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Speaker 1 [00:00:02] Hi. Is John here. It’s National Indigenous History Month here in Canada. And while there’s a great range of issues, some of them very difficult for us all to reflect on and learn from. There’s also a lot we can take forward from history to advance society, help our communities and accelerate economic growth. One of those clear opportunities is indigenous ownership in all aspects of the economy, but particularly the resources sector. We’ve done a lot of research on this at RBC, including a report entitled 92 to 0. The 92 is a reference to recommendation number 92 from the Truth and Reconciliation report. And zero refers to net zero. The point being we’re not going to get to net zero without economic reconciliation. The report shows that more than 50% of the critical minerals opportunities in the country sit on Indigenous territory and 40% or more of the best wind and solar developments are going to take place on Indigenous territories. So it’s clear that economic reconciliation is fundamental to our prospects of getting to net zero. I recently spent time in Ottawa with a group of Indigenous leaders making this case to a range of departments, including the need for a National Indigenous loan guarantee to help scale and accelerate the flow of capital to Indigenous owned projects. And it’s not just about money. Canada’s Indigenous communities hold the key to unlocking the country’s national resources in a more sustainable way, which is why they must have a seat at every table. Their unique insights on sustainable practices make them a key partner in accelerating Canada’s new energy economy, as well as helping us achieve reconciliation. One great example of this is the six nations of the Grand River. It’s the most populous first nation in Canada, with about 30,000 members spanning around 180 square kilometers. And the community recently announced something called the Oneida Energy Storage Project, which will help Ontario reduce greenhouse gas emissions by 4.1 million tonnes. That’s the equivalent of taking 40,000 cars off the road every year. But it’s also going to help Ontario better manage peak electricity demand by drawing power from the grid during off peak hours and storing it for later periods of heavier demand. And when it’s operational in 2025, it’s expected to offer enough power to run a city the size of Oshawa. And just as importantly, when completed, it will be amongst the first of its size to be co-developed by private and public partners, including the provincial and federal governments. As you can see, the entire project is a pretty big deal. It promises to make renewables more reliable, advance reconciliation, and perhaps forever change the way our electricity grid works. It’s probably the kind of project we’ll see a lot more of in the years to come. This is Disruptors. An RBC podcast. I’m John Stackhouse. As Canada recognizes National Indigenous History Month, we look at why Canada’s next resource boom must run through Indigenous consent and collaboration. On this episode, we’re going behind the scenes of the Oneida Energy Storage Project to see how indigenous business can accelerate Canada’s net zero transition. My first guest today is Annette Verschuren and she’s a great Canadian trailblazer from a small town dairy farmer to global change maker. Annette has done pretty much everything. She co-founded the craft chain Michael’s and is the former CEO of Home Depot, Canada and Asia. She sits on so many boards, too many to count. She’s the chair of Mars Discovery District and Sustainable Development Technology Canada. She’s also the president of the Ontario Energy Association and a bestselling author. And if that weren’t enough, by day, she’s the chair and CEO of Enter Store Inc. That’s a Toronto based clean tech firm that builds, owns and operates innovative energy storage projects. I’ve known Annette for many years and have engaged on a range of issues. Annette, welcome to Disruptors.
Speaker 2 [00:04:28] Hey John, great to be here.
Speaker 1 [00:04:30] It’s wonderful to have you and to be talking about Oneida. It’s a big commercial project for you and our store and a true 5050 partnership with Six Nations of the Grand River. That’s all the more significant because we’re in Indigenous Peoples Month in Canada. And I want to start with asking you, Annette, what Canadians need to understand about the importance of Indigenous equity in the economy and especially in the energy transition.
Speaker 2 [00:04:58] Follow This is such an important topic, John. I think there’s a real opportunity as we make this energy transition that we really truly engage our indigenous peoples. This project started six years ago and we wanted to do it from the beginning with six nations of the Grand River Chief Mark Joe and Matt Jamison, the president of the Development Corporation. We were truly partners from the very beginning. We wanted to partnership. We have a lot to learn from the indigenous peoples in our country. I come from Mi’kmaq territory. I am from Cape Breton. I grew up with Chief Terry Powell. I grew up with Chief Downey. I understand the capacity, the enormous capacity, the long term capacity of how indigenous people think. There’s so much to contribute to us. And so what a way to do this. A 5050 partnership. We set up the rules at the very beginning, we were involved in designing, involved and choosing the equity. We’re involved making the application. We were involved and presenting to governments together. This to me is the way it needs to be done. In order to have that economic reconciliation. They need returns to build their infrastructure and their communities. And so what better way to do it in a project like Oneida?
Speaker 1 [00:06:15] You’ve done projects across the country and around the world. How did that kind of partnership make things different?
Speaker 2 [00:06:21] So I think we have a tendency to want to do things faster and perhaps not as thoughtful as things should be done. We had this outreach with the Six Nations community and we talked to the community about this project, and we just kept coming back to say, Look, we want you to understand what we’re doing. We want you to understand the benefits and the risks of this project. And we were very open in how we dealt with the communication project. It truly, truly was something that was built in partnership.
Speaker 1 [00:06:57] Tell us a bit about the basics of battery storage and how that’s playing into the economy of southern Ontario.
Speaker 2 [00:07:05] I really feel that battery storage is a bridge to the future of other technologies that are being developed. And what’s really needed as we are verify our grid and have a greater demand for electrification. We need capacity, right? So what this facility does, it takes excess energy and it’s not just from renewables. It’s from anything access, whether it’s a nuclear plant, whether it’s hydro, it takes in those electrons when they are not needed and then they distribute that electrons when they are needed. And so it’s a really wonderful tool where electrons go both ways and that two way movement really will provide an amazing opportunity for the electricity operator, the ISO, to manage that grid way more effectively, to not have to curtail wind, to not have to sell our excess electricity, to give back to our friends south of the border. And what’s really cool is this project saves ratepayers money.
Speaker 1 [00:08:11] I suppose you could do this in a lot of different parts of Southern Ontario. Why do it on the territory that you chose? For our listeners who don’t know the territory, it’s just over the Niagara escarpment from Toronto and Hamilton, a beautiful little part of southern Ontario.
Speaker 2 [00:08:27] Yeah, look, the place that we put it had enormous transmission capacity, 4000 megawatts. So we wanted to put it in a place where it could be used very efficiently and effectively, had the capacity to go both ways. So we worked closely with the ISO, Hydro One, etc. to make that all work and close to the Imperial Refinery as well, right next to a transmission station. It’s it’s really the right location for this facility. The other thing that’s important is that Mississauga, because of the credit, are us involved. And it’s one of the first projects where two different first Nations groups are working together. So it’s very cool.
Speaker 1 [00:09:04] What’s the ambition from here?
Speaker 2 [00:09:06] I want to get off call very quickly. I want to help Saskatchewan. I want to help Nova Scotia. I want to help New Brunswick make this transition. We have to reduce greenhouse gases quickly. We’re going to need three times the amount of electricity in the next 15 years. And it’s got to be clean because companies will not be attracted to Canada. They’re really pushing hard to say, Well, can you produce my tire clean? You produce my steel plate, you produce all the things, all the products clean. So we have a big opportunity. 80% of the electricity in Canada is clean. That’s amazing. And so let’s use that to attract industry and manufacturing to Canada.
