pick up the trust theme that you opened up with earlier and one of the key things we're seeing from the marketplace, both from a customer as well as an investor shareholder perspective, is looking at institutions, commitments to ESG and as well as net zero specifically. And so obviously the Canadian banks have made numerous commitments on net zero and are out in the marketplace discussing those. But what does it mean for the Canadian, the banking industry as a whole, as well as the economy as a whole, in terms of what the Canadian banks will do in this space?

Anthony: It's a really interesting topic. What I've been amazed, as I've been meeting the leadership teams of my members is the amount of investment they're putting in place, the growth of hiring, investing and working with consulting teams and firms like yours, to design plans and think about how they're going to fund transition and get to transition. There's a real sincere desire to be part of the solution. And if you think about Canadian's bank, when Canada's had big transformational eras, like we're building a national railway, well, who funded that? The banks. The challenge we have is sometimes people want to get their net zero right away. Well, we're not going to be able to get there right away because we need to actually switch to an environment where we have energy sources and other elements that can allow us to live our life. And so what we need to do is focus on that. And so what they're looking for is to partner with governments, other elements, supporting the investment in new technologies and investments. They're contributing time and effort in research, and working directly with Canadians across many industries, and not just the oil and gas industry. They're working really closely with new technology to help that. The other thing is to think about your carbon intensity and how we address that. That cost money. The banks are thinking about how we can help with carbon capture and storage, and helping advancing investments and financing in advance those elements. The other thing is the global energy markets are quite impacted by where the source of those energy is coming from. And so Canada is a source of clean energy. So we need to think about how we can support our partners that are currently going through a really tough environment. You know, and there are countries that use energy as a weapon. We all know a lot of people or probably a pretty cold winter this winter. And so Canada also has to play a role in supporting that. That doesn't mean we can't actually continue to do that to fund the transition, if anything, that gives us potentially more earnings to reinvest and support. But in this time, the short term time, we also as banks have to play a role in helping that issue. It could be that our oil and gas support and loans don't drop for a while. But what are the components and what of those things are part of a transition? And one of those are about helping support, upholding the values that Canadians hold dear and supporting countries that are free and support democracy. So it's a complex issue, and it can't be done overnight, but we're working at it, and our members are significantly dedicated to it. And what people understand that they see this is a , multielement, multidimensional complex issue. But like building the railway, our members are committed to getting us to net zero by then.

Jason: Thank you for those reflections. And there's a common theme there in terms of the Canadian banks really investing ahead of these changes that we're now facing. So interesting and any final thoughts that you may have in relation to thinking about being future ready, both from a Canadian banking context, but also more broadly from a Canadian marketplace?

Anthony: One of the things that the pandemic has taught us is that we're actually far more capable of doing in operating things that we haven't really thought. Like sometimes we're limited by our imagination. We have a great country, but I want to encourage people to be energized about, despite all the challenging things, inflation and all these disruptions and markets, and then actually we've got something great here that we can build and grow upon. A good way to think about that is the future depends on what we do in the present, which is something that Gandhi said. Right. And we're setting the conditions for a winning future, and we continue to push ourselves for that. And there's no reason why that future won't result in us having to wear shades. Right. Like, it's I think we have a bright future despite the challenging environment going through and we're in this together. And I'm really proud to be representing my members and helping them with that. And I appreciate the opportunity to discuss that with you today.

Jason: Anthony, just want to say thank you on behalf of our listeners. Great perspectives in terms of thinking about the Canadian banking industry, but also thinking about how they're enabling the rest of the Canadian economy as well and really helping the Canadian consumer. So thank you.

Anthony: Thanks, Jason.

Jason: Once again, I'd like to thank our listeners for joining us today for another episode of CEO Viewpoints. Be sure to subscribe to our podcast to learn more about future episodes and to hear insights from our Canadian CEOs.

Keegan: Hi everyone, and welcome back to our CEO Viewpoints podcast series. Thank you for being with us, as we discuss key themes from PwC's 25th Annual Global CEO survey. We've heard from leading Canadian CEOs on key topics such as ESG and cybersecurity. Today we're diving in how CEOs can identify and leverage their people and agility for transformation, creating more sustained outcomes for their organizations. I'm Keegan Iles, a Strategy& partner and the national insurance sector leader for PwC Canada. I'm joined by Rowan Saunders, president and CEO at Definity Financial, to talk through their recent IPO, modernization, what it means to be a digital insurer in 2022. Welcome to the podcast, Rowan. 

Rowan: Thanks very much for having me. 

Keegan: Why don't we kick off first, congratulations on the IPO. Successfully taking the first Canadian mutual company public with the largest Canadian IPO last year and third largest in the last five years. Fantastic story. Tell us a little bit about the transformative journey you've been on as CEO at Definity. 

Rowan: Well, it really has been quite a journey over the last number of years. But five and a half years ago I joined Economical, now Definity, to lead the organization through the demutualization process. As you said, the first Canadian company to demutualize, but also to get the company ready for life as a public company. That has been quite an exciting journey that we've been on. And the way I describe it is really over the last five years, we've done a couple things simultaneously as part of the turnaround and the transformation. And the first part of that, was getting the company ready for life as a public company. That involved a bit of a textbook turnaround, a profit improvement plan, where we had to make a lot of changes to the business, both from an operational and a financial performance perspective. So that involved things like reshaping the portfolio, improving pricing sophistication, repricing the portfolio, addressing costs and efficiency in the business. We did that over a three year program that really had significant financial benefits from that, in the hundreds of millions of dollars. So we're really kind of pleased with that process. At the same time, we led, which I would say is a more exciting and more transformation program, and that really was involving a number of things, clearly had to do with a big investment in the modernization of technology, given how important technology is to running a successful company in the years ahead. And we built new business models, and so we built Sonnet, the first and leading digital insurance company in Canada. We built Vyne, which essentially is Sonnet, but both for brokers, which helped brokers reduce friction and have a much easier interaction with their insurance companies. We made major investments in our commercial business, expanding our capabilities from just being a small commercial enterprise player to a mid-market player and now a specialty insurance player, and made big investments in the claims transformation as well. So when you sit back, I mean, that's really a lot of change. Culture was a big piece as well for us. We made massive investments in the culture that we would need to shift to from a mutual company to a high performing public company and talent. And an example of that 70 percent of the top team my direct reports are new to Definity since the last five years, and 55 percent of our top 100 executive management group, and that made a big shift in moving the company forward. So I think when you step back, it's a very different organization than it was just a number of years ago. As you mentioned, we've gone through a successful IPO. I mean that was a really masterial change for the organization, which puts us in a much better position than we would have been before. We now have access to capital. We now have more brand recognition, which is great for attracting and retaining talent, but also giving our broke a partners much more confidence in the credibility in the future of definitely going forward. 

Keegan: What a journey. I love this concept of a sort of concurrence of execution and being sort of fit for growth as you look forward. And maybe you could elaborate on, you know, to what extent do you think different is corporate strategy and kind of culture contributed to enabling that successful transformation so quickly? 

Rowan: Well, I think it played a huge role. I step back and I look at what our strategy was, and I think it was very bold and very ambitious. When you think about moving Definity to a top five player, becoming that digital leader in the marketplace, making sure we have a platform for growth, and that's both organic growth and inorganic growth, but also really focusing on innovation. We want to change insurance. We want to make insurance better. We need the right talent, of course, to do that. But I think that clear vision and the case for change that our strategy supported really helped drive the agility and the ability to change so quickly. And then you mentioned culture, and I think that this is a big journey for a mutual company to shift into a high performance public company culture. We've done a lot of work on that. We've also made very big investments in technology and tools and talent, and that leads the execution. And so I do think when you think about, you know, how do you run a successful transformation, it is, of course, about having the right strategy, but it comes down to can you properly executed? And strategy and culture are massive drivers in that execution. 

Keegan: It's really sort of two sides of the same coin, isn't it? You know, I think that any CEOs really were lagging some of their global counterparts on digitization. And I guess I'm just wondering about what was different in that strategy culture tools, technology, conversation that allow you to get so far ahead on both finance on it. 

Rowan: Firstly, I would say that we made a very convincing case for change. And so when you think about our starting point, there really was the performance operationally and financially of a mutual company we knew was not going to be at the levels that a public market would expect. So that actually gave us a real platform for change, and I think that's really important. And then I think we followed up with that with the size of investment. This is really no incremental changes. This was a very bold and fully committed change that we made. We then put a lot of governance around it. I mean, this is where you get the board involved. This has to be CEO led and top priority for the organization's leadership team. And I think that the timeline or the pressure of a timeline marching to a defined date of an IPO, which was November 23rd, 2021, sharpen the minds and sharpen the focus of the organization. And so I think those were one of the a couple of the reasons why in Canada, you know, we really move quickly on this. 

Keegan: I think that's just so interesting, because it really highlights that it's not just about digital transformation, right, that there's a broader conversation to look at the entire organization. You know, maybe you can elaborate on why it is important to reimagine your organization to prepare for the future. 

Rowan: Yeah, and we did that. We did a really big reimagining of the whole strategy. And I think that a couple of ways or elements to making that decision. First was, you know, we really looked at the  P&C trends, both the global trends and the trends impacting our business here in Canada. And we saw a number of things. Firstly, customer expectations were really changing quite rapidly. We noticed that the industry is consolidating. We do have a view that scale is increasingly important. We're aware of social changes, climate changes, the talent challenges that are going to be facing companies today and in the future, and also changes in distribution. So we sit back and look at all those changes and those trends impacting P&C. We then reflected on that and said, look, in that environment, what are the new capabilities or emerging capabilities required to be a successful P&C insurance company? And they are things like, you know, being very customer centric. There are things like developing digital marketing capabilities, clearly pricing sophistication in terms of claims management, being best in class and fraud management. Data is playing such a big role in our world today. And so really understanding data, collecting the right quality of data, working that into advanced analytics and into artificial intelligence models is critical, but also translating that into a great user experience. And I think that's one of the things that we really try to focus on, is how do you take all the insurance fundamentals and the technical elements of insurance, but translate that into a very usable and great user experience? We then take that and ultimately that informs what our strategy is going to be. And that's the big change. I mean, that's why, you know, we reimagined the entire business and thought about it on a very broad basis. You see us therefore building Sonnet, so we could access, we think, an emerging segment of the market that really is self-serve and wants digital interaction is what's building mind for our brokers to stay relevant and to make sure that they can minimize the friction between insurers and brokers, and ease of businesses is so important for them. So it's building Vyne commercial, and that's essentially automating the SME, the small business component. Where today over 50 percent of our volume is processed, self-serve by the brokers, 24/7 access. We've now translate that into our claims operation as well. So know all of that supports our top five journey when we're on track for that going forward. 

Keegan: That's fantastic. I love the cohesiveness of that thinking, because it really highlights that you need to orchestrate all of the internal dimensions successfully to make that sort of digital transition. If we think externally though, our insurance 2025 survey identified collaboration, co-creation, partnerships or even acquisitions, which insurtech specifically to be potentially a primary source of innovation and therefore create some advantage. I'm wondering, you know, how are you thinking about working within the ecosystem now that the inside of Definity is sort of set up for success? 

Rowan: You know, I think as I look at for that ecosystem, and this all relates to, you know, innovation. And I think firstly, I would make the observation that there's a lot happening, there's a lot of investments in innovation in the P&C, which I think is very exciting for all of us. And that is happening both in incumbents and the mature businesses, but also in fintechs, insurtechs, you know, and startups. And so I think that's a great environment for us to have access to. From our side of things, one of our strategic imperatives is about being innovative and that is about being different, is about making insurance better. So this is a bigger focus for us. So Definity, what we do is a number of things. One of the things we do do is we invest in insurtechs and fintechs. We do so through a number of venture funds. For us, you know, there's often the opportunity to make follow on investments, but primarily this gives us great learning. This is the leading edge of what could happen. The second area is in partnerships. And so an example I'd give you is in Sonnet. You know, we do have partnerships with certain fintech organizations, particularly those in wealth management. And so we're looking at testing and learning and understanding what customer trends are doing and cross-selling opportunities. And then thirdly, we have an internal group that's very focused on this. This is our R&D group. They're investigating their monitoring and then translating opportunities and programs. We have to be more innovative. And then the example I would give you, currently we're working on telematics, so usage-based insurance. We know this is a key component of being a successful auto underwriter. And so for us, how do you capture the best and most innovative elements through the fintech ecosystem, and then leapfrog the competition when you do come to market with the product? 

Keegan: We've covered a lot of ground from modernization, digitization, transformation. Maybe I could add a couple more isms on to the end of it. But before we conclude, I'm curious if you have any messages or advice for listeners to consider as it comes to their successful business transformation. 

