“Sustainability must be approached with the same high expectations of rigour and accountability that you use to run your business. There should be no difference. And that includes defining the strategy, setting ambitious targets and measuring progress.”
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As environmental, social and governance (ESG) matters rise to the top of the agenda for Canada’s chief executive officers, it’s clear that the success of an organization is no longer measured solely by its financial results. This is creating new expectations of CEOs, who must increasingly know how to navigate and respond to ESG issues like climate change, workforce diversity, supply chain ethics, economic inequality and much more.
In the first episode of the CEO Viewpoints podcast series, host Shelley Gilberg sits down with Heather Chalmers, President and CEO of GE Canada, to discuss the ESG transformation opportunity, how leaders can take bold actions to achieve sustained outcomes and the path to net-zero greenhouse gas emissions. They also talk about GE Canada’s approach to sustainability matters and how it navigated one of the biggest challenges on the ESG journey: getting started.
Be sure to stream, share and subscribe to our podcast series today. If you enjoyed today’s episode, let us know by leaving a review on Apple Podcasts.
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.
Heather Chalmers is President and CEO of GE Canada. During her 25-year career at GE Canada, she has worked in many areas of the business, including GE Healthcare Canada. She took a leadership role at GE Healthcare Canada in 2007 and became President of that business in 2014 before being promoted to her current position in 2018. She continues to serve as President of GE Healthcare Canada in addition to her role as CEO of GE Canada.
Shelley Gilberg is the Canadian Platforms Leader and a member of the extended leadership team at PwC Canada. Prior to her role as Platforms Leader; Shelley was the Canadian Leader for ESG Markets. As a consultant, she practises in the areas of strategy, transformation, finance and value creation. She focuses on private equity, pension fund and sovereign wealth clients as well as public-private partnerships.