Speaker 1 [00:09:49] Tell us a bit about reliability is also a concern. Affordability. Sustainability are key components, but reliability is also something we actually get to take for granted. But it was only 20 years ago this summer, and Ontarians will remember this well that we had the great blackout of 2003. How do we manage this transition and not risk more episodes like that?
Speaker 2 [00:10:15] Well, battery storage will help that transition, right? You know, you put a battery a next to a manufacturing plant and the electricity goes out and the backup power is battery. You know, I was involved in 23. I was working at Home Depot, and 12 of our stores had generators, which was highly unusual. And so we could continue operating those stores during that time. Resiliency is really cheap. Manufacturing plants wind in the middle of a still run around, middle of a pulp and paper run. You have a problem with the quality of your electricity. You can screw the whole day’s production. Another example is we sell the Tesla power of Yeah, right. And so we did a deal with Hydro One and remember that storm that came through about two years ago. We put those Tesla batteries at the end of the road. Okay. And it saved the utility an enormous amount of money, like 80% of what it normally would cost when you have to take all your trucks and have to reboot the whole system, etc., etc.. So decentralization of energy and electricity is very, very exciting.
Speaker 1 [00:11:23] How are we going to get all this built? I mean, it’s very exciting the way you describe it. But whether it’s big energy storage facilities like the one you’ve built it or Nidaa or the Tesla battery packs at the end of my street, we’re kind of literally flipping a system that has been built over the last century and a half, and we’re going to have to do that in probably 15 years or less.
Speaker 2 [00:11:44] Yeah, you know, it’s not easy, my friend. Not easy. And it’s going to require a lot of creativity. There is an enormous amount of work that has to be done. When you think of growing, all the buildings in the city are all built with a different electricity model. The wiring of these buildings are not built for putting chargers in. There’s a whole bunch of work that has to be done. But businesses are driving this change. You know, there’s not a meeting that I go to that ESG and the e of ESG is not one of the top issues that people are dealing with, but it’s going to require an enormous amount of money. It’s going to require different thinking about how we pay for this. It’s going to require involvement of the business community, involvement of the business community. It’s a lot of work, but the social and economic advantages are enormous. The return on investment are enormous. And so let’s do it this way. Let’s go forward and really make a difference as Canada makes this big transition.
Speaker 1 [00:12:46] That’s a great message to all our listeners as we move towards closing that, I wonder if you can reflect a bit on what we can all learn in terms of reconciliation and Indigenous inclusion. What you’ve learned through the entire project. As I said earlier, it’s Indigenous Peoples Month, which is both a month for reflection and for celebration, but also for commitment. Curious what we should all be thinking about in terms of how we take a business minded approach. To both reconciliation and economic development.
Speaker 2 [00:13:18] We have this amazing upsurge of 1.8 million indigenous people in our country. We need to engage with them. When I go to a conference and I see one or two Indigenous people there, I really worry that we don’t invite Indigenous people to table with us. The way we need to think is how can I develop a relationship with that Indigenous community on this particular project? My team’s filter system is that we are really trying to do every project going forward with an Indigenous partnership like this. So we have to think differently and what you will discover is that these are amazingly smart, capable people. I’m humbled by working with people that have survived what we’ve done to them over the last 200 years. I come from a community where a lot of the indigenous people went to residential homes. I know the history and it’s time we catch up and we do it quickly and we do it with respect. And we don’t have these biases that I see sometimes. And we have to be more patient and we have to be more constructive. And in the end, I’ll tell you this prejudice can be built on budget and on tongue. We have people that want to do this project. We have people that are empowered to do this project. And what is the cost of that? How much would it cost if we were trying to set up this battery operation on land that is the territory of Indigenous people and not having them involved?
Speaker 1 [00:14:54] That’s a great message to wrap up on, Annette. Thanks for all you’ve done for Canada and for being on the podcast.
Speaker 2 [00:15:00] Great to be with you, Joan. You’re terrific.
Speaker 1 [00:15:03] That was Annette, for sure. CEO of Enter Store. We’ll be joined in a moment by Matt Jamison, the president and CEO of Six Nations of the Grand River Development Corporation. Please stay with us. Welcome back. Today, we’re talking about the Oneida Energy Storage Project and its significance for the clean energy transition and indigenous economic reconciliation. We’re joined by Matt Jamison, president and CEO of Six Nations of the Grand River Development Corporation. Six Nations is the only first nation community that includes all 600 national nations. It’s located along the banks of the Grand River in southwestern Ontario and is also the most populous first nation in Canada. Under Matt’s guidance, the Development Corporation has deployed more than $50 million of direct equity into utility scale renewable energy projects and has participated in the construction of more than $2 billion of infrastructure assets. Matt, welcome to Disruptors.
Speaker 3 [00:16:10] Happy to be here, John. Thanks for the time.
Speaker 1 [00:16:12] I want to start with the connection between Indigenous led conservation and economic reconciliation and how that applies to energy production. Probably some people don’t see the immediate link there, so maybe walk us through that.
Speaker 3 [00:16:24] Sure. From an economic development standpoint, six Nations is not unlike other indigenous communities in this country. We went through this cycle of development where the world was effectively built around us. Through that time. That was frustration and a lack of consultation. Finally, the emerging green energy economy came really to our doorstep, and it’s one of those very few sectors that are really closely aligned with the values of indigenous people not just six nations, but generally. And so for us it was really an opportunity to participate in a new paradigm of economic development and ownership of assets that really ultimately strive to achieve our long term values, which is creating a better future for the next seven generations.
Speaker 1 [00:17:07] Tell us a bit more about how battery storage connects with your values as a community.
Speaker 3 [00:17:12] Well, Six Nations, Devco. We’ve been an investor in the renewable space since as far back as 2010. We’ve made some significant investments in and around our region that large wind and large solar farms. And we see firsthand the performance characteristics of these assets. But at the same time, you see the frustration of the rate there. You see energy curtailment that happens. And really what that did for us is it opened up the reality that we are operating within an inefficient system. We don’t have the right tools in the toolkit to really unlock the value of these assets. And so energy storage for us was a way for us to actually bring forward a solution. And and that energy project was really borne through that goal of how do we bring forward a solution that hasn’t been done before at a scale that will be meaningful, that will be grid facing and create value not just for us as equity or as bucks for the ratepayers and for the environment.
Speaker 1 [00:18:02] How did this particular project find you or how did you find the project?
Speaker 3 [00:18:07] It’s been a long time coming, John. It just so happened that through networking and connections, I ended up coming across the net reassuring in our store and she of course had a reputation for getting things done in our store as a company that was really at the forefront of energy storage across Canada. And one of our key tenets of our strategy for economic development is to seek out and partner with the best industry. At the same time was thinking, how do we work with indigenous communities to do something that matters, to do something that’s more than just profit? We really latched onto each other very closely that we struck an economic bargain where we’re in this 5050. And so this thing was born not from Miner Story and not from situations that were born together. And I think that’s really the future of economic reconciliation, the communities to do things together as opposed to trying to have a solution that you then bring in the 11th hour and expect an indigenous community to accept.
Speaker 1 [00:19:01] Lots of businesses across the country. Maybe most businesses now want to partner with Indigenous communities. What do you look for in a partner?