Rowan: Well, I would say that, you know, when you do a big transformation, it's not an easy thing. And I think you have to step back and be fully committed to it. And so a couple of things that I think have worked for us that I would recommend. One of it is really being clear on your articulation around the case for change so that it's credible internally and externally. I think you have to really be clear and have a compelling vision, and also determine what are the success measures like? What are the KPIs you're looking for? How will you know when you have successfully achieved that vision? The other area I say is that you have to lead from the top. I mean, this is top down driven. The top team has to be engaged. They have to actively lead from the CEO to the board. Our board has been very engaged in this whole transformation process. I also think that you can't think about this in test and learn, and just being incremental. In a way, you've got to be so committed to it. You've got to put the appropriate budget to it. And that's why I referred to as an all in commitment. You know, once you've made that commitment and you have that conviction, you go all in. Governance is, of course, important, tracking, setting milestones. And I would say, you know, operational intensity. I mean, this is difficult. It does take time. Not everything goes in a straight line and not everything works exactly the way you would have thought it would. And so rapidly identifying that and adjusting without, you know, having the wind taken out of your yourselves and showing some resilience, I think is is the the final point. And absolutely, it can be done. And I think that's why when we look at now what we've done that at Definity the last couple of years. You know, I can't tell you how proud I am of our team. We're really pleased with how the business has performed and the investments we've made, and excited about the opportunities ahead for us. 

Keegan: That's been fantastic. Rowan, thanks for spending the time with us in terms of insights of Definity's transformation. It's been great having you on the podcast. 

Rowan: Well, thank you very much for having me. Keegan Iles, it's been great chatting to you. This is a really important transformation for us, and so thanks for your interest. 

Keegan: I also want to thank our listeners for spending the time with us today. Please be sure to like and subscribe to be the first to hear the latest episode of the season of CEO Viewpoints. 

Richard: Hello and welcome to PwC Canada's CEO Viewpoints Podcast series. For those joining us for the first time, this is a series where we discuss key themes from our 21st annual global CEO survey with leading Canadian CEOs. In our last episode, we discussed how CEOs are addressing cybersecurity concerns from increasing legislation, risk management tactics to engaging the board of directors. My name is Richard Wilson, and I'm a partner in cybersecurity, privacy and financial crime at PwC Canada. Today, we have a guest that I'm personally very excited to spend some time with, Ken Hartwick, president and CEO at Ontario Power Generation or OPG. Ken, we're so pleased to have you here today. Welcome.

Ken: I appreciate Rich, and it's going to be a good conversation, very topical given what's going on around the world for both how it impacts us and your perspective.

Richard: Couldn't agree more. Cyber doesn't seem to be going away, doesn't it? Well, let's dive right into it then. It's no surprise that in our fifth consecutive year of the annual survey, we see that 53 percent of Canadian executives say that they're either very or extremely worried about the threats that could harm their business related to cybersecurity. The fact that it's a top threat for so many years, speaks to how difficult it is for businesses to try to solve that problem. It's a key risk. We'd love to hear your thoughts on this. As a CEO, how do you think about and how do you manage cyber risk?

Ken: Maybe starting with your very first comment on this. I think the reason it remains top of mind for CEOs and many others is that the risk is getting harder and harder to manage. So a lot of the things we deal with in business, whether it's integration of a business, whether it is safety, it feels like you can stay ahead of it or make progress against it. And I think cyber is one of the few areas where I know me personally, I always feel like no matter what we do, we're no further ahead. Because, you know, maybe it's the nature of the threat, the nature of the people that do bad things that you probably see around the world. They continue to get smarter. And I think this is what makes boards uncomfortable. And CEOs and management are uncomfortable is that you just don't feel like you are safer or better at it, you know, next week or a month later or a year later that it's always seems like a real work in progress. So that's why it stays top of mind. That's why it stays high on your list because of this lack of comfort in being able to say, great, that one's done. What risk am I going to deal with next? I don't think this one ever gets off the risk map.

Richard: Fair enough. So you will continue to make forward progress. You are identifying and managing these risks and bringing them certain ones to conclusion, and then others start to introduce themselves. And you feel like there's this perpetual movement forward around them. How do you keep your board in a relative degree of comfort around that process?

Ken: It certainly is work. We run big power assets, generation assets. Many of them are critical to the operation of a the grid system, electricity for the province of Ontario and a bunch of hydro assets in the U.S. So when we're with the board, it is trying to keep this in perspective as to what we are doing in the area, being clear on what the gaps are. I think one mistake I think some people make is trying to convey it is more in control than what it is. And I think with boards being really open, really honest, really transparent as far as what, you know, the gaps that still exist, probably the biggest gaps are the ones, you know, I don't know about or we don't know as a company. And when they happen, and a gap or a problem develops is being really open and trying to understand, explain to your board why it happened. And then I often think with any board, you know, problems happen in every business, cyber included, it's the speed you react to and solve that problem will give boards confidence that you know, that you have the right resources around it. Because I think the alternative for any board is to just pour more resources into something. And sometimes more doesn't get you a better answer. Sometimes smarter gets you a better answer. And that's where I think management and with the help of advisors like yourself, can help us be smarter as opposed to just doing more.

Richard: As a former director, I take a lot of comfort in what you just said, because when you're sitting in the seat and you're getting briefed for management, there's a binary question in your mind, which is, am I getting good, transparent truth is a candid. I don't need to have it perfect. I just need to know what we've got here so we can figure out how to manage it. And, you know, on the other side of that question is, this sounds too good to be true so is it the case? So the candor, the transparency that you talked about with those gaps certainly gives the board comfort that they know what they've got, and then you can work through it together. So that's really, really sound advice. Well, let's dive into, I guess, that next question, which you start to touch on, which is these cyber crimes have a real impact on a company's operations and its reputation or its finances, you know, even sustainability? We're seeing a strong trend in the market towards integration, integration of technologies and processes and organizations, certainly in the power sector. From a CEO's perspective, is the integration a strength or is a weakness when it comes to cybersecurity?

Ken: The strength is when you integrate a system, you know, if we integrate with Quebec, Manitoba, New York, Michigan, it's an economic strength, because you're more optimal in the use of resources and how much power generation you need in our in our instance, how much transmission is required. So it is a strength. The weakness is you're as strong as the weakest part in that integration. You're right on for the power grid. We are heavily integrated to the provinces beside us and down through the Northeast, Midwest, U.S. And if any of us have a major problem, it is everybody's problem. Nowadays, you know, that integration really forces every entity like us that's part of that to have their eyes on and hold others accountable to being at a very high level on the cyber side. It is a tough cyber environment when you're trying to rely on the internal workings of probably in our case, I would say 50 other organizations to be at a level of excellence that we think we're at. That can cause you to think more at night than what you want to.

Richard: I can only imagine, and I guess when it comes to the vendor and supplier network that you rely upon to help run your business, maybe there's a trust but verify type of strategy there as well, which is contractually you might ask them to secure themselves to a certain level and, you know, give you some comfort that they're achieving that. So it sounds like there's another whole ecosystem there and being coordinated and interconnected.

Ken: Because we run nuclear facilities, we verify. The trust part doesn't really come into it. You just can't trust, because it's a mistake anywhere along the chain. And I think most our vendors would rather us verify all the way along to give them comfort that their quality programs work, their cyber protection programs work. So again, it's one of those industries, you know, maybe ours and health care and banking where I think more emphasis on verifying and no one get upset. You know, if someone we get asked to verify our readiness on the cyber side to entities that oversee the North American power grid, everything is verified.

Richard: It seems to be a sign of things to come. So good advice to any organization to get good and get efficient at being able to prove that you're secure. Because it sounds like the question will be asked more and more as things move ahead. Let's turn our sights inward to your organization for a minute. You're obviously staying informed of trends out there that may harm your organization. And it sounds like you need to build a good cybersecurity culture around that. So give us your advice. How do you build an effective cyber culture within your company, and what advice do you have to set the right tone from the top?

Ken: So maybe a couple of things. We are very proud of our safety culture. You know, we deal with equipment, moving parts, water, moving water, nuclear stations. So we have it ingrained in the company that safety is number one. Take care of the person beside you. Don't enter a work environment that is not safe so that you go home at the end of your shift or the end of your day exactly like you came in. And I think cyber has to get to the same level of prevalence. To me, it's a same philosophy that everything we do because a cyber event can lead to a safety event, it can lead to customer impacts, it can lead to reputational issues, but really it is getting the culture of the organization. So they think every bit as much around opening an email, around testing a piece of equipment that's coming in to our plant. So it is just second nature. I think this is the challenge. A lot of the lot of times in every organization have a different thing that's most important. Like, say, for us, we really go on safety. Nobody gets hurt. And it is resonating with employees. So my advice to people is pick an analogy within your organization that the average person can understand. Because again, I think what I see sometimes at our place is the conversation is targeted to our I.T. people and people who sort of already know. Well, it needs to be targeted to every person who has an email, every person who does QA on a piece of equipment, every person that is involved in our integration with these other utilities. So analogies tend to be the best thing. So we do a lot of work on, if you think about safety this way, you think about cyber this way.

Richard: Terrific. Do you run any cyber meetings where your chief information security officer, you know, briefs management or, you know, is there any sort of upward briefing that happens and how does that look?

Ken: It is every three weeks there is a briefing of myself and five others on our executive leadership team. And you could say, well, three weeks seems like a lot. But if you go back to your survey results, and you think that this is one of the top three risks, why wouldn't I be involved in understanding it that frequently. It is very regular, and the topics, we do two things in those briefings. One is what are the events in the last couple of weeks. And then a second element of that is pure education. Because I think the only way to lift an organization, I am an account and I'm not a technology specialist. I'm definitely not a cyber specialist. But I need to have a good working knowledge as to what we are facing as an organization so that I can make budget decisions, resource allocation decisions, people decisions, because that's what the board is expecting. So if we know it's one of our top three risks, and you know, as the CEO, I don't know how I don't do all those things now.

Richard: Fair enough. I guess that also relies on having a really tuned in CISO who doesn't bring you a lot of technical jargon but understands how to take all the technical threat intelligence that they receive, and translate that into a briefing that management can absorb and understand and apply. That sounds like you've got a good CISO who's helping to equip you with that information.

Ken: Our group does exactly what you described, is a really good job of taking a highly technical area and bringing it into the business environment so people like me can understand it and as I said, make really resource decisions around it.

Richard: Final question for you would be, I guess CEOs are presented these days with a growing list of strategic mandates that they should consider for their organization, environmental, social, governance, ESG, equity, diversity and inclusion. They're important. The great resignation. I mean, there's just this flow of topics. How do you keep cybersecurity from being a buzzword? How do you make cybersecurity practical and embedded into the processes of your organization to reduce risk rather than an acronym?

Ken: I go back to almost what does the senior leadership spend their time talking about and not letting it slide. And, you know, we could say we face the same thing on safety. Be very easy to go on to these other topics, and lose track of the importance of safety, and lose track of the importance of cyber. And, you know, this is just our prioritization of time. So I think when the organization knows I have a level of interest and knows the other five executives that are getting regularly briefed on cyber, then they quickly pick up that this is important to the organization, it's important to our success. And again, what our cyber team has done is really simplify the message so that everyone in the organization hears it. I think we have another sort of educational session going out companywide in the next month and just keeping it top of mind. So I think on one of these things, if I lose focus on it, the organization will, and then you have a problem. But it's like I say, if it's among our top three, which it is, there's no excuse for losing track of it.

Richard: Terrific. Sounds like a very strong top down message, and it sounds like it's repeated often. Well, you've given us some terrific, impactful insights to consider. So I want to say thank you very, very much. Thanks for being with us today and for giving us some interesting points to take away and reflect on.

Ken: Thank you. I appreciate the conversation, and I appreciate your firm's help in helping us get down this path of trying to catch up, which has been a big help.

Richard: All right. Well, that brings us to the conclusion of our discussion today. Ken, thanks so much for spending time with me. The time just seemed to evaporate. But we got some great insights from you on the effect that cybersecurity has on organizations, and from a top down perspective, you know, how you organize yourselves to manage it. I also want to thank our listeners. We really appreciate you spending time with us today. If you enjoyed this episode, please be sure to subscribe to the podcast series, and be sure to check out the final episode of the season of CEO Viewpoints.

Richard: Welcome to PwC Canada's CEO Viewpoints podcast series, where we'll be discussing key themes from PwC's 25th Global Annual CEO Survey. Thanks for being with us, as we take a closer look at the top challenges Canadian CEOs are facing. Today, we'll focus on how CEOs are addressing and prioritizing cybersecurity. I'm Richard Wilson. I'm a partner in our cybersecurity, privacy and financial crime practice here at PwC Canada. I'm thrilled to be joined today by Indrani Butany-DeSouza. She's the president and CEO at Elexicon Energy, which is a hardworking, very well run local distribution power company here in Ontario. Indrani, welcome. So glad to have you here to speak with you today.

Indrani: Thank you so much for having me. I'm so excited to be here as well.

Richard: For our listeners, I'm going to ask Indrani for her insights on the role of a CEO for managing and governing cybersecurity, how to engage the board, and building and maintaining trust with stakeholders. Indrani, let's jump right into it. It's the fifth consecutive year that our annual CEO survey shows that cybersecurity is the most serious threat to growth among Canadian executives. In fact, over half of CEOs say that they are either very or extremely worried about cybersecurity threats that could harm their business. The fact that has been listed as a top threat for so many years, speaks to the complexity of securing organizations against attacks. Elexicon, for instance, has I.T systems, power operational systems, customer data, vendors, partners. It's a really complex environment. So can you share your perspective as a CEO on how leaders should be thinking about cybersecurity? Should CEOs still be concerned?

Indrani: It's such a great question. And it ties directly to the fact that we're a digital and knowledge based economy now more than ever before. Digitalization and the knowledge based economy is a key driver to economic prosperity for our organization, as well as organizations across our country and, frankly, globally. But with that ongoing shift and reliance on digital tools and technologies, all CEOs, myself included, are looking at our digitalization efforts, but at the same time needing to be extremely vigilant about the emphasis that we place on risk mitigation as such pertains to cybercrime events. And when it comes to working with our board of directors to obviously oversee the governance and risk profile of the organization, it's clear that this is a central area of concern for our board of directors as well. And obviously for me and the executives in my organization and frankly for our entire organization, this is a central item in terms of being able to safely deliver electricity to our customers reliably and continuously in order to continue to serve our customers needs. So it's central to our business goals, and it's a focus of our business strategy. But when we consider the question that you've asked me as why do CEOs need to consider this or why is it a forefront concern? I think part of this is because we need to understand what a good framework for cybersecurity looks like, and how to break it down into its respective elements in order to then systematically address the risks how to measure where you are on a baseline, and then how to evaluate when you make investments that are cybersecurity related, that you're actually achieving risk mitigation and the outcomes that you intend to. So ultimately, when I think of cybersecurity, it's about one more risk, one more business problem. It's not different from not entirely different from labor relations or asset management in the context of an electric LDC or an electric utility. But it's a problem that needs to be broken down into its parts, and then addressed and solved. And so from a CEO perspective, obviously we handle strategic problems every day. But the bigger challenge when it comes to cybersecurity is that on top of handling the systematic approach and breaking down the elements, there's also a major factor that other technical issues don't have, and that is that there's a strong human element to this. So that makes cybersecurity not only more fluid or dynamic but also more elusive in terms of how you address it. Generally speaking, when you've got a technology based problem, you're able to systematically address it, but then you need to introduce the human factor as well. And then the challenge from this technology based threat is that nefarious actors are also continuously evolving their means and mode of attack. So generally speaking, when it comes to asset management, for instance, I know what the aging of my assets is, and so I can put together a plan and make the investment in order to address that risk and mitigate bad or negative outcomes. When it comes to cybersecurity, I can define what the challenge is or what the cyber risk is, and make the investments. But once I've solved that problem, there's likely five more, only three of which I probably know about, and two others of which I still need to wait for somebody to have experienced the unfortunate outcome of a cyber attack in order for us to know what those challenges are. And then, as I touched upon the human element, obviously we also make investments in training our people. It's a top of mind training item for our organization, not dissimilar from investing in training for how we safely undertake activities in the field or how we do equity, diversity and inclusion training. I mean, the list goes on. It's one more training element, but we're reliant from an interaction with technology standpoint for all the humans. So all of our wonderful employees to remember their training and to be able to act with that training in mind all the time. And when it comes to cybersecurity and the cyber threats, often the threat is so benign that it's difficult for people to actually distinguish that something is a threat to the organization. So vigilance is key. But that's the reason I would say that it's at the forefront of concerns of CEOs, that it's completely strategic, it's investment based. We can address it systematically, but then we also need to recognize that the risk is constantly changing. And then there's a human aspect to this that it's difficult to account for entirely.

Richard: Amazing. I would encourage anybody who's listening to the podcast who comes from a technical background to rewind and listen to exactly what was just said, because that is how a CEO thinks about cybersecurity. There were no three letter acronyms. We didn't get deep dive into all the technologies we're buying. I loved how you framed that as a strategic systematic way of knocking it down. And that that to me is exactly the way that an informed organization will do it. So I love that. You talked a lot about risk. And risks associated with cybercrime can have a pretty major impact on a company's operations, on its reputation, building trust or eroding trust, certainly its finances, even sustainability. So there's a lot of different impacts that we see for this. And so it's important, as you just mentioned, to apply a top down strategy to cybersecurity. There are a lot of stakeholders involved. So in this context, how do you perceive the role of CEO when it comes to cybersecurity among all the other stakeholders that are also performing your role?

Indrani: You know, it's such an interesting question. And I appreciate that you called out the fact that I didn't use TLA or three letter acronyms, probably because I would get them wrong. But I think, in fact, the role of the CEO with respect to cybersecurity almost ties to that, not being technical or jargony in my approach in any event. I don't think my approach as a CEO is any different from my approach to any other investment or problem that I need to address or show leadership on or provide strategic oversight to for the organization. Cybersecurity is but one more strategic issue. It's very heavily risk based, and I think from our enterprise risk management framework, it is currently listed and has been for the last several years as the top risk to the organization. But it is but one more issue. So we manage a number of risks in any event. But I would say that a few things are slightly different from a CEO standpoint when it comes to cybercrime and cybersecurity. And I think the single biggest one is education. Not only educating myself and my executive team, but then also educating my board of directors. Everybody hears about cybersecurity. And it's certainly a it's more than just a buzzword, but it is certainly a buzz topic when it comes to boards of directors and where directors think that they need to be placing their oversight and emphasis. But the education piece there does tie quite centrally to what's the risk tolerance of the organization. And so that's where I think there's a confluence between education and evaluation of risk, as well as evaluation of investment, because this item requires continuous education, monitoring, measurement and then trajectory for outcomes. So what are the improvements that we've achieved and to what level or what extent are we willing to go? And so the thing that keeps me up at night when it comes to cybersecurity is have I adequately educated my team and my board of directors because we work collaboratively to mitigate the risks to the organization and then how we balance the needs of the customers and the organization in terms of the level of investment that we need to make. Because as anybody who's delved at all into investing in cyber security preparedness and risk mitigation would know, you can throw millions of dollars at this and many organizations do, but at the end of the day, the coffers are only so deep and there are other initiatives that need to be addressed as well. So I would say that when it comes to my role, it's as much about education as it is about partnership between the executive team, so between management and the board of directors to ensure that we are all comfortable with understanding the kinds of risks that we're facing and the level of investment. Meaning is it a sufficient enough level of investment in order to mitigate the potential of a cybersecurity event.

Richard: It's a complex role clearly, the way that you set the tone, set the culture, and try to get everybody into lockstep into what sounds like a very practical, sensible way of addressing it, gets rid of some of the fear and the chaos that can surround it if you're not careful. So that sounds like a really appropriate way to go. For you to make the right decisions as a CEO with cybercrime continually present, you've got to stay informed with trends and threats, but you also have to stay connected to your security leaders and partners. One obviously important connection point you mentioned was your board. And they, of course, are concerned with how organizations are managing risk. So give us your best advice, how can you effectively engage with and seek the support from your directors for your cybersecurity program?

Indrani: I think that's an excellent question. And at the end of the day, when it comes to the board of directors, I think and I seem to be breaking this all down into well, it's all kind of run of the mill. Everything that we do from a CEO perspective or board perspective, this is just one more issue. And I don't mean to oversimplify it, but I do think that it's critical when you're considering how you interact with the board of directors. You know, we often say, certainly in corporate culture, that you need to speak a common language. And that's not dissimilar from the common language that you need to speak with your board of directors or the approach that you need to take with your board of directors, which is understanding the language that resonates with them. So when I'm considering the areas that my board or any board tends to focus on, it's certainly on strategy, it's on corporate performance, it's on risk and obviously enterprise risk management and mitigation and then reputation. So when you take those four pillars or areas, the topic of cybersecurity is highly technical. And we've spoken earlier in the podcast about how the approach that I'm sharing with you isn't laden with technical jargon, and not just because I'm not the technical expert, if you'll forgive that double negative, but more so because it's an issue like any other that needs to be broken down simply in order for people to understand a very technical topic. And so that technical topic needs to be translated into the language of the board of directors. So strategy, performance, risk mitigation and reputation. And I mean, in that case, when you break down cybersecurity into seven or eight items for each of those potential items, you can assess the level of risk and the investment that as a collective you're willing to make within an agreed upon time frame. So that means that we're evaluating what the cyber risk is to the organization or what we estimate it to be, and then we're agreeing on the appropriate amount of risk that we're willing to bear. So, you know, the counterpoint to that is how much risk do we need to mitigate versus how much will we continue to carry? Because based on that, then you have an agreed upon financial budget, resources, human, of course, and then a timeframe within which to achieve that risk mitigation target. I mean, the worst thing that you can do to a board of directors, I think, is anchor this topic in techno speak so that then they don't approach it, they don't understand it. But then if something were to go awry, the board isn't in a position to say you've fully apprized us, and we were able to absorb it, and we felt comfortable with the direction in which you were going, and we could support it. I think in the world of cybersecurity, it's integral that you have the support of your board, the understanding of your board, and that you're in lockstep about the level of risk mitigation.

Richard: That sounds like a picture perfect way to engage a board without getting into the technical details that we've seen happen so often. And I can see how that would be really effective. It really is speaking their language. Indrani, there's been a common leadership theme in recent years that I've certainly observed around transparency and trust. You hear it all the time. You know, CEOs have stressed the importance of building trust with their stakeholders, and they're concerned about what the potential impact of cybersecurity as an incident would be on these relationships, particularly with their employees and with their customers. So who are your key stakeholders and how do you build and maintain that essential and valuable trust with them as it relates to cybersecurity?

Indrani: As you know, as a municipally owned local distribution company, we have a myriad of key stakeholders. But again, I consider cybersecurity in the same way that I consider probably our single most deeply held value, and that's of safety and wellness, which is top of mind to any electricity president and CEO. And so I think of cybersecurity in the same way is safety and wellness, that it is fundamental, and that it is on us to protect the financial health of our employees, customers and partners, the privacy of my employees, customers and partners, as well as the physical well-being of our employees, our customers and our partners. Effectively, what we're doing, which utilities have done for years, is build a culture of safety and safety based or safety and wellness based now, as we're in 2022. Here with respect to cybersecurity, we're delivering on top of that a culture of security. So where we all play our part in securing the system and the system is as much our physical distribution assets because our grid is tied in to technology, but also our I.T. based or digital assets for which we all have to be vigilant. And we need to be concerned about the safety levels, both of humans, from a safety and wellness standpoint and cyber safety from a security culture standpoint. That trust is a two way street as it is with safety and wellness. We need vigilance by employees. We need our partners who we work with to want to and need to protect themselves and their assets as well. This is very much a team sport. And we need to work collaboratively together, and the trust is built upon everybody doing their part and bringing their best approach to the security culture. So it's important for us to have transparency with customers when it relates to collecting their data and the usage of that data. Obviously, we can use their data for the business purposes for which it's intended and not for any other purpose beyond that. And then we all need to be taking a systematic approach. It can't be frenetic. And that's true of if I play back to the parallel of safety, we have processes and protocols in place in order for people to safely work in the field with our distribution system assets in order to manage our grid. The same approach is true of managing within a security culture or managing cybersecurity. We need to take away the fear, the uncertainty and the doubt. And when you imbibe a pragmatic approach, then it's possible for everybody to work collaboratively and for that trust to be developed and sustained. And when you do that, I think the ultimate outcome is that and it ties back to some of the points that I've articulated earlier in our discussion, that then you're in a position where your board of directors, as they are a key stakeholder, are comfortable with or can support the level of cyber risk that the organization bears.

Richard: All right. Well, I think that brings us to the end of our discussion. Indrani, thank you so much for taking the time to share your strategies and your unique CEO level perspectives with us. You clearly thought this topic through. And you know, managing stakeholders and building trust is not easy, but you clearly have some good techniques for doing that. So thank you for sharing notes. I'd also like to thank our listeners for tuning in with us today. Please be sure to subscribe to this podcast series to hear about the new episodes as they're released. I'm Richard Wilson, and I'll catch you on the next episode of CEO Viewpoint.