Speaker 3 [00:19:10] Yeah, and I will say that there is a paradigm shift happening in this country. You see from coast to coast, whether it be as Squamish Nation, there they have a $1.4 billion housing project that they’re building. You’ve got the MEMBERTOU and the billion dollar seafood deal. There is this collision of opportunity and economic development. And really the question I get all the time is, well, how do these companies make these connections? How do these companies make these transactions take place? I think it goes back to the key ingredient for the entire project, and that is working together. The early onset of a concept or idea, allowing those indigenous communities to inject their DNA, if you will, their fingerprints on projects to talk about siting, whether or not the location has impact from an archeology perspective or from the plants and wildlife perspective. Those are the principles that really are important to indigenous communities anyway. And energy storage is really the first example. We’ve been able to demonstrate that and has really been a catalyst for us to approach all projects in new and interesting ways.
Speaker 1 [00:20:06] How did you convince your own community and communities, since there are six nations involved here, that this was the right project at the right time?
Speaker 3 [00:20:14] Well, I mean, Six Nations is not unlike other indigenous communities in this country, not unlike other societies. We do have folks in our. Community who we know may not necessarily understand the technology or expressed concern. And it really is an exercise of patience job. We have a fairly methodical process that we go through to speak with our community. We went through ten sessions with this particular project. We were on the radio. We exercised efforts to all channels to reach our community members. We were looking for qualitative feedback, the kind of feedback that can help us put that DNA that I talked about on these projects. That qualitative type of feedback would enable us to make the project that much more attractive to the community members. And at the same time, we have to talk about other things economic benefits like revenue, profits, employment, capacity building training. Carry on a good conversation with the community and have them have a better appreciation for what we’re trying to accomplish.
Speaker 1 [00:21:06] How do you know when you have the support of your community or even consent?
Speaker 3 [00:21:11] Well, consent is a very, very challenging thing to achieve. Consent is something that has been a sort of a blurry goal line, not just for six nations, but for businesses in general in this country. And so for us in our community, we do the best we can. And really, the development corporation was founded on the principle of transparency and accountability so people can come here and ask questions all day long about anything they want. And we have those answers. If we don’t, we’ll find them. We don’t seek to quantify community content because if you have 80% that still does 20% of the people who don’t support the project. And so what we’re really trying to achieve is an environment where community members can quietly support projects. There will be folks who don’t support it. Sometimes they can be loud, but they don’t necessarily care the voice of the people. And so we act amongst the silent majority within the best interests of our community in a way that’s transparent, accountable.
Speaker 1 [00:22:00] You talked about your private sector partners and our store being the lead one. You also had to negotiate with the provincial government as well as the electricity authorities, including the ISO, the independent electricity system operator, which for people outside of Ontario runs essentially the grid for the province. What did you learn not through that journey?
Speaker 3 [00:22:22] Well, I mean, it’s been a learning process for us, but also for the province of Ontario and the ISO, this curtailment issue, there was a lot of political pressure on renewables, and for us it was how do we unlock the inefficiency used to open up the opportunity for more renewables? And so, yeah, I mean, it was a challenge. It took a lot more time than I would have expected. But now you see new active procurements sent to the ISO, which is going to lead to a much more accelerated future of energy storage. I must say though, John, the energy storage project I think is a classic example of call it an MBA course for Emerging Bright Minds, where you assess the relationship or the opportunities that can be created through collaboration with the federal government, through the Canada Infrastructure Bank, who’ve played a big role in this project through the province, through the ISO to an indigenous community, six nations, two public companies like our new partner Northland, and through private companies like Interstellar. I think that that really is an example of what the future of Canada is, and that’s a collaborative future that definitely includes Indigenous participation.
Speaker 1 [00:23:26] When other Indigenous leaders call you up to ask you for guidance on how they should approach deals like this, what’s your advice to them?
Speaker 3 [00:23:34] Well, I get that a lot, John. And the one thing that my board of directors does encourage me to do is share our story as much as possible with those indigenous communities. So I would say my number one message to those leaders are our responsibility as Indigenous people is to be organized and prepared to do business when those opportunities present themselves. There’s this collision of reconciliation. There’s the U.N. Declaration on the Rights of Indigenous people. You’ve got to RC, you’ve got Supreme Court rulings. All of this is driving this conversation with indigenous communities. And if they’re not prepared, they’re doing a disservice for future generations. So I always advocate for communities to create a separate legal structure like what we have that Stations Development Corporation, so you can separate business from politics. So that would be my key word of advice.
Speaker 1 [00:24:20] That sounds like a pretty logical approach, but communities are always complicated and this is what politics are. People are pushing for different benefits or different outcomes. How does the community find that balance between the political and the commercial imperatives for the community?
Speaker 3 [00:24:36] I think it’s important for us to think about the history that has gone on. Right, And that history for Six Nations for indigenous people is very much an oral history of this country. So we went through this exercise to understand what are the barriers that we face as a community. We wanted to list them. And one is how does a community suddenly enter into the corporate world and do large commercial transactions and borrow money and trust development partners sort of in a hope and a prayer on someone else’s capabilities. And the reality of it is that it is communities, not just six nations, but others, lack understanding in the corporate world and never done due diligence deals before. They don’t have many people on staff. They don’t understand the risk and how debt structures and tax implications work. When things take place, folks volunteer. When your grandparents and great grandparents tell you that they were harmed by somebody that resonates with you. That’s amplified over the course of time. And that’s something that we as a community do go through this healing process to recognize that what was in the past isn’t in the future. We need to do things on our terms, and we’re looking for partners that see it that way and believe in that and will buy into working together. That’s the way we’re going to overcome these barriers. That’s where we’re going to get our community onside. And the social license is something you earn, you’re not entitled to, and it’s something that you can lose very quickly if you one poor decision. So we’re always cognizant of that and we’re always keeping those fears and distrust and those other barriers that mildly transact business.
Speaker 1 [00:26:04] Those are powerful messages, especially for Indigenous Peoples History Month, including your line, that we don’t need to be beholden by history, but we certainly need to learn from it and need to carry those lessons into the future. What are the key messages that you’d like Canadians to carry forward?
Speaker 3 [00:26:19] Well, I think that Indigenous history in Canada, believe it or not, in the Stone Age, is not well understood. Less than 40% of Canadians have ever stepped foot on Indigenous communities, but yet 100% have an opinion. And I think that part of the responsibility of Canadians is to take the time to learn and to go on that discovery. The future is bright. The future is possible. There’s nothing that’s going to be built in this country from a large scale perspective unless there’s an indigenous ownership. Almost 100% of Canada is subject to a land claim, a treaty writer asserted. Land interest and indigenous people make up 5% of the population. So you have a very small group of folks who have a very vast interest in land. And you know what? We’ve been here for thousands and thousands of years. We’re not going anywhere. So let’s work together in ways that are innovative and creative. One of our goals by 2030 is to have $1,000,000,000 asset valuation for our company. That’s our goal. And whether we achieve it or not, I’m not sure, but nobody’s ever accused me of thinking it’s all junk.
Speaker 1 [00:27:18] That’s what we love. On disrupters. People who don’t think small not. It’s been great to have you on the podcast. Thank you.
Speaker 3 [00:27:24] John. Thanks for having me.