Elliott: Welcome back to PwC Canada CEO Viewpoints podcast series, where we discuss key themes from our 25th Annual Global CEO survey. Today, we'll dive right into part two of our episode with Jason Storah, CEO of Aviva, Canada. Part one with our conversation with Jason, we explore what drives business leaders to finding solutions when approaching ESG. Today, we're picking back up with Jason to hear his perspectives on getting started with ESG strategies, building roadmaps, and we'll learn how Aviva is leading its unique approach to achieving net zero. Jason, in episode one, you refer to an interesting statistic. We're seeing that only a third of Canadian organizations have explicitly factored climate change into their business strategies. And yet 51 percent of CEOs surveyed said that climate change would impact their ability to do business. So what do you think is holding Canadian CEOs back?

Jason: Look, I believe that those stats are true. So those stats are a call to action, without a doubt. I'm conscious it can be difficult for companies, no matter what size you are. But I think it can be difficult for companies to develop a perfect plan. But there's no such thing as a perfect plan. The best plan in this space is to get going with something and then have that plan evolve and iterate from there. You know, the other thing I'm quite conscious of is there is an increasing amount of external scrutiny on this. There are a number of industries where the carbon footprint is something that is factored in and is communicated to consumers, but is not in many industries today. But it's coming. You can see the trend. So I think get ahead of that and start to educate yourself and understand it and build in what's the risk of me as a business, me as a CEO, me as a senior leader, or me as an employee not getting ahead of this, not understanding it. What's the future risk for my business, my livelihood of not understanding that? And then I think it becomes very real. You know, I think the other thing is, you know, you see this all the time in this space and that the rules of the game around ESG are changing and the definitions and the standards are changing. And so there's a great lot of I think there's an awful lot of energy being focused on what are the right standards, what's the right definitions that we've got to use? Who cares? Pick a definition. Publicize it. Share it. Be transparent about it. And then if it changes in the future, that's okay too, because this is an evolution. And I think it's just really about, you know, getting on doing something and being transparent about learning as you go. And I think, you know, the other thing that I'm quite conscious of and we see this from Canada, I think we see this south of the border, right in the impact that the political tension has in this space. And I think Canada isn't where the US is in terms of this having become such a politicized component of the national debate. It's not to say that it isn't polarizing in terms of people's views, but it hasn't taken that front and center role where it's, well, if you do something, I'm just going to undo it at some point in the future. So I think we're in a space at the moment where we can still make some change and we can still build momentum. And, you know, I look at this entire space around climate change and risk managing your business if you're the CEO. How can I build future momentum? Because I can't go from a standing still to a sprint. I have to start walking and then I can start jogging and then I can start running and sprinting. And I think that's the opportunity that business leaders have today. And just look around you. There are businesses and industries that are doing this well and their business and industries that are doing it badly. And we all know who they are. There's no secrets in this space.

Elliott: Well, someday, not on PwC's time, we can go for a beer and talk about the politicization of climate change within Canada.

Jason: There you go.

Elliott: Slightly different perspective. He touched on something there about ESG. I would say ESG is like the galaxy. It's expanding in all directions, at incredible speed at all times. You've gotten on that journey, that warning as you go. You've had a walk, run, sprint sort of mentality. And we just talked about how quite a number of Canadian CEOs are really just getting started or haven't yet started. So when you reflect on your journey there, learning as you go, what can you reflect in terms of the risks that you've managed or the opportunities that you've captured? How can we inspire Canadian CEOs to take more action based on your experience?

Jason: Yeah, I mean, look, the risks are the unknown, right? The unknown costs associated with doing something about it. You know, if I think about, it just to bring that to life in the insurance space. The risks are what's going to cost us more to settle claims in a sustainable way. The risks are, is our investment portfolio going to generate the kind of returns that we need it to that competitors are going to generate? We don't know. So I think you can always look at those risks, particularly where there is historical track record, to say how it will play out. You're not you're not copying a playbook. But I think you've got to lean into those into those risks and iterate as you go along rather than try and start with a perfect solution or a plan that has a, you know, anything more than a north star. You know, I think this is such an emerging space that, you know, I think about over the last few months, you know, we've been looking at future non-executive directors for boards and ESG now is obviously something in terms of a requirement. When you look at skills matrices of boards, ESG is there. Well, ESG wasn't even it wasn't on the skills matrix, not that many years ago. So to think about where you can find that capability and that expert experience is quite challenging. But it's not a reason not to do it. It's not a reason to pick somebody with more traditional experience set and skill based over something that, you know, is beginning is going to become more prevalent going forward. And I think anybody looking for inspiration, there are people out there that have different views about science and climate change and what's causing it and whatever. But I mean, I'm pretty much surrounded by people who are not people who will think like me. But we have some things in common around what we believe, you know, we want to do from a company perspective, what we want to do for our customers, what we want to do for the people that work in the company that I work for. And so I think it's not that difficult to galvanize around a common problem. But you've got to be honest and transparent with everybody about what that problem is. In my case and Aviva's case, we see the very tangible impacts of a common problem of the cost of climate change on individuals when they lose their homes, when they lose their belongings, and the emotional impact as well as financial impact that has on people. It's quite easy for people in Aviva and people in the property casualty insurance industry to galvanize around that, I believe. And then you've just got to get on and break it down into a manageable plan. And I think, you know, personally, you know, I'm of the belief that people will be inspired by a lofty ambition, but only if they can see the steps to getting there. If you just put out lofty ambition without a roadmap and you don't build that roadmap for people, it becomes very difficult to start making progress.

Elliott: And just reflecting on something you said about values there there's a stop me if you've heard of this person before named Katharine Hayhoe. She's a Canadian climate scientist who lives in Texas, and she's one of the best communicators on climate change in the world. And she always talks about linking it back to people's values. And I love what you said there.

Jason: I mean, it's funny, like my grandmother always used to say, leave somewhere better than when you found it. And I think you can apply that approach to dealing with climate change perfectly. Because, you know, if I think about the amount of waste that we create, the how much more sustainable our processes and our workflows and what we send customers. And, you know, insurance companies are notorious for sending customers 40, 50, 60 pages of fine print on their insurance policy. Aside from not being particularly customer friendly, being a terrible experience, it's not very environmentally friendly either. So, you know, I think you can always look at, you know, different parts of what you do as a business and say, well, we can do this better. And now I think the lens is not just we can do this better for customers, but now we can do this better for the environment.

Elliott: And let me ask you, I'm sure when you use that 40 to 50 page example, there's someone around the leadership table who says, oh, we really need that from a legal perspective. And someone else says, we really need that to be on paper. You know, with every one of these things, you can think of reasons not to do them. So could you share any reflections on what it's like to lead, to build that unified senior leadership, to break down silos on ESG?

Jason: You know, I think this is a space where everybody's got their own views. I think the key thing is, you know, any organization and I'll give the example of Aviva. Senior leadership of Aviva over the last few years, we have all had to educate ourselves in this space. And then we've all got to layer over the ESG lens on what we've historically been focused on, and change the way we're doing things. I mean, I'll use a non climate example earlier, you know, the George Floyd murder. And the reaction that had. And the impact that had on us as a leadership team and the dialog we needed to have in this organization was really, really uncomfortable. But there was no way of having that dialog and it not being uncomfortable. You couldn't get into understanding what that meant for people in a company like Aviva without having some uncomfortable conversations about people's experiences. And they would be experiences that I can't relate to because then they weren't my experiences, their backgrounds were not my backgrounds, and I think I'm using that as an example because you can't you can't get into this without having uncomfortable conversations and making some decisions and some trade offs. And if you don't see change as a result of that dialog and as a result of those uncomfortable conversations, then you might as well have not bothered. And I think, you know, in any part of the ESG space, there should be areas where there's a natural fit with or you need to try and find areas where there's a natural fit with what your purpose is as a business, what you do for your customers. But you also need to be alive to the fact that there's going to be areas that cause friction, and it's how you deal with that friction that will make a real difference. You know, we could choose to ignore building back better when somebody has a claim. Probably cheaper in the short run. We could choose to ignore being more mindful about re-use rather than just always using new materials. Probably cheaper, easier. Who knows? Maybe it's easier to get the customers there. But the right thing to do is to have some grittier conversations, some more difficult conversations and decisions, and maybe to deal with some of the short to medium term consequences, whether that's cost, whether that's resource requirements to get to a better spot. And I think that's really important in the ESG space because you just can't move the dial unless there's some awkwardness and unless there's some friction that you deal with.

Elliott: Do you feel a certain like personal responsibility to your people when it comes to ESG?

Jason: Yeah, because you've got to lead by example. You know, anything that's worthwhile usually requires effort. And I think ESG is very worthwhile. And it quite it requires a lot of effort. And I think, you know, you've got to be prepared to lean in. And if you don't lead by example, you can't expect other people to follow and you can't expect other people to get out of their comfort zone. And, you know, I mean, I use the Black Lives Matter example a second ago with regards to George Floyd and the reaction there. How could we possibly think that we could be a better organization and more empathetic of population of employees in Aviva and in the insurance industry? You know, in the black community, if we weren't prepared to have some awkward conversations and some difficult conversations, and we weren't prepared to do it in a way that was hopefully supportive for people. And I think in the climate space, you know, whether that's becoming net zero is an operation, that's quite difficult. You know, where are we getting our energy from? What kind of fleet of vehicles are we using? How many people that work for Aviva are, you know, have a carbon footprint? That's a bit this is a bit different. It's a bit greater. And how do we change that? You know, and it's just it's always easier to refer to, although we've always been doing it this way. It's quite comfortable. I don't need to change it because it's not broken. It's kind of working. It's quite difficult and it requires an additional amount of effort, you know, I think to break those norms. And we see that with ESG more than any way.

Elliott: Totally. And when you know, to tell people that it is broken and that change is required can be quite personal. And I really I really appreciate you sharing your personal reflections. I could ask you a number of other questions. I just want to maybe go off script for one more before we close out. I mean, the passion with which you just spoke about was called the S within ESG, the social element of Aviva's goal. Is there another part of the portfolio that you feel that strongly about?

Jason: I think they've all got their places at different times. You know, the S of ESG, I mean, I'm the diversity, equality and inclusion agenda for me is it just feels like it's 2022. We sort of need to get this right. Right. You know, enough already. Come on. Whether that's, you know, gender bias that exists in the workplace, other bias that exists in the work back in the workplace, the way we set people up for success, the way we support people. That just feels so obvious and proximate and easy to fix. That, you know, walking past it would be a crime. Now, you know, there's other parts of the ESG agenda which I feel equally as strongly about. But I think perhaps that's a reflection also of where Aviva is and the things we've done over the last few years and where we where we've really been able to make some progress. But the nice thing about ESG in any part of this spectrum of ESG is as you make progress, it's like, okay, now I can see how to get to the next level and then I can see how do we get to the next level. But if you don't make that progress, you can't get to the next level. You've got no chance. Right. And I think that's one of the nice things about taking ESG seriously, whatever components of ESG it is and really, really focusing on it.

Elliott: I'll just get you out of here on this. Do you have any one last message or piece of advice for our listeners when it comes to ESG?

Jason: I think ESG is a really big topic. And I think because it's such a big topic, it can be overwhelming. Because it can be overwhelming, it can be easy to ignore. You know, my advice to people is to break it down. Acknowledge that you don't know everything about. To acknowledge the people around you don't know everything there is to know about it. But that doesn't mean that you shouldn't start to educate yourself. It doesn't mean that you can't start to do something no matter how small. And I think one of the things I've found and we've seen in Aviva is focus makes a real difference. You cannot do everything at once, particularly in a new space. So picking what's relevant for you, what's relevant for your organization and going at it with real vigor and focus makes a difference. And then I think the other part that comes from that is being transparent about what you want to achieve. So putting targets out there and sharing them with people is really, really critical that you are transparent about that. And then the final thing in any organization is linking those targets to incentivisation and remuneration so that there is there's something behind at the end of the day or at the end of the year having achieved those targets or not. And then, you know, I think more broadly, ESG is in a very, very expensive part of the long term future. Because of that, it's very easy to forget about it in the short term, and it can be quite cheap to forget about it in the short term. But if you do forget about it in the short term, it's only going to become a liability. And I don't think there's any industry that's any sector that is immune from this. There was no sector that was immune from COVID. Now, some parts of the economy and some industries did better and some did worse, but everybody was affected by it in some way or other. And as I said earlier, I think everybody is going to be affected by climate change to varying degrees you want. Nobody's immune from it. And the best thing we can do is get ahead of it and try and turn it from, you know, what could be a massive looming liability that future generations will have to deal with to something that we can get ahead of and, you know, and adapt accordingly.

Elliott: Jason, thank you once again for your time sharing your perspectives, and it's been great to hear about Aviva's journey. I'd also like to thank our listeners for joining us for part two today. If you don't already, please be sure to subscribe to hear our newest episodes as soon as they launch. Up next on CEO Viewpoints will be coming to you in French as we shift the discussion to one of our other key topics at the forefront of Canadian CEO's minds, cybersecurity. I'm Elliott Cappell, and thank you for listening.

Elliott: Hi and welcome to PwC Canada's CEO Viewpoints Podcast series, where we discuss key themes from our 25th Annual Global CEO Survey. Organizations are under pressure from shareholders, investors and customers to move beyond just setting net zero targets. There's a growing expectation of concrete transition plans, transparent reporting, as well as increased leadership and accountability from the C-suite. At our last two episodes, we discussed why environment, social and governance, known as ESG has risen to the top of the CEO agenda in terms of strategy and transformation. For today, we will continue the ESG conversation in part one of a two part episode. Diving deeper this time into net zero and the importance for leaders to take bold actions to secure the future. My name is Elliot Cappell and I'll be your host for this special two part episode. I'm a partner and the national climate change leader for PwC Canada. Thank you so much for joining us today. We have an amazing guest. Jason Storah, CEO from Aviva Canada will chat with us about their strategies on ESG and getting to net zero. Welcome, Jason.

Jason: Hey, Elliot, thanks for having me.

Elliott: Thanks for coming aboard. Maybe we can just start a little bit with you just telling us about your journey as the CEO of Aviva Canada.

Jason: So, I mean, I've been in Aviva for 18 years now. I've been CEO for the last three years. But before doing this role, I did a number of roles across all parts of Aviva Canada. So I think I know this business well. I think I actually know the insurance industry in Canada generally quite well. Actually, when I was appointed, I was referenced as being a veteran of the Canadian insurance industry, which wasn't thrilled with being called a veteran, but that's just my own ego and denial of how old I perhaps am. But, you know, doing a variety of different roles does mean that I know this company. I think I've seen, you know, different parts of the cycle, the insurance cycle in Canada and how we and the rest of the industry have reacted to it. And I've also seen the evolution of things like the importance of communities and how ESG is now emerged. You know, it's not that long ago that we were not talking about ESG as a business. So the fact that we all know and the fact that, you know, actually Aviva overall has taken, I think such a fantastic leadership position is amazing. But yeah, I know this business well. Been the CEO role for actually three years almost to this week. So, you know, obviously had the first nine or ten months as a normal CEO, I would say, albeit new in the role and then COVID hit. So for the most part of my time as CEO, I felt like everybody been managing a world that we now live in around the last couple of years of COVID and working from home and all of the fun that's come with that. This is a great business and I'm very fortunate to have this role.

Elliott: Congratulations on your third anniversary.

Jason: Thank you.

Elliott: I want to start by asking a broad question about the insurance sector, because when we talk about climate change more broadly, energy, agriculture, infrastructure, other aspects of the real economy, and then large investors, pension funds, banks, even on sustainable finance, tend to take up a lot of the oxygen. In the insurance sector isn't one that I would say is often at the forefront of that conversation. So what you know, what are the main thrusts or drivers within your sector and how has it ever taken that leadership role on climate change?

Jason: Yeah, so I mean, the irony about that question is that I think the insurance industry probably sees the impacts of climate change more than any industry or certainly as much as other industries. You know, if you think back, there's a stat floating around that, you know, back in the 80s, natural catastrophe, weather events cost the industry in Canada anywhere from 25 to 50 million dollars. Over the last three years, they've cost the industry over 2 billion dollars each year. So we see the impacts of climate change. And if you think about weather events in the Canadian market, whether it's hurricanes in on the north eastern seaboard that impacts Atlantic Canada and then come into Quebec and Ontario, whether it's hurricanes and storms in the summer in Alberta or whether it's floods in B.C. that we saw in November. You know, in May of this year, there was a there was a storm in mostly in Ontario, but also in Quebec that cost the industry almost a billion dollars. So that's a billion dollars of losses in the space of 46 hours. So I actually think the industry is a much better line of sight on the impacts of climate change and how climate is changing around us and probably many other industries. And it certainly costs us as an industry. And I think, you know, the best claim is the one that you never have because nobody wants to have a flooded basement. Nobody wants to have a, you know, a fire ripped through their home or a roof leak and caused damage. So the more you can do to educate yourself and in our in our industry, educate consumers around the things they can do to mitigate. And then when there is a claim to build their properties back better and to be in a better position, you know, going forward, there's lots of studies around, you know, the incremental costs that if the industry paid or insureds paid after a claim, they could make their roof more resistant. They could make the siding on their house more resistant. They could protect themselves from flooded basements. And, you know, we all see the impacts of something like rising water levels and increased volatility of weather events. And so I think it's very, very real for the insurance industry. And, you know, we're trying to be as clued in on that and thinking about what does that mean for people going forward.

Elliott: It's interesting in the examples that you gave are really around the physical impacts of climate change, the resilience, the impact of the environment on us. And yet, you know, much of the conversation today is around decarbonization, clearly our impact on the environment. So how have you managed to take that conversation, which is about the immediate impact and use it to advance what our very ambitious climate change goals your organization.

Jason: Yeah. Well, I mean, we, you know, Aviva was the first major insurer globally to come out with a net zero target by 2040. Now, 2040 is still a ways off, but it will be upon us before we know it and the actions that we need to take around. You know, to your point about carbonization around decarbonizing the things and the activities that we do about working with our partners to make sure that they're using science based targets to sign up to commitments to reduce their carbon footprints, to get to net zero, hopefully in a reasonable timeframe. I mean, the way we've done that is we've said, first thing we've got to do is become net zero in our own operations. Second thing we want to do is to work with partners that are committed to becoming net zero over a reasonable period of time. And the way we're trying to do that is, you know, I think like this is not an easy problem to fix and it's not an easy challenge to deal with in a short period of time. So the approach of was taken is to say that we want to engage with people, not exclude them, because this is a complex industry. And you know that phrase, it takes a village. It takes a village to make the insurance industry work well. So you've got to work with everybody in that village and certainly give everybody a chance. And so, you know, for us to make those commitments, particularly around saying we will lead by example. Because I also think that we're very aware that Aviva is not going to change the world on its own. But if we set the standard, whether that's the timeline of the commitments we made or the actual actions that we take, I have a firm belief that others will follow. You know, if you think about the electric vehicle space and how that's emerged. I mean, almost exploded over the last few years. It's particularly acute at the moment because of the crisis. You know, generally that's inflation related and supply chain and, you know, the oil and gas prices, etc.. But, you know, it's not that many years ago that electric vehicles I mean, think of it, governments were offering incentives to encourage people to buy electric vehicles. Now, a number of those governments don't need to offer those incentives. And in fact, in some parts of the world, governments are talking about, you know, collecting more taxes on electric vehicles because they need to collect more tax revenue given some of the challenges they have. So how quickly that environment has changed? I think, you know, we see the same in the insurance space and whether it's impact of climate on weather events and extreme weather, whether it's the future impacts of biodiversity loss, you know, that's biodiversity loss is something that Aviva is really taking a keen interest in. We have a fantastic partnership with the World Wildlife Fund of Canada and actually the World Wildlife Fund globally. But you know, you've got to pick your spots. And one of the things that I think we've all learned in the last couple of years is climate change is such a big challenging, almost overwhelming problem that it can be very easy to just stay on the sidelines and analyze and spin. But actually you've got to start somewhere. And even if you're starting with just your own operations or how you engage with customers or partners, that is a start. And it will take you down the path that will lead to bigger and better things.

Elliott: Let me ask you about the last thing you said there, specifically about making a start. You know, you said, you know, not long ago, ESG wasn't really at the forefront of the agenda and how quickly things have changed around EVs and other aspects of the challenge. So as a leader, what was the catalyst? What pushed you to bring ESG up the agenda or climate change?

Jason: It was a number of motivations. Fist was personal. I have an 11 year old son who I don't know what kind of future he's facing. He loves the natural, natural world. He loves insects, animals. When I was growing up, I used to love watching David Attenborough. David Attenborough these days is leaving a very different impression of the world around us and what we're doing to it. So I think that just on a personal level, it feels like this isn't something that we can just I could just ignore. Secondly, I think it's very relevant to, you know, the business I'm in, in the company I work for. Climate change impacts our customers every single day and in certain parts of the year more than others. And so we see the financial cost of climate change. We see the impact of weather events and claims that people have. And we've got to get ahead of this because it's only getting worse. And then I think there's lessons from COVID, right? You know, COVID hit the most vulnerable, the hardest. You know, it wasn't something that you could just ignore and it would go away. And science is what got us through. And it's getting us through COVID with medical research. And I think you can apply any of those. So what's from COVID to climate change and say, well, COVID 19 was really significant, but it pales by comparison with the consequences potentially of climate change. So I look at that and I think, you know, all of those things line up. And then, as I say, I work for a company whose purpose is to be with you today for a better tomorrow. And you can't deliver on that purpose if you're not thinking about tomorrow. And so you can't think about tomorrow without considering climate and the impacts it's going to have on our customers. So, you know, I'm quite fortunate in that I feel like there's parts of my personal life and parts of my professional life that come together quite nicely. But even if I didn't have that holistic view of this, any one of those components would be important enough for me to think. I've got to educate myself more about this. I've got to make more of a difference and more of an impact, whether that's in my personal life or in the role that I have at Aviva.

Elliott: I find that very compelling, and I'm sure that there are many in your organization and in the industry who would agree with me. But, you know, what are the strategies that used to engage people in your organization and in the industry more broadly speaking, from personal experience, are you drawing the parallels to COVID? What have you found to be most successful?

Jason: I mean, the first thing I think if you can link climate or ESG more broadly to the purpose that you have as an organization is, you know, I think that's a really easy way to introduce people to this. And not every business, not every industry has that linkage. Although I think today, you know, if you say that you believe that it's important to be net zero, I think any industry can try and find a linkage to all of net zero today. What do they need to do to become net zero and why is it important? Why is it relevant for their employees and for their customers? I think fortunately for Aviva, that is easy for us to link ESG with our purpose. I think the secondly you've got to do is link it to your strategy, because if you're not linking it to your strategy and things that are important to you to deliver as a business, then it will fail. It will just become a strapline on a nice presentation that's been shared with the board or with investors, or with your employees or with your partners. I think the other key thing is to get people engaged at a grassroots level. You know, so when we talk about becoming net zero by 2040, we've brought that to life to people for people by telling them. It means this, means we are going to have a fleet of electric vehicles. It means we're going to our offices are going to be net zero. It means we're going to be using energy that comes from sources that are, you know, sustainable and all of these things. And then, you know, we've gone as far as, you know, in June, we had our first all employee sustainability day with 1100 employees who were able to help in their relative in their respective communities. Whether that was anything as simple as cleaning up litter, planting bushes and trees and local species, trying to deal with invasive species, you know, a whole number of activities that we created for employees to touch and feel a little bit more, because otherwise it feels removed and it feels like something that's on a page. You know, we've just published about a month ago our first sustainability report, which is where we're being quite public about the targets and the metrics that we're putting out there, how we're going to judge ourselves, how we want others to judge us as well. And one of the things I'm going to be doing is sharing that with other people in the industry and in other industries to say, look, I'm sending this to you not because I'm trying to self-promote Aviva, but because I actually quite like you to do better than us. So only one company can only achieve so much. And I think, you know, I'm, I like a good bit of healthy competition as much as the next person. So to put something out there and say, here's the bar now, who can beat it? And then also us to go back to ourselves and our teams and say, if you just seen what ABC have done, that's more aggressive than we've committed to. That's that feels a bit more ambitious. How can we beat them? And I think that, you know, collective momentum is something that we all need to build. And then I think that, you know, the other thing is I'm very conscious that is the relevance of ESG. When you talk you know, I hear people talk about ESG and I hear people talk about taxonomy and definitions and it feels so far removed from what's relevant to me and what impact I can have. But when I think about the impacts I can have, you know, in my own home or in the community where we have offices or with our employee base, and it could be any part of ESG. I mean, you know, we talked a lot about climate and sustainability so far, but if I think about, you know, other parts of ESG around and I'll say this absolutely shamelessly and in the fact that Aviva Canada is the first major financial services company in Canada to achieve gender equality at a leadership level. So we have a 50 50 male female split. Well, the average, I believe, for financial services in Canada is only about 30 to 35 percent of leaders are women. That's not good enough. Right. And that's only the start of thinking about a diversity and inclusion agenda that has a lot further to go. So whether it's, you know, I think you can look at any part of the ESG spectrum and say, how is it relevant for me and what can I practically do about it? And then the final thing I'll say is, I do think there is a there's a responsibility on people to call out when the dialog is just too removed or when it feels too high level. Because, yes, we can all educate ourselves every day, but I think we've got to get down now into practical actions that may be baby steps. But if you're not taking baby steps, you're certainly not going to be able to learn to walk and run later on.