Speaker 1 [00:27:28] That was Mark Jamison, president and CEO of Six Nations of the Grand River Development Corporation. I’d also like to thank Annette for Sharon, the CEO of our store, who joined us in the first half. The Oneida Energy Storage Project is something you may be hearing a lot more about in the years ahead because it’s being talked about all over the country as a model of what’s possible. It also reflects how much Canada has changed, of course, how much we still need to change. But it shows what’s possible. Not far from where the project sits is a big hulk of an industrial structure, which used to be the world’s biggest coal burning power facility that was shut down just a decade ago. And now the province of Ontario has one of the continent’s cleanest grids. With this new battery project, we’re also seeing the power of indigenous ownership, which will only increase across the energy sector and frankly, across the economy in the years and decades to come. It’s not a bad way to end a discussion about Indigenous People’s History Month by casting an eye to the future with a sense of where we’ve been and the pain that that’s caused, but also to see the possibilities of Indigenous communities from coast to coast to coast. That’s real disruption. Join us next time for our season finale. When I sit down with the leader of one of Canada’s most significant and global enterprises, Olivier Desmarais is the CEO of Power Sustainable. Join us to hear his insights on how Canada can win the global clean tech race. Until then, I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon.
Speaker 2 [00:29:10] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. For more Disruptors content, visit RBC dot com slash disruptors and leave us a five star rating if you like our show.
Category: AI, Technology and Innovation
Speaker 1 [00:00:01] Hi, it’s John here. You know, one of the great things about Canada I’ve always thought is the lineup of people around the world to get into this country. It’s a tribute to every Canadian and the society that we continue to build. It can also be a challenge, especially when it comes to housing. Canada has an affordability crisis and we’re going to need a lot more housing units to accommodate not only the population that we have, but the population we aspire and need to grow in the coming decades. That’s a housing challenge. It’s also a climate challenge because the houses that we all enjoy and call home are also contributing negatively to climate change over the coming decade. We’re going to need up to 6 million new housing units to accommodate the expected growth of our population and to make housing more affordable. How can we add all those units and also cut the emissions from our buildings? As you heard on our last episode, buildings are Canada’s third biggest source of greenhouse gases. That’s because of the unsustainable construction materials that go into every building and also the way we heat and cool our homes and offices, shopping centers and warehouses. Technology can make a big difference, and it can be materials technology, as well as the software that increasingly drives our homes. But it’s also going to take a bit of change from each of us when it comes to our relationships with the built environment. Can technology make our homes and offices smarter for a new climate change? This is Disruptors and RBC podcast. I’m John Stackhouse. Welcome to the second of a two part series on Greening Canada’s built sector. We’re exploring new builds and whether the combined power of new technologies, techniques and innovative materials can get us closer to net zero. Building better homes can be better for everyone, as we’re about to hear from our next guest. Brad Carr leads one of the largest privately owned building firms in North America, and it’s the largest new homebuilder in Canada. From its origins in 1978, Mattamy Homes has gone on to build more than 60,000 homes and in some ways is just getting going. It’s a real pleasure to welcome Brad to Disruptors. Brad, welcome to the podcast.
Speaker 2 [00:02:37] Thanks for having me, John It’s a pleasure to be here.
Speaker 1 [00:02:39] Let’s start with a basic question about houses, because a lot of people probably don’t think of their homes as sources of greenhouse gas emissions and therefore a challenge to the climate. What’s wrong with our houses as they’re built now?
Speaker 2 [00:02:52] I’ll try and break it down into two components. There is obviously a lot of energy, a lot of carbon that is used to construct homes and to construct all the materials that go into homes. So that’s kind of one component, the actual physical building of the house. The second part is how we operate our homes. We all live in built structures and we all consume energy to heat cool and operate our homes. And so that we referred to is kind of the operational component of the greenhouse gases produced by housing.
Speaker 1 [00:03:27] And what can you as a home builder do because you presumably just have to buy the cement and wood and glass that’s on the market. And then once you sell the home, people can turn up or turn down the heat as much as they choose. You have no real control over that.
Speaker 2 [00:03:41] I think what’s important is we all recognize that we have a role to play. And our founder, Peter Gilligan, once said it very succinctly As the largest home builder in Canada, we not only have the opportunity, but we have the obligation to lead our industry in the direction that it needs to go. I think we can be a real catalyst for changing some of those materials by encouraging our trades and suppliers to do things differently. And at the same time, I think we can create built environments that our home buyers can operate more efficiently. So we’re kind of right in the middle and we can hopefully have an impact on both.
Speaker 1 [00:04:21] Give us a sense of how houses are changing. What’s different today from, let’s say, 25 years ago in terms of the climate impact?
Speaker 2 [00:04:30] I think one of the easiest things for everybody to get their arms around is how well-built the homes are and the fact that as we build better building envelopes, the more efficient it is in terms of its consumption of energy. Ultimately, what we don’t want is a whole bunch of leaky houses where we’re just paying money and consuming energy to heat the outdoors or cool the outdoors.
Speaker 1 [00:04:55] So it seems like an interesting challenge between kind of old fashioned materials, the way we seal a window, for instance, and then high tech, the way we operate our homes. Where do you think the greatest opportunities are? The ingredients of the building or more in the technologies that help us operate our homes better?
Speaker 2 [00:05:14] It’s always the safest answer, but I think it’s a bit of both. I think materials science can make a massive difference moving forward. If we think about some of the elements in our homes that we all value so much. An example would be Windows. Obviously, the tightest home we could build would be a box with no windows, but that wouldn’t be very enjoyable to live in. And so materials science around window efficiency and window insulation, the type of sealants we use around the windows, all of those things can have a major impact. But the other part of it that can have an impact is just how we put these materials together. Just really efficient building practices that encourage disciplined installation methodologies can also have an impact on how well that building envelope performs.
Speaker 1 [00:06:00] I’m guessing that costs more, and that cost ultimately has to be borne by the homeowner. So how are you thinking through and how are home buyers thinking through the economics of this?
Speaker 2 [00:06:10] I think we would all agree that in Canada today, one of the number one topics is housing affordability. The truth is we can’t talk just about affordability without talking about sustainability. We need to make sure that the homes we’re building today are going to be those more efficient, sustainable homes for tomorrow. So how do we get there and how do we achieve both? I think we do it with scale. I think we try and bring along everybody with us. And by bringing more materials to the market that more builders are using more frequently, hopefully we ultimately drive down those costs and we can tackle affordability and sustainability at the same time.
Speaker 1 [00:06:48] As you say, though, it’s a challenging market for a lot of people right now. You can’t turn on a news channel without seeing descriptions of the housing crisis. Is this something that people want to take on but maybe not? This year or next year that they want to defer this, perhaps?
Speaker 2 [00:07:02] I think it’s a safe assumption that many feel that this is one that we can defer. I think we’re already behind the curve. Any time you’re tackling something so significant as climate change, it always feels like, well, we can delay it, we can delay it. But the truth is, if we don’t get in front of this today, it’s going to creep up on us in 2050 will be here before we know it, and we will have an opportunity to recover.
Speaker 1 [00:07:27] I’m always curious when I see a real estate sign for a net zero community or a net zero house and wonder what does that mean if someone’s labeling their home as net zero?
Speaker 2 [00:07:38] So essentially what it means is the house has been designed such that the energy that it requires can be produced by sustainable forms of energy attached to the house. So whether that be solar or geothermal or any type of renewable energy source and the energy that’s created and the energy that’s consumed are equal and thus net zero.