Elliott: I was had the pleasure of interviewing another Canadian executive who shared some with me, which I'll now share with you that when ESG feels like a checklist, that's when you lose people.

Jason: Yeah.

Elliott: Right. What it has to be about is are you managing your business in a way that mitigates risk and captures opportunity in the real world in the 21st century? Right. As soon as it becomes, you know, have you asked your portfolio companies about the following material issues, you know, that's when people start to really glaze over a little bit.

Jason: Oh, definitely. And I'll tell you, in the insurance space, you know, one of the things we've seen is a lot of the dialog in insurance, in property and casualty insurance is have been well, well, what are you going to stop doing to make yourself more sustainable, to achieve net zero? And actually there needs to be more dialog around what are you going to start doing? You know, particularly in the insurance, well, you know, how environmentally friendly are the claims practices that insurance companies provide? You know, we know when houses get damaged and there's a whole load of damaged material that ends up in landfills. Well, other alternatives to that material ending up in the landfill and other alternatives to using toxic paint and other materials that are problematic for the environment. And that's just a slither of the kind of things that we can do. But you're right. When things are really high level, it's so hard to engage at that level I find.

Elliott: Well, let me just engage with you on that. I'm going to go a little bit off script here because, you know, you talk about claims. Great example, right. And you mentioned before the concept of building back better, but I think so many of the systems and structures we have, I know the public system better than the private insurance space, but so many of the systems that we have are designed to build back the same, not to build back better. Are you thinking about that? How do we get past those barriers?

Jason: Yeah, we are, I mean, if I think back over the last number of years, there was some really significant insurance events over the last number of years. One in Fort McMurray, one in Slave Lake. And in both of those instances. Now, this was when the thinking, the mindset, the thought leadership around ESG and sustainability was in a very different spots. And neither of those are that many years ago. But in both of those events we try to work with local governments and we reached out to media and other partners to say, look, can we just think about not just rebuilding houses where there's a high risk of fire or flood? Can we think about firebreaks? Can we think about different local building requirements, perhaps? And I think I don't want to say that that fell on deaf ears, but I think the mindset generally that the world had was a little bit differently. I really, really would like to believe that if and when those events happen now, there will be a more willing set civilians to think differently. And, you know, in November last year, B.C. had some pretty devastating floods. Now, fortunately, those floods, for the most part, happened in areas that were quite rural and where there wasn't large concentrations of people living. Now, that doesn't help if you were one of the people that lived there in the flood zones, in the flood regions, because you were very badly impacted. But if those if that flooding had happened in some of the more urban areas, you know, the cost would have been infinitely higher. And I don't just mean the financial cost, but the cost on people's lives and that the amount of disruption it would have created. So, you know, we took the B.C. floods and we took a subset of the claims that we handled in the B.C. floods and very deliberately said that we will handle those claims in a far more sustainable way. So it was only a subset of those claims. But the learnings we got from that of how difficult it is to get rid of and deal with waste and, you know, demolition construction material that has some level of toxicity to it. You can't just get rid of it in the normal course that the industry typically doesn't have even included. You have to think differently. You also think differently about what can you reuse what rather than what are you just throwing out and getting rid of? And then think differently about the materials that you're using to build back and as you say, to build back a little bit better. But even then, it's more expensive to replace an old roof with a roof that is more resistant to hail or to flood. It's more expensive to replace siding on the house with old siding versus fire resistant siding. So all of those things you need to take into account. But what I hope we will do and certainly a Aviva we will do this I hope the industry does is will take those learnings and then we'll feed those back to our customers and our partners to say this is why, yes, your premium might be a few points more, but this is the impact it will have on you and this is the impact it will have in the event that you do have a claim. And then that technology around building the fire resistant siding and the hail resistant roof, that technology will get better and the cost of those products will go down. But part of that is the industry driving that demand so that those producers and those suppliers do those things. They build more scale, they build more capability. And it becomes more prevalent and more commonplace than it is today.

Elliott: A lot of that resonates with me. I mean, I think in a lot of the work that I've done in resilient infrastructure and other real assets, you know, you see that on the energy sector, decarbonization, right? We can use the energy savings to make performance work. Whereas on the resilience side, as you said, installing that fire resistant roof or siding or whatever, you know, improved indoor air quality, whatever resilience measure you're trying to implement, those generally are additional costs. Until you factor in the avoided losses, and those are very hard to monetize. So it's that delta on the physical impact side on the cost, the physical impacts, which is just has I think still proven elusive in this country anyway. And it's exciting to see Aviva play a leadership role in trying to tackle some of those issues.

Jason: Yeah, I mean, you just touched on something there and I don't remember the exact stat, but kind of it does not stack up well globally in terms of our carbon footprint is terrible. And when you look at the pack of you know, where we are on the leaderboard, we're at the bottom. And I think many Canadians would be surprised and disappointed with the sort of company we're keeping on that leaderboard around, you know, what we're doing and what we're not doing from a sustainability perspective. So, you know, look, I think it's great that Aviva is taking the position we are and we're trying to be a leader. I think it will be even better when many other companies as well decide, well, we can't let Aviva have this space to themselves. Let's also get out there and make a difference and take our own leadership positions. But I do think it's one of those things, partly because, you know, Canada is such a vast country geographically that I mean, even though I see the impacts of storms in Alberta, I don't experience that living in Toronto. You know, I see the impacts of floods in B.C. but I wasn't living in those floods. I didn't experience. I see the impacts of bad weather and, you know, May storms in Ontario and Quebec a little bit. But like many things in life, it can be very easy to feel removed from the consequences and the outcomes that many people live with. So there's just a lot more to do in this space.

Elliott: Time flies, but I feel that there are so many interesting topics we can cover. Jason, we're going to take a break there and we're going to get right back to it in the next episode. Thank you to our listeners for joining us today. Please be sure to subscribe to hear part two of this conversation with Jason. We'll continue our discussion on communicating strategy, the importance of transparency and building a concrete road map. I'm Elliot Cappell, and I look forward to you joining us for the next CEO Viewpoints episode.

Shelley: Welcome to our PwC Canada CEO Viewpoint Podcast Series. This is a series where we discuss key themes from our 25th Annual CEO Canadians Survey with leading Canadian CEOs. And our last episode, we talked about how environment, social and governance known as ESG has risen to the top of the CEO agenda. Today, we're going to continue that discussion with a new guest. My name is Shelley Gilberg, and I'll be your host for this episode. I'm a partner here at PwC Canada, and I lead our ESG markets. Thank you so much for joining us today. We have a guest with us that I'm personally really excited to spend some time with. Rania Llewellyn, the president and CEO of Laurentian Bank. And she's going to spend some time with us on her journey, ESG strategy and transformation, and her thoughts on where trust and leadership play in all of this. So welcome, Rania. Delighted to have you with us. You have such a unique and interesting journey on more than one front, and I have a few questions for you about that. Maybe we'll start with I think our listeners would love to hear more about how you became the first woman to head a major Canadian chartered bank in 2020. And I was so excited to see your appointments. I would love to, as our listeners would, I think, to hear more about that journey.

Rania: Thank you, Shelley, for having me today on your podcast. So yeah, so in terms of how did I get here, well, it's been quite the journey, but some of the key, the personal story to start off with. So I was born in Kuwait to an Egyptian father and a Jordanian mother, lived there for 11 years, then moved. We were fortunate enough to leave actually Kuwait before the Gulf War and moved to Cairo, Egypt. And I finished my high school there. I actually finished high school at the age of 14, wanted to always be a doctor. And at the time the only private university was the American University in Cairo, and I had studied in English. And so my dad said, you know, you really probably should attend that school. And they didn't have medical school. So when I got in, I said, what's the two hardest professions? And at the time it was IT and I didn't know anything about technology and business, so I decided to do business. So finished my first two years there. And then to be honest, as a family, when the unrest started happening again in the Middle East, we decided we wanted to immigrate. We actually landed August 22nd, 1998 to 30 years ago in Halifax, Nova Scotia, of all places. I ended up going to Saint Mary's University, finished my undergrad there, did a Bachelor of Commerce in marketing and finance and so excited to graduate and typical immigrant story couldn't get a job. My name was not Llewellyn at the time. As you can see or hear, I don't really have an accent. It was just getting that first step at the door. It's hard when you just are applying on paper. And so I ended up being I ended up working for Tim Hortons with my bachelor degree and decided to go back and do my MBA, because that was what typical immigrants do is go back and just get another degree. I was fortunate enough whereby my dad had a business and his commercial account manager from Scotiabank at the time, met me and said, well, why don't you come work for us? And I said, I keep applying. You never call me back. And I first and I got ended up getting my first teller job there. I said, I'm going back to do my MBA. And so that was my foray into banking. But again, I was ready to graduate from my MBA and again couldn't find a job, including working for Scotiabank. But at my swearing in ceremony with my family as a new Canadian, there was a special guest among us that day and it was the senior vice president of the Atlantic region. And my mother asked me to go up and ask him for a job. And I was like, Mom, this isn't really the place for me to ask for a job. And she said, just do it. She's barely five two, but she's a tough woman. So anyway, so I went up to him and I said, Mr. Keith, I work for you. You don't know who I am. I introduced myself and he and I said and I invited him to our reception at St. Mary's University, was a wine and cheese reception. I had no idea he actually sat on the board. So fast forward, I met him at the wine and cheese reception and went up to him and I said, Mr. Keith, I was born in Kuwait, I'm half Egyptian, half Jordanian, lived in Egypt, came to Canada, Scotiabank's Canada's most international bank. This is the only bank I want to work for. He said, do you speak Spanish? And I said, I'll speak whatever language you want me to speak as long as you pay for it. Anyway, I ended up calling him ten days later and his assistant, Zara. When she took my name down, she said, you're the new Canadian. And I said, I made an impression. And it was because of that ten minute meeting I had was with Mr. Keith, I ended up stop being a teller on a Saturday, and I got my first breakthrough as a commercial account manager in training on Monday. And so the moral of the story is, and I tell my kids, you don't ask, you don't get. What's the worst thing that can happen? So that was my foray into banking. So then I moved from commercial banking. I took another step, I ended up moving to Toronto because I thought, you know what, there's nothing like head offices in Toronto. I didn't really have a job. I accepted a motley position. And then I joined corporate banking. I was a corporate banking for seven years. And so I always took routes that were not really well, well laid out. I put my hand up for a special project and I ended up creating my own job being VP of Multicultural Banking. It was really a seven month secondment. I was one of four people, had no idea I was creating my job. And that was to start up a new business targeting newcomers to Canada, which was near and dear to my heart. So I did that for three or four years and then again, you know, put my hand up and said I was ready for a move. I became president, CEO of a subsidiary of the bank that nobody really knew anything about called Roynat Capital. So I spent 26 years of my career there, Shelley, where I find that I was almost training for this job. I did very different roles. The last job I did was payments, which was technology, product operations. So I didn't grow up in a vertical. And being an immigrant, being female, being young made me different. And so when this opportunity came up, I just couldn't say no. It was a transformational opportunity. It was sitting at the top. Yeah, I feel like I've been training for this role, but it was that personal journey that I usually share because I think at the heart of it is taking chances, being courageous and not agreeing to fit in. But I always tell people why fit and when you can stand out.

Shelley: I love that story in terms of not only how incredible your journey is, but the sometimes you need to track your own path and there isn't necessarily a standard way to get to where you want to be. Sometimes I even know what you want to be. And maybe that theme we can tug on a little bit, because one of the other things that I'm curious about, and I suspect our listeners are, is that theme of trailblazing and sort of needing to create your own path comes through in so many ways in your story. And you were one of the first CEOs who personally took responsibility for ESG at the bank. And I happen to know you're very passionate about this. Can you maybe share a little bit more about why did you think that was so critical? It wasn't common at the time. And what kind of values drive you in the bank?

Rania: I think it's because of where I came from. The fact is immigrant female, you're kind of the underdog. How do you create that equitable environment? So it was really core to who I was. And I kind of always, whether I was at Scotia, where I was head of the Black Employee Network, I actually led ED&I for capital markets there as well. So here was an opportunity where I can build the bank that I've always wanted to work for. We hire a lot of newcomers to Canada. We have a lot of diversity at Laurentian Bank. And when you look at the history of the bank, 176 years ago, it was the bank that served the underserved. So it was just a natural fit. So we started with our Courageous Conversation series. We started with a number of employee resource groups. And then from there that was really the beginning of our ESG journey. Then you kind of move into, okay, let's do a data analysis, let's look at the E and look at the G. But it was true to who I am as a person. And I believe in being authentic. Authentic as an organization in terms of our purpose statement. Authentic as an individual leader. And so it was really, really important to me to kind of look at it from that perspective, but make sure it's not a standalone project. It's actually embedded in everything that we do. It's how we do business. It's how we conduct ourselves. It's how we recruit. It's how we interact with our vendors, how we do business, how we design our products, how we deliver our product. So that was really, really important to me as well.