Speaker 1 [00:08:05] So with that in mind, as a homeowner, am I actually going to save money in the long term if I have a net zero already home?
Speaker 2 [00:08:12] That’s an important thing to consider because while we all agreed today, the capital cost of building a net zero home is slightly higher, the operating cost is lower. And so the hope is that we can create a balance in terms of how much it costs upfront, offset by how much you save on a monthly basis moving forward.
Speaker 1 [00:08:36] Rob, before we let you go, I want to ask you about the insights that you’ve gained in building sustainable communities. Not a me in some ways is in the vanguard of Net zero community. Specifically, what have you learned today?
Speaker 2 [00:08:47] I think one of the things that is permeating through every corner of Mat, Amy Holmes, is an understanding that this is important, an understanding that like customer experience, like quality, like profitability, this is going to be a key driver of our future success by making sustainability a pillar of everything we do, I truly believe, will help not only advance sustainability at Miami, but advance sustainability right across the homebuilding building sector.
Speaker 1 [00:09:19] That’s a great message. Brad, thanks for being on disruptors.
Speaker 2 [00:09:22] Thanks for having me.
Speaker 1 [00:09:23] That was Brad Carr, CEO of Miami Homes. As we’ve heard, buildings can often be the sum of their parts, the materials that go into their construction, be it cement or glass or steel. Those have significant impacts on their carbon footprint. And as our next guest will tell us, reducing the amount of materials, particularly materials like concrete, can be key to creating eco friendly buildings. Carol Phillips is design lead and partner at Moriyama Teshima Architects. That’s the firm behind such notable buildings as the Canadian War Museum in Ottawa, the Ontario Science Centre and Bata Shoe Museum in Toronto, and the stunning Canadian Embassy in Tokyo. Carol, welcome to Disruptors.
Speaker 3 [00:10:09] Thank you, John.
Speaker 1 [00:10:10] Let me ask you to help us understand a bit more what raw materials play when it comes to construction and new builds.
Speaker 3 [00:10:17] Well, buildings represent about 40% of the greenhouse gas emissions on the planet. And this breaks down into two categories their operational carbon and their embodied carbon. And materials are effectively embodied carbon. And so I think it’s up to us as architects, designers, builders and clients to really look hard at that proportions and try to increasingly reduce the operational carbon in a building. The carbon that is expended when we run the lights or the air conditioning or the heating. That’s going to become increasingly decarbonized and more efficient as we clean up our grids. So then it matters even more to select the right materials for our projects, because that embodied carbon starts to matter even more as we begin to clean up the energy sources. Carol, I’d love to.
Speaker 1 [00:11:10] Know how as an architect, you think through this challenge. I grew up admiring the work of Raymond Moriyama, the founder of your firm, and the dreamer of many of the most iconic buildings in our cities, especially here in Toronto. As an architect, when did you start to think about the climate impact of the materials that go into your buildings?
Speaker 3 [00:11:33] Well, I think part of the philosophies of the firm and all of us here together is, is that we choose materials and we design buildings that actually represent the sites and the places that the buildings are cited in. And increasingly, we cannot ignore the fact that we’re having negative impact on the environment. And so we begin to search for materials that represent and come from places. And we’ve always been attracted to the natural sources of materials. And for that reason, I think timber is a fantastic material because if you even look across Canada, the forests are not the same. The forests of Quebec and the forests of B.C., they’re different and so imbued in the material there is a personality that is regionally specific. And I think for me as a designer, it satisfies both the ethos to represent a place and to look for carbon sequestering highly sustainable renewable materials.
Speaker 1 [00:12:30] Well, let’s get into this issue and opportunity of timber, because you’re currently the partner in charge of a remarkable project currently being constructed in Toronto’s East Bayfront community to George Brown College, and this is known as limber loss place. Can you give us a sense of what the building aspires to be?
Speaker 3 [00:12:50] Close really is a remarkable building. So Lumber Lost Place is going to be the first tall, exposed mass timber net zero carbon emissions teaching facility in Canada, in North America. And I think it’s on track to be that in the world. It is a building that’s actually going to use no fuel fired equipment to power it. It’s going to use renewable materials for the structure. And this is a building that will has 3400 students. So what better place to teach a new generation about how we’re going to change expectations and change a culture of what we expect from our public buildings? And we really have George Brown College to thank for setting that vision and setting that bar really high. It’s also going to be a striking building. It was procured through an international design competition, so they were not only looking for a high performance building, they were looking for beauty. And I think that that’s actually part of the solution as well, to make really valuable, enduring, remarkable places that also achieve all of those high criteria for treating the planet better.
Speaker 1 [00:13:58] Why does beauty matter so much? We’ve got an efficiency challenge here as well of just making buildings more climate efficient. What’s the role of beauty in that?
Speaker 3 [00:14:07] Well, I think it’s the assignment of value. And by value, I don’t mean it has to cost more. I mean, it actually has to mean something to you. It has to inspire you. And I think that there is something to be said for making remarkable places that actually elevate your experience, connect you with your environment, and actually make you feel better and feel more connected. Not only. Your community but to the planet. And I think it adds a level of care and responsibility to everybody who encounters a space and an environment. If you see a care that went into creating that place to house yourself or your peers.
Speaker 1 [00:14:43] It’s such a great point. I often think of Tesla in that there’s a climate centric innovation that is also very esthetically appealing to a lot of people. And in fact that sometimes is the main motivation for people to adopt it. As we think about changing our lifestyles or our preferences in a more climate smart way, we have to think of the esthetic side of it that adds value, as you said, to our lives. I wonder, Carol, if you can tell us a bit more about timber. What’s so special and unique about mass timber compared to traditional concrete and steel?
Speaker 3 [00:15:14] Timber is an incredibly remarkable material. It’s grown with strength and remarkably Tall Tree demonstrates on its own it’s structural integrity. But what we’re talking about when we talk about mass timber is not cutting down the old growth. It’s about using smaller members, even weaker members, and laminating them together into massive pieces that we can use structurally to actually replace, in many cases, concrete and steel. Concrete is an incredibly durable material, and it makes the most sense in very, very specific applications. However, we can’t ignore the fact that both concrete and steel have very, very carbon intensive processes that actually allow them to become the remarkable materials that they use. But we have, again, a responsibility to use carbon sequestering renewable materials as much as we possibly can as we race towards 20, 30 and 2050. And timber is really unique in that way, in that we can use it for structural means for building in urban centers, for instance. But at the same time, understand that we’re also making space in the forest to replant and regrow those very same trees.
Speaker 1 [00:16:26] Can you give us a sense of all that goes into the production of mass timber? Where do these very large pieces of wood come from and how are they processed?
Speaker 3 [00:16:36] That’s a really interesting question because I think when we think about using timber in buildings, we are saying cuts your standard two by four or a two by six, or we think about very large members that come from a whole tree and Mastaba is neither one of those. It’s laminating together two by sixes and two by fours into much larger members so that they act like an entire tree. In fact, a tree like you’ve never seen before, the largest that you can actually assemble. And in that way, we’re not using old straws. We’re using smaller members and laminating them together with glue under pressure in order to create this stable, fire resistant, massive member that has at the structural integrity of a much larger piece of wood and basically using the actual capacity of the fiber in different ways. We can laminate wood together to have different kinds of performances that are incredibly stable, incredibly true and straight. And also, again, I’m just going to say it renewable.
Speaker 1 [00:17:44] Carol, before we let you go, when lumber losses complete and people get to admire it, what do you hope they think?
Speaker 3 [00:17:51] You know, one of the interesting things that happens when we tour people around the construction site or people walk by, they look at the building and they immediately recognize the natural material. And they say, where did that would come from? And as an architect or a designer or a builder, we have that responsibility immediately to answer where does it come from? How many trees were replaced? Where is the forest? How was the forest impacted? And ultimately, I would love for someone to say and ask that of every material they see in the building. I’d like them to ask that of the glass that they see and the metals that they see there. I think the raising of consciousness beyond the beauty, beyond the idea that this is a remarkable space that actually feels like a tree house at the edge of the lake. I also welcome the question, where did that would come from and how is the forest being treated? Because we need to extend that same thinking to every single choice we make if we’re going to live a more sustainable future together with the planet.
Speaker 1 [00:18:53] That’s an outstanding question for every climate conversation. Where does that come from? Carol, thanks so much for being on disruptors.
Speaker 3 [00:19:00] Thank you.
Speaker 1 [00:19:03] That was Carol Phillips of Moriyama Teshima Architects. Our last guest today is a Canadian tech entrepreneur who’s on a mission to make buildings smarter from the inside out by leveraging the incredible power of AI in conjunction with the building’s heating, cooling and ventilation systems. Sam Rama Dorie is the CEO of Montreal based Brain Box A.I., a company named by Time magazine, as one of the best inventions of 2020. Sam, welcome to Disruptors.
Speaker 3 [00:19:39] Thanks for having me, John. Pleasure to be here.
Speaker 1 [00:19:42] Let’s start with Brain Box I. Give us a quick sense of what it does.
Speaker 3 [00:19:47] Sure, John. What brain box set out to do is really leverage new capabilities that Air is now giving us. And obviously it’s a timely discussion given the last few months around Jupiter. But what we sought to do was basically take data from buildings and specifically the heating and cooling systems of buildings. That is by far the biggest energy consumer and emitter of GHG. And the whole goal was to leverage data that buildings are generating today, but to really under using and marry that data with external data impacting the building and letting the new capabilities of air loose on that data. Ultimately with the goal of optimizing the building’s energy consumption, reducing emissions, making the space more comfortable using autonomous artificial intelligence.
Speaker 1 [00:20:31] That’s a really good connection to what we’ve been talking about earlier in the episode, and that’s about the incredible power of materials in determining how much GHG emissions go into a building but also come out of the building. But there can be a technology gap. Are we at a stage now where technology is sufficient for buildings to manage themselves?
Speaker 3 [00:20:52] We are at a stage. I mean, our inventor, Jose Mohan, was inspired when he got to sit in a self-driving car six, seven years back in California. And the idea of a technology that can learn the environment that’s in that’s constantly changing and then be able to make decisions on the fly. In the case of a self-driving car, obviously getting from point A to point B safely could be applied to buildings because they’re constantly being impacted by other factors. And so using this capability of the self-learning artificial intelligence that then can autonomously control the many hundreds of individual pieces of equipment in a building in real time is now at our fingertips. And that’s what we sought to leverage to really make a real impact on the energy consumption of buildings, but also in a way that’s very scalable.
Speaker 1 [00:21:40] Can you give us a sense of the role of AI here? I work in an office where the lights go on and off by themselves. The heat seems to go up and down by itself. How is AI changing the dynamics of temperature and lighting regulation?
Speaker 3 [00:21:54] You have systems today that are purely responding to what the sensors are telling it, and those sensors are simply the thermostats on your wall, maybe a humidity sensor somewhere. It’s making decisions based on what that sensor is saying. But at the same time, it has no idea that it’s sunny and 30 degrees outside. But soon it’s going to be cloudy and rainy. And my energy right now costs so much and it may cost more in the afternoon. And it’s this carbon intensive now, less carbon stuff like it. It knows nothing of those external factors impacting costs and energy consumption. And so here we seek to turn that dynamic around. So let’s bring all the buildings data to the cloud, this Marriott with all this external data so that it can learn and make smarter decisions.
Speaker 1 [00:22:41] Brain Box AI’s been at this for a few years or more now, but as you mentioned earlier, we’re kind of into a new chapter of AI in 2023 with generative AI with GPT. How is that changing your thinking about the role of AI and what brain box can do in the building space?
Speaker 3 [00:23:00] Well, I mean, we’re lucky in Canada, particularly in cities like Montreal and Toronto, where there’s such an incredible knowhow around the AI and really pushing the envelope that as company like brain boxing, AI, we can interact with that ecosystem. And so that’s benefit number one. But two, I think we’re all seeing the push on the regulatory front around AI and having been involved in developing and our platform, we are supportive about the efforts to put some framework around the use of AI and definitely recognize that this is moving much more rapidly than I think most people thought. And there are things we need to keep in mind as we’re pushing this technology in many fields.
Speaker 1 [00:23:40] How fast do you think that’s going to accelerate the technology?
Speaker 3 [00:23:44] And if you speak to the experts, there’s a fairly consistent message that the acceleration is faster than they would have originally thought a couple of years ago or a few years back. And then we’ve heard this quote. Exactly. If you look at the last five years of change, look forward, five years is not just going to go faster. So there’s no doubt that this is moving at a rapid pace. Regulation, I think it’s being considered Europe here in Canada, U.S. feels like it will be coming. I think it needs to be done right. I think in our case, a brain box. We’re proud that we’re using it for a very important global goal of decarbonizing buildings. It’s one of the big top five global climate problems we have. So you don’t want to discourage us and many other innovators to come with scalable solutions. That’s what I really have to offer is its scalability. But at the same time, we’ve got to think about how we could put a framework around it for many other industries, our own, but many other industries as well.
Speaker 1 [00:24:36] You’ve talked about the technology. Let’s turn for a moment to the users, to building owners specifically. Your technology is now being used in 25 or more countries. I’m curious how you’re engaging and encouraging building owners to invest in and take advantage of the kinds of innovations we’re seeing coming out of the Brain Box API.
Speaker 3 [00:24:56] The real estate sector is probably not the fastest adopter of new technologies, right? So you do have to understand and get better at how we interact with the day to day operators, managers of buildings. And that’s something we have breytenbachs and also have to continue improving on. When you’re doing groundbreaking tech, you really have to focus on the technology, make it work. But given the number of years we’re at it now, certainly at the phase where we have to think more and more about how we interact with the users of the technology, in our case, building operators, there’s a lot to manage. You’ve got the constant phone call from the tenants dealing with the day to day crises. Now you’re getting the additional pressures from senior management and the board that are putting forth sustainability targets and goals that are very real and very challenging to achieve. So you’re entering a fray and creating a relationship that involves working together to make it a success. So I think many of the technology companies ourselves and many that we interact with recognize that we have to keep getting better and better.
Speaker 1 [00:26:01] Your primary market is large buildings, office buildings. How far are we away from this being widely applied in the home sector?
Speaker 3 [00:26:10] I’d say for the moment, our biggest deployments are in commercial buildings and retail buildings. The issue with the homes is truly every one is unique, although I think there is a drive to make the homes much more efficient right off the bat with common systems and common protocols. Unfortunately, right now, 99% of the building stock is already out there and you have to deal with that 99%. And so it is a challenge. I think people are tackling it in different ways. But for us, we are really focused on the commercial side of things. The scalability going on the commercial side versus any other movement to residential is probably a number of years out for us.