Shelley: Maybe if we if we take out a little bit further, how did you decide what to prioritize after you got sort of that S sorted? And where's the bank at now?

Rania: Yeah. So in terms of part, I mean, there's lots and lots of ways. It's like it's like reviewing a strategy. And that was really the fortunate thing is when I came in, I came in as a new CEO. I brought in a whole new leadership team. We were reviewing all of our operations at the same time. We had to kind of come up with our purpose statement. And our purpose statement is all about we believe we can change banking for the better by seeing beyond numbers. As we were building our strategy, one of the key strategic pillars is making the better choice. One of our core values is all about acting courageously, making sure we're creating an environment where everyone belongs. So the ESG is embedded in everything that we do. So I always say, you gotta you can't climb the mountain all at once. You need to kind of take steps and but have that north star of where you want to be. And I think that was that was really important. So it really started with the purpose statement to galvanize and bring our employees together. So the S was we felt we did well on this. And so the next thing we did was we started looking at the E. We hired a new head of ESG. We started building a TCFD roadmap. We started kind of saying, okay, well, where we at? So you have to kind of look at your current state. We started engaging stakeholders internally our employees, our board, our shareholders, our vendors. And so then you start kind of building that roadmap. But being again very focused on where we want to play, where we want to go. We launched our very first ESG report, and in that we disclosed our Scope 1 into GHG emissions. We signed on to PCAF. And then we started engaging all of our employees in the conversation as well as to what's important to them. Our employees are just like any other stakeholder. So we can start building that heatmap and just look at the complexity, what's required from a regulatory perspective. We had a lot of things that we had built at Laurentian Bank, but we hadn't disclosed it. From a metrics perspective and a shareholder perspective, disclosure is absolutely critical to being transparent, whether it be on the E or in the S. And from a governance perspective, we started building ESG policies within our board, our Exco teams. We started putting metrics so that it starts with really knowing, okay, what's your current state? Where do you want to go? And yeah, there's lots of different directions you can go, but you have to be really clear on it's a multi-year program. It's not ones and done. And so being very, very thoughtful and strategic and we're a smaller organization, so we have limited resources. So how can we make a bigger impact? And you have to be able to measure that impact and making an impact to the environment, making an impact on employees lives, making an impact to our shareholders. And so I always tell people start small, but you have to start with your current state, build a roadmap that kind of resonates with what you're trying to accomplish and not what everybody else is trying to accomplish. Right. And then make sure that you're actually reporting and delivering and you're measuring accordingly.

Shelley: You've said a couple of things. So, one, you talked about purpose sort of at the beginning. You've talked about the importance of that transparency. How do values and how do trust sort of play into how you're knitting all this together?

Rania: I always tell people trust is earned over time and it's earned through actions delivering on what your commitments are and it can be broken in one interaction. Even joining an institution where I was a new CEO. Nobody knew me, I didn't know anybody in the middle of a transformation, in the middle of a pandemic. Building trust with employees was absolutely critical. And it starts by two way communication and transparent communication. And then whatever you say, you should deliver it. Despite the transformation, we had a third of our workforce turnover, new strategy, new vision. But what we did was we went out with an employee survey almost a year into that transformation to see what the employee engagement scores look like. And to be honest, I was pleasantly surprised. Trust in management was at an exceptional high of 89 percent. And so when you see that, it really resonates in terms of the level of communication, the level of transparency, the level of engagement that we're getting from our employees is resonating. And that's the way we've, to be honest, use that same methodology for our stakeholders, whether it's our shareholders, whether it's our analyst community. So every quarter we report to the analyst and shareholder community, and we've outlined our KPIs very, very clearly. We didn't have to do that. So that's over and above our financial targets. So for example, in our KPIs, we actually talk about our employee engagement number that we're targeting for the next year and three years out. We talk about the KPI for turnover and so it's really, really important to engage. But I always tell people, don't ask people what they think. If you're not going to act on it. That's where trust is broken. And so we did the same thing on the ESG front is we've actually started by educating. So we have a new leader for ESG and we actually put a one on one kind of ESG deck together. We started tying it back to this is our strategy, these are our pillars, these are our values. I truly believe ESG is everyone's responsibility. It's not just my responsibility. I may be the champion, but it's everyone's responsibility. We put it in people's scorecards so I can hold my leaders accountable. And when we put it in the scorecards, it was directly attributed to how they can contribute to that journey. So it's not just a generic metric. It's for our commercial staff. How are you going to personally come up with new products or new services or help your clients on their ESG journey? So I think that's how you build trust. It has to be transparent. And you know what, even in our KPIs that we're starting to show in our last quarterly results, it's showing a little bit of yellow. And so when people ask me, but it's yellow, I'm like, well, that's part of the transparency aspect of it. We did that in our ESG report in terms of our disclosure. So we know where we're at in the process. We know where we need to go. And we know where our gaps are. And I think that's really important in terms of building trust with all of your stakeholders.

Shelley: One of the interesting stats that we saw in the CEO survey was that 60 percent of the Canadian CEOs are concerned and place attracting, retaining talent is a very high priority. Data point to was there anywhere up to 34 percent of the workforce regardless of age demographic is considering a change of employer based on shared corporate values. What are your observations from your experience at Laurentian in terms of does this make a difference in attracting and retaining top talent and engaging people?

Rania: I think the pandemic has really made people take a step back and value and kind of reevaluate kind of their work life. And I hate to use the word balance. But just in terms of their purpose, how are my values aligned with my organization's values? And that resulted in a lot of turnover as well as people kind of reconsidering who their employer is. And so it actually from a timing perspective, it worked out perfectly for us because we just launched our new purpose statement, our new core values. And so I would say, despite the heated competition, we've been able to attract a lot of talent in the last year. And I think it's because I know it's because I hear it from our employees. We just had a couple of employee appreciation events and they say that purpose statement really resonates with them. Right. And the fact is, to be honest, that first female CEO of an organization that resonates with a lot of women, a lot of underdogs, a lot of immigrants. And so having your core values embedded in everything that you do and making sure that the employees feel that is absolutely critical to why they stay. But the other thing that we've done, Shelley, is, as you know, the pandemic is I wouldn't say it's like in our rearview mirror yet, but things are opening up again. And so we were one of the few organizations that throughout the pandemic did not mandate vaccines. We actually encourage people to get vaccinated, and we lead by example. We encourage them by showing them the reasons why, but ultimately it is a personal choice. And we needed to make sure our employees and our customers are safe, particularly those who are going into the branches every day. Not once during the pandemic did we mandate our employees to come back. And so based on our new strategy and our future of work strategy, we sent out a survey to our employees and they told us we don't want to come back full time. And so we listened. Based on that, we actually got rid of 50 percent of our real estate, our corporate head office real estate, which is great for our employees, but also great from an environmental perspective. So we got rid of that real estate footprint, which also means that our employees are not going to be commuting to work every day, which means that from a gas emission perspective, we're contributing to the E. And from an S perspective, our staff, they have work life balance. They have more time to spend with their young ones, their elderly, their family, spend more personal time on their own. It actually has helped in terms of our recruitment because it differentiates ourselves, but it's true to our core values. And while we're trying to reimagine what the future of our real estate footprint looks like, we've actually engaged in focus groups with a third of our employees. And so they're helping us co-create an ideate where does that future of work look like for us at Laurentian Bank. And so, so again, the same principles of two way communication, listened, learned. But we made it again very transparent and clear. We're not going to be able to make everybody happy. So we've come up with 13 personas. We have a cultural boot camp that we're going to give to leaders to work with their teams to show them how difficult it is to actually there is no one size fits all.

Shelley: If you had to summarize your best advice for people that are just starting out on this journey, particularly around ESG and values disclosure, what would you tell them?

Rania: Yeah. What I would tell them is like any other risk and it's interesting even, you know, even people who people have never actually worked in risk see risk as a deterrent to doing business. And I always say if you turn it upside that risk is actually creates an opportunity. And so how do you leverage ESG to create opportunities for your organization and for all of its stakeholders? And so if you make anything a checkbox exercise, that's the problem. So even when new regulation comes into play, I always tell people from a risk perspective, if it's there to serve our customers, how can we use this regulation to differentiate ourselves to provide trusted advice and counsel? That's the way I look at ESG. So I'll give you a I'll give you an example. We announced in December that we have signed a partnership with a new fintech to help us transform our visa platform. And so in selecting the fintech, it was fantastic. The CEO is an immigrant, the CEO is female. So it's like awesome. We're supporting a female individual. As part of the design of the platform, we told her that we need some rewards programs that would resonate with our ESG subsegment of our customers. So who on your platform can kind of help service that? Right. So there's lots of things that you can embed even with our partners, our vendors, whether it be PwC. When I interact with them and to be honest, I see a lot of male partners covering us as a we need to challenge them on where are your female partners? We're doing that with our legal counsel. We're doing that across the board. So it's taking it and baby steps. Because I think if you try to just say ESG and here's what it looks like, it becomes very daunting for somebody who doesn't know where to begin. And that's why how do you bring it down to that commercial lender who you tell them, I'm not asking you to exit this business, but I'm asking you, how can we come up with programs that can help your client who probably has the same pressure as you on their ESG journey? How can we do that HR? How can we do that in operations? I always tell people it's little examples that can help people, then understand, oh, now I know how I can contribute to that ESG strategy. So it's no longer a tick box exercise. That's how I approach everything is. If you've never kind of walked in someone else's shoes, it's really hard. How do I make it resonate with you by bringing it down to how you do business every day and come up with a specific case study that will help you kind of contribute to the overall goal.

Shelley: I think it's excellent advice, Rania. I think it resonates across regardless of sector big or small, how do you how do you sort of take your first steps on this and appreciate that. Maybe the last question for us to get some perspective from you on today is if I think about everything even the team at Laurentian have accomplished in the last two years, what are you most proud of?

Rania: The thing I am most proud of is the leadership team that I have been able to build is extremely diverse, different backgrounds, different ways of thinking. I think it really speaks from an ED&I perspective and how this team has come together and what we've been able to accomplish in a very short period of time. On the ESG front, I would say the fact that it's not a program, it's not a side project, it's really fully integrated across the bank through our core values, our strategic pillars, our operations, our activities. And then most importantly is reviving that sense of pride in our employee base, customer base and our shareholders and analysts are now beginning to believe. So that was one of our key things, is we believe in changing banking for the better. I think everyone now is starting to see that what something is happening at Laurentian Bank, they're starting to execute and we are rebuilding that trust that we had lost a few years ago. And so to our ESG journey, I'm really proud that I feel that I'm on the right path of building the bank I've always wanted to work for, Shelley and that I have a phenomenal team that is there to help me see that vision through.

Shelley: So as we conclude today's podcast, I really want to thank Rania for spending the time with us today. On behalf of our listeners and on behalf of PwC, thank you. I think those insights were fantastic and the thoughts that you shared around ESG, strategy and transformation, leadership and trust were extremely valuable. Lastly, but not least, thank you to our audience today. We hope you'll join us for the next episode and check out all of the podcasts on your favorite podcast app.

Shelley: Welcome to PwC Canada's CEO Viewpoints Podcast series, where we discuss key themes from our 25th annual Canadian CEO survey. Environment, social and governance, known as ESG, has risen to the top of the CEO agenda in terms of strategy and transformation. The success of an organization is no longer measured solely by its financial results. Leaders must also know how to respond to issues of climate change, workforce diversity, supply chain ethics, economic inequality. It's all about aligning and embedding all of these principles and more into strategy and operations. Now is the time for leaders to take bold actions for sustained outcomes. ESG is perhaps the biggest transformational opportunity of our time, but it can't be an add on. It must be part of an organization's overall business strategy. My name is Shelley Gilberg. And I'll be your host for this episode. I'm a partner and our ESG markets leader for PwC Canada. Thank you so much for joining us. Today, we have a really exciting guest. Heather Chalmers, president and CEO from GE Canada, is here to speak with us about her perspectives on Canada's path to net zero and ESG strategy and transformation. So welcome, Heather. It's great to have you here with us. And I'm hoping that maybe what we can start with for the audience is to have you tell us a little bit about your journey as CEO at GE Canada. 