Speaker 1 [00:26:51] Before we let you go, Sam. What can all of us as building users, occupants, tenants and even owners do differently to accelerate this kind of progress?
Speaker 3 [00:27:01] The tenants and landlord relationship, it’s been around forever and a day, right? We go back a couple of thousand years and it will look something like it does today in a sense. Given the change and how fast we need to make it happen, I think the tenants really have to get much more involved or be made to be involved because in the end, true innovation, it’s not an easy flip the switch, right? There’s change involved. People need to be kept up to speed. There are implementation times where things may be reacting differently. We don’t want to discourage that big move towards innovation and the normal hiccups of true innovation happen, but the tenants need to be informed, whereas for them it’s a regular Wednesday afternoon and something went off and they do what they have to do, which is they have an office that needs work and they’re going to call downstairs and say, What’s going on? Well, I think if there’s a relationship and a shared common goal, I think everybody in that building wants it to decarbonize, which just have to be a little bit differently than we have in the past.
Speaker 1 [00:27:58] That’s a great note to end on that technology is ultimately about people and buildings are ultimately about people. Sam, thanks for being on disruptors.
Speaker 3 [00:28:08] Thank you very much, John, for having us.
Speaker 1 [00:28:12] That was Sam Rama Dory, CEO of Brain Box A.I.. Thanks to my other guests, Brad Carr of Miami Holmes and Carol Phillips of Moriyama Teshima Architects. Canada is a nation of builders, and I guess we have to be given the environment that we inhabit. And there’s a lot of people out there who think we can’t really change the way we build homes and offices, shopping malls and industrial parks. It kind of works the way it is and too big to change. There’s others who say most of the buildings that we’ll have in 20 or 30 years are already out there. So we can’t really change them unless we go about some massive renovation project which could be cost prohibitive. But as we’ve heard over the last two episodes, there’s already remarkable change and innovation and yes, disruption underway across the built environment, whether it’s new subdivisions or old buildings being renovated or the way we’re using technology to operate the buildings of our lives, Canadian developers and technologists and innovators are showing the world how we can transform our communities to make them part of our net zero future. Join us next time for a special episode. In recognition of Indigenous History Month, we’ll go behind the Oneida Energy Storage Project in southwestern Ontario and explore its significance as the largest of its kind in Canada. Until then, I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon.
Speaker 3 [00:29:42] Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. For more Disruptors content, visit RBC dot com slash disruptors and leave us a five star rating, if you like our show
Speaker 1 [00:00:01] Hi. Is John here. I want to start with a big thank you to our listeners. You’ve helped make us one of Canada’s top listened to podcasts. We recently cracked the top 15 on the Apple charts, and we’re the most listened to podcast in the business and entrepreneurship category. So to all the disruptors out there, thank you. This episode we’re talking about something close to home, really close to home. Our houses, shopping malls, office buildings, the so-called built environment, and the challenge and opportunity it presents for disruption in our collective journey to net zero. Fortunately, Canada is a nation of builders. For generations, we have led the world in the built environment, and we now have to turn that brainpower, that creativity and that hard work to the net zero challenge. Many of us don’t realize that next to the cars we drive and the flights we take, buildings are the third biggest source of greenhouse gases in our lives and for decades, the most important buildings in our lives. Our homes were built with a focus on affordability, not climate, as a guiding priority. We’ve got to start to change that. As we found in a recent report from the RBC Climate Action Institute called High Rise Low Carbon. Canada’s existing buildings release some 90 million tonnes of CO2 annually. That’s a little more than 10% of the national footprint. So what’s the solution? Part of it lies in creating what’s referred to as a retrofit economy. Think about converting 57 million square meters of residential space to low carbon heating each and every year. That’s about 400,000 units roughly the size of the city of Ottawa every year for the next 25 years. So how do we get there? It’s going to take the right mix of financial investment policy incentives, design, technology, reskilling and scale. And most importantly, it’s going to take all of us to lean into the challenge. This is Disruptors, an RBC podcast. I’m John Stackhouse. Welcome to the first in a special two episode series on Greening Canada’s built sector. In Part one, we’re exploring the question How can retrofitting old buildings help us get to net zero? And I’ll be speaking with several building experts today, including our first guest, Ken Peterson. Kent is the owner of P2S, which is a California based engineering consulting firm. He’s also a distinguished fellow at Asprey, the American Society of Heating Refrigeration, Air Conditioning Engineers, and is chair of the Decarbonization Task Force. Kent, welcome to Disruptors.
Speaker 2 [00:02:51] John, it’s great to join you today and your listeners.
Speaker 1 [00:02:54] Can I wonder if we can start with some ground floor questions, pardon the expression. Help us understand where emissions come from in our buildings.
Speaker 2 [00:03:03] Primarily, people are mostly familiar with the emissions that come from the energy that’s used by the building sector, and I’ll put that in perspective. Buildings are responsible for roughly 40% of the global greenhouse gas emissions related to energy related emissions, but that’s only where it starts. We also have emissions from refrigerants, whether we’re talking about air conditioning units, chillers, heat pumps. We also have what we refer to as embodied carbon emissions. And embodied carbon is the carbon that’s emitted and the extraction, the manufacturing, the production, the construction of the buildings and any of the renewals of the buildings themselves. And so we’re starting to get that big picture of where all these emissions are coming from. And that really takes the whole lifecycle of the building for us to really address this issue.
Speaker 1 [00:03:47] When I hop in an old fashioned car and maybe turn on the ignition, I think this may not be good for the planet. I don’t have the same mental connect when I walk through the door of a house or a building. How do I know when I kind of turn the handle, whether it’s a green building or not that I’m walking into?
Speaker 2 [00:04:03] I would probably start with a number one and our loading factor when we’re looking at existing buildings or even new buildings, and that’s energy efficiency. So if you were walking into a building and you had a really good envelope, have excellent windows, good thermal insulation, it’s going to use the least amount of energy and it’s going to produce the least amount of carbon from an operational standpoint. And sometimes when we talked about energy efficiency, people always looking at payback, when am I going to get my investment back on? But operational savings and not everything in decarbonization has payback. Taking those fossil fuel-based systems, pulling the furnaces out of the house and replacing it with the heat pump may not have a great payback by itself. It’s really that efficiency component that gives us that payback.
Speaker 1 [00:04:45] And using the car analogy, again, if I buy an electric vehicle today, I’m probably spending more. But I save money over the long term by relying on electricity rather than gas to run it. Is it the same equation for a house?
Speaker 2 [00:04:58] It is the same equation for a house as long as the electric cost is going to be low. So as I go across the United States and Canada, electric costs can vary substantially depending on which state or which province you might actually be in. And so it would be much more viable to go all electric where you have lower cost of electricity. In fact, buildings account for roughly 70% of all the electricity that gets use off the electric grid. And as we begin to decarbonize buildings, we have to decarbonize the electric grid in order to see the overall savings. If I have an electric vehicle feels really good, if I draw the boundary around the vehicle, But if I actually use a coal powered power plant to generate the electricity that charges the vehicle, and I draw the boundary around the vehicle and the power plant, now it’s not so good anymore. So it takes both the building down the grid to work together in order to get us to zero.