Heather: Terrific. And Shelley, just first, thank you very much for having me here today. It's a pleasure to be able to talk about a topic that I'm incredibly passionate about, both personally and professionally. A little bit about me. I've worked for GE almost 27 years. I started in our plastics business, moved into health care. And then since about 2018, I've been president and CEO of GE Canada. For those of you who may not know, GE is an iconic global company, but one with deep Canadian roots. In fact, Canada was the first country GE expanded into. And I'm proud to say that we will be celebrating our 130th anniversary in the country this summer. In a little fun fact that I'd like to share is that Thomas Edison, who is our founding father, visited Peterborough on a trip and fell in love with the area so much so that he wanted to have a cottage there. And that was the reason why the first motors facility, GE Motors was born in Peterborough, Ontario, 130 years ago. 

Shelley: So I love the fun fact and I did not know that about despite the fact I'm a bit of a nerd when it comes to energy. So Heather, maybe diving a little bit into this topic that you and I are both fairly passionate about. There's a lot of concern. There's growth, there's changing expectations around trusts, transparency, performance. We're seeing leaders really need to take some decisive action to address issues that are having long term consequences but also generational impacts. And when we look at the macroeconomic and the geopolitical volatility and the imperative to re-imagine organizations just keeps growing. And I'd love to hear your perspective on why is ESG even more important now and particularly to business leaders, company stakeholders and shareholders and close to my heart, Canadians and the Canadian economy? 

Heather: There's no question the last two years have been incredibly challenging, whether that's COVID 19, reckonings with racial injustice and systemic inequality, the continuing effects of climate change, supply chain challenges and unprecedented inflation and most recently the Russian invasion of Ukraine. This is one of many ongoing conflicts across the world. In fact, I use this term VUCA, volatile, uncertain, complex and ambiguous all the time with my Canada employees. That in fact VUCA is our new steady state. The other thing I'll say is that these events and disruptions have also helped underscore the purpose or the why of what we do at GE. You know, I'm both lucky and proud to work at a company that is committed to tackling humanity's biggest challenges in the energy, health care and aviation industries. And everyday we say we rise to the challenge of building a world that works. Across all three of these industries, there is a clear alignment to sustainability, whether that's leading the energy transition to drive decarbonization or developing precision health care that personalizes diagnosis and treatment and building a future for smarter and more efficient flight. There's also an incredible opportunity for Canada because of our rich natural resources, geology, history and nuclear and hydro are incredibly strong academic base and broad trade agreements and government prioritized focus. And the other piece, I would say it's important to Canadians. They understand this is a priority and that while there's costs involved, it's better that we we start this transition in an orderly way, in a transparent way because climate change and the impact or the requirement for to be better at ESG is not going away. We need to do this not just for us but for the future of our children and subsequent generations. And I'll end here by saying Canada has this incredible opportunity to be a leader in terms of reaching its own net zero goals. But if we do it properly, there's a tremendous role that we can play in terms of the energy transition. We will all win if we play this right. And that means predictable and enabling policies and regulations, as well as smart business decisions that are based in science and technology and so that we can lead in the energy transition that will ultimately create new green sectors for growth and economic prosperity for the long term. And to that point I shared with you earlier, I've just had the opportunity to expand my role in an international capacity. The idea is to take these first of a kind this these leadership examples that were demonstrated in Canada, whether it's the small modular reactor, if I could use that as an example or carbon capture and then how do we translate that into other parts of the world. Quite, I think it's just an acknowledgment of the good work and the momentum that we have in Canada and the opportunity for impact in a much more broader way around the world. 

Shelley: Well, on a personal note, Heather, congratulations. I've had the privilege of working with you on some of the leadership you provided through the Net Zero Council and you're perfectly suited for. So congratulations. Let me picking up where you sort of touch down in terms of Canada and Canada's role and where we stand. We recently annually we do a CEO survey. And one of the things that surprised me in that survey was, well, we have some exceptional Canadian companies who are leading in some of these spaces. Many of the Canadian respondents in that survey really had not yet realigned their priorities in terms of an evolving world, whether that was trust issues like ESG. As I said, we saw some exceptional leaders but we actually saw an enormous amount of the Canadian business landscape really lagging our global peers. The challenge to sort of look beyond the short term and putting those sustained outcomes at the heart of things is not small. What advice and what thoughts do you have on how organizations can position themselves for that long term growth and that role on the global stage for Canada that you talked about when it comes to ESG and net zero, Heather? 

Heather: I would say and what we try and live by is that sustainability priorities need to be woven into what a company does because this is right for both the business and the planet. Sustainability must be approached with the same high expectations of rigor and accountability that you use to run your business. There should be no difference. And that includes defining a strategy, setting ambitious targets and measuring progress. Alignment with external standards may also be a value. For example, you know at GE, we were a signatory to the UN Global Compact since 2008 and we see close synergies between multiple UN sustainable development goals in our strategy and sustainability priorities. 

Shelley: Maybe you can expand a little bit, Heather, in terms of sort of the long term growth side of that, in terms of how do companies need to think about this differently, sort of building off of what she's done in the space? 

Heather: Let's start with maybe our goal. And our goal is to be carbon neutral in our scope one and scope two GHG emissions by 2030. In our last year sustainability report, we also announced our ambition to be a net zero company by 2050, which includes our own operations as well as the scope three emissions from the use of solar product. This is similar to what many other companies have set out but the challenge is a bit more difficult in our goals, I would say. Because of what we do, our net zero journey ultimately is our stakeholders net zero journey. For those who may not be aware but I'm proud to say one third of the world's electricity is generated using our technology. This includes renewable anonymity technologies such as onshore and offshore wind turbines, hydro turbines and nuclear reactors, as well as highly efficient but emitting gas turbines. We are actively working on pre and post combustion decarbonization pathways such as burning hydrogen in our turbines or using carbon capture to abate the emissions coming from this technology. I would say the same also applies to our aviation business, where two third of the world's commercial jet engines are manufactured by GE or our partner companies. As for lessons, I would say there's a huge opportunity for education. Whether that's Canadians or otherwise, we need to acknowledge that getting to net zero is a journey. Hence the term energy transition. Second, we need to massively increase the amount of non emitting or low carbon electricity we generate while simultaneously electrifying other sectors of the economy. Third, we need to understand that the energy transition will look very different depending on where people live. We should neither expect nor prescribed any two provinces to reach net zero in the same way. The reality is it's going to take a portfolio of technology solutions. In that portfolio in each province will look different and be determined by existing infrastructure, natural resource availability and the policy and regulatory landscape. And the reality's it's okay that it'll look a little different. And then lastly, I'll just say economy wide decarbonization must be done affordably, reliably, sustainably and equitably. We need to make sure that no Canadian gets left behind by the energy transition. 

Shelley: It's extremely well said. I've heard you speak on this before but I think would be of interest to many folks is, you know, addressing climate change really calls for an unprecedented level of cooperation among industry sectors, regions that may naturally be competitive but also business leaders, governments, investors and NGOs. You deal with a very diverse and sometimes polarized set of opinions. From your perspective, why do you think it's important for organizations and for all of us to sort of reimagine collaboration? And maybe most importantly, how can we create more of that to achieve the goals and the transition that you've outlined? 

Heather: Thanks, Shelley. I think I'll tackle that question in two parts. Perhaps starting with the why and then some thoughts on the how. In terms of the why, climate change is an urgent global priority and it is a challenge that affects everyone, regardless of where you live, how much you make, how old you are. It's universal. The challenge is also too large for any one actor, whether it be a company, an NGO or government to tackle alone. It really is going to take all of us, like you said, governments, energy producers, OEMs, utilities, research institutions, indigenous communities and other non-governmental stakeholders to work together to drive Canada and the world towards net zero. So this means that we will all have to come at this problem with different perspectives, agendas and ideas. And frankly, that's a really good thing. It helps to identify barriers or unintended consequences of lack of alignment between various actors that need that we need to think about and address in order to build a solution. In terms of the how, you know, I think we start with everyone acknowledging that one person or entity doesn't have all the answers. You know I'll say at GE we strive to have a culture built on focus, transparency and humility. And humility helps us recognize what we do not know and that we need to start by asking questions and then continue by listening carefully and respectfully. And by doing so, we can open the door to collaboration and ultimately innovation. And the other piece of that is just it's discussions like this. We need to have more of them. We need to have more forums where we bring those various actors together to share concerns and to share ideas. The Canada's counting on us. The world is counting on us. 

Shelley: You alluded to something a little bit earlier, Heather, in terms of speaking about companies that are going to do this well or organizations that are going to do all of this well are really sort of embedding that and integrating that into how they run their business, both risks and opportunities. And we've definitely seen that in the work that I get the privilege of winning as well. But we're also seeing that those organizations are starting to potentially have access to lower cost of capital, wider access to investment lending sources. They're attracting and retaining customers differently and they're also attracting retaining talent, which is a key issue for a lot of industries right now. How does GE think about this and approach this when you're investing in ESG and your transition strategy, do you measure that success? 

Heather: I would start by saying that the very act of reporting in terms of our progress against net zero targets and making progress on ESG. It's essential if you have to start from that fundamental principle. At GE, we routinely and purposely analyze and revisit our sustainability programs, our commitments and our targets. Our employees are using Lean to hold site specific sustainability assessments, identify energy reduction opportunities and calculate and track costs and paybacks. And I would say they're incredibly engaged in this journey with us. We also maintain a global database used to track our GHG emissions, energy and water usage. And this is also foundational to our reporting. For example, in developing our 2021 sustainability report, we considered three key sustainability reporting frameworks in addition to the UN SDGs. And that was the task force on climate related financial disclosures, industry specific standards from the Sustainability Accounting Standards Board and finally, the Global Reporting Initiative Standards. So I circle back to my first point. We believe in reporting and we believe in reporting to consistent sets of standards that are recognized. And then we hold ourselves accountable to regular progress to those standards. 

Shelley: Keeping companies that are demonstrating how they're creating value for both shareholders and society seem to be positioned to gain an edge. When GE started the journey around reporting, can you share a little bit about what that was like for you to get started? Because I think a lot of the organizations that I get to work with, getting started is sometimes the hardest part. 

Heather: Perhaps I'll answer the question, Shelley, this way. First, it starts with everybody acknowledging that climate change is an urgent global priority. And I think ideally we've established that. Secondly, I would say at GE we are guided by an active and engaged board with leadership that sets the example of a culture of integrity that is core to everything we do. And so having that board engagement and accountability is critical. We also operate our businesses with a view towards long term sustainability and continuing to develop and deliver products and services critical to building a world that works. In a key element of our sustainability strategy is to implement lean management principles across the enterprise to drive continuous improvement for outcomes in our own operations, as well as looking for places for innovation in the solutions that we provide for the rest of the world. And in that vein, sustainability is integrated with strategic development and risk management across the country. We use this sustainability lens to focus on operations and priorities within each business, as well as how do we make targeted investments in those areas that we can help in terms of technology solution. Right now, we're in the midst of this strategy process in our new energy business, which will combine our traditional power portfolio, our renewable portfolio and our digital business into one. In the very purpose of that is to be a partner in the energy transition, a partner to governments, to companies, to provinces. It's a tremendous opportunity to be at the table in this way. 

Shelley: A lot of insight and I think a lot of experience in terms of your journey and part in a short period of time. Maybe I'll feedback to you sort of the five or six things that have really struck me and I think will also strike our listeners. And one being that Canada complete outsized role to being that integration matters of ESG and these transition and climate change concepts into the organization, not just standalone, collaboration being critical and no one size fits all for all of Canada I think is important. Also really resonated with me, in terms of your comments around an affordable inclusive transition is crucial and not leaving anybody behind. Supported by that idea that reporting is key to moving ahead and holding ourselves accountable on this and the governance and leadership really need to underpin that. Are there other messages or advice, Heather, that you'd have for not just the business community but sort of organizations across Canada, in government, investors, NGOs and business to maybe take away today? 

Heather: First, I think you've done an excellent job summarizing. So thank you for that. The one thing I was remiss in maybe talking about is people. And just like the energy transition is going to require a portfolio of technology solutions, I think the teams at the table have to represent that diversity of thought, that diversity of backgrounds, that diversity of context. It is so important that we have the best and brightest minds coming together and having very thoughtful debates about how to do this in a way that is affordable, it is sustainable, it's reliable and it's equitable. And it's important that at each of our companies, in our own lives, that we are creating environments where the culture is very accepting of that diversity and inclusion. And in that we are going to have the best conversations that ultimately lead to the best solutions for Canadians and then for the broader international community. So that's the one thing I will tell you that we are incredibly focused on as well, in addition to our own business targets and our technology targets. 

Shelley: Heather, thank you so much for making time to join us today and sharing your perspectives on Canada's road to net zero and ESG. And thanks to each of you for making time to tune in to the CEO Viewpoints Podcast series. We look forward to having you join us for the next episode. Merci et au revoir.