Speaker 1 [00:05:51] Let me for a moment draw a boundary around our buildings and particularly our homes. Many of us grew up in an era where conservation was a key word. And when we hear energy efficiency, our minds probably go to, certainly in Canada, turning the heat down a little bit in the winter and maybe wearing a sweater. How far does conservation get us in terms of getting our own footprint closer to net zero?
Speaker 2 [00:06:13] It gets us a long way. The International Energy Agency has a really good report on getting to zero and it looks at the building sector and says, what are the things that we need to do? And they look at the loading order and energy efficiency gets us 40% of the way there from what we call direct and indirect. So directives were burning fossil fuels, and indirect is the energy that’s coming from the electric grid. You said turning the thermostat down is one of those examples we used to think about. We don’t have to really do that, to be honest with you. There are a lot of other energy efficient things we can do and heat reclaim and trying to not have waste heat leave buildings to recover that waste heat and reuse it in some form with the pump technology. So we’re going to see much more heat pump technology being used that allows us to use electricity and what we call a coefficient of performance, which is somewhere between 250 to 300% efficient. And getting out of that device using refrigerants.
Speaker 1 [00:07:10] Can you explain what a heat pump is and what it does?
Speaker 2 [00:07:14] A heat pump. There’s nothing more than an air conditioner that has a. Reversing bulb, they can actually move heat either direction. So an air conditioner extracts heat from a building and that’s how it actually cools when you make it a heat pump. They put a reversing building that unit and now I can extract heat out of the air. We now have technology that can extract heat out of the air when it’s minus ten degrees Celsius outside. And that’s pretty amazing.
Speaker 1 [00:07:40] What about -30?
Speaker 2 [00:07:41] -30? We haven’t gotten quite there when we’re talking about using air source technology. We could do ground live technology and has no problem depending on what the outside air temperature is. In fact, I’m right now just building a cabin up in Idaho, in the Rockies, and we do get the -30. And in that system, I’m actually putting in a ground forces pump in order to do my heating of that cabin.
Speaker 1 [00:08:03] Technology adoption is always both fascinating and challenging, even more so for big pieces of hardware like this that tend to run in the thousands of dollars. How do you convince people.
Speaker 2 [00:08:14] It takes education at the educational materials going to be different depending on who it is? We’re trying to communicate well, and by no means are we recommending people to take something that happens ten years of life left and change it out today. And Lester happens to be other benefits like energy efficiency and you’re going to get some type of payback. And the reason is the embodied carbon part of that equation that we talked about earlier. I don’t want to spend a lot of upfront on body carbon. I’d rather use my equipment to the end of life and then have that alternative of what I can put in. That’s going to be the best alternative. And then on the technical side, we have to educate contractors with educate engineers on how to actually design these systems. There’s a big workforce development issue that we don’t have enough people that can actually install these type of systems. And so that being undertaken by ASHRAE and other organizations out there working together.
Speaker 1 [00:09:03] Kent, as we wrap up, I wonder if you can share some insights on what governments need to come to grips with in the near term, whether it’s subsidies for heat pumps or more aggressive approaches to decarbonizing the grid or other measures that can be taken in the next couple of years.
Speaker 2 [00:09:20] I think we need to look at the whole picture. So all circle back to my opening comments and that is whole life. Carbon really makes a difference. And so just as we did when we were having problems with the ozone layer, this goes back into the 1990s and the activity in our industry really responded positively and we got rid of those CFC refrigerants that were burning a hole in the ozone layer. We now have to deal with the same thing on these high GHG refrigerants that are being used in HPC in our business and we’re moving in that direction. But this is something that’s part of the overall picture. So it’s about energy efficiency. I think anything we can do to help incentivize or get tax incentives for people to do things that are energy efficient and lower the greenhouse gas emissions, I think are going to help us shift the industry on the retrofit market forward. The retrofit market is the big lift for us to get to 2050 and beyond zero.
Speaker 1 [00:10:12] And what can we all do as building occupants or homeowners in the coming months to make more progress?
Speaker 2 [00:10:18] You know, one of the easiest things to do right away is to make sure you have a smart thermostat in your house. Smart thermostats are really good about understanding when you’re home and when you’re not home. And that alone saves energy and saves carbon emissions. The first thing we should do on this journey is try and make our buildings as efficient as possible.
Speaker 1 [00:10:35] That’s great advice. Ken, thanks so much for being on disruptors.
Speaker 2 [00:10:38] Thank you, John.
Speaker 1 [00:10:42] It’s no secret that Canada’s construction sector has a lot to do in terms of our collective net zero challenge. To help us better understand that. I’m joined next by Jody Becker, the chief strategy officer and executive VP of Infrastructure Services and Technology at Ellis Dawn Ellis Dion is one of Canada’s largest construction firms, and it completes more than $5 billion of volume each year. Jody, welcome to Disruptors.
Speaker 3 [00:11:06] Thanks very much. Pleasure to be here.
Speaker 1 [00:11:09] Jody We’ve just formed something called the Climate Smart Buildings Alliance, which is Ellis Don, Mattamy, and RBC, and a lot more will join us. Can you give us a quick sense of the ambition of the alliance?
Speaker 3 [00:11:22] Absolutely. It’s interesting to see these three companies come together. And I think the real power behind that is we have three strong leaders with their sights set on changing the industry. And the hope is really that we can start to move the needle. We know that we need support from government at all levels to really change the way we approach the built environment in terms of decarbonization. But we know that the private sector has its role to play as well, and that we can really move the needle if we work together.
Speaker 1 [00:11:55] We’ve been talking on this episode about leaky buildings, and a lot of the leaky buildings out there are the big ones. They can be all the hospitals, old university buildings, but also old office towers and older apartment blocks. Do we need to come to grips with tearing them all down and building more efficient buildings, or can we fix them as they are?
Speaker 3 [00:12:16] Absolutely. Have to look at all options. Right? It’s not always practical to just tear down and start over again. So we have to think strategically about how we approach those buildings. And retrofits are a big part of that, obviously. But we need to do that in a way that makes sense, particularly in active operating environment. So we operate a number of health care facilities across the country and we’re using technology and we are using the capital plans that exist for those buildings to think about how we can strategically upgrade those facilities while still maintaining a healthy operating environment.
Speaker 1 [00:12:55] Can you give us a couple of examples of how that works?
Speaker 3 [00:12:57] Sure. One of the things we’re using right now is technology that will scan the existing facility and create a digital road map of the existing infrastructure so we can see all of the piping, where it’s going and what some of the potential problems are. You can imagine that within a hospital, for example, if you turn off the water because of a leak and you’re turning off the water that’s running to the renal lab, you can cause a great deal of problems. So we have to be very careful and understand the facility really well before we touch anything. And with all the infrastructure, that can be a real challenge. So we use that scanning technology. We’ll turn that into an actual digital twin so that we understand the connections between all of the equipment and systems.
Speaker 1 [00:13:41] So retrofitting is about much more than double painting a window or putting weather stripping around the doors.
Speaker 3 [00:13:47] Absolutely. We have to look at retrofitting from a number of different respects, and we’re always looking at improving the functionality and the performance of the building. But we’re also now thinking about how we decarbonize that building as well. So if there’s an opportunity to change a boiler or to a heat pump, if there’s an opportunity to change an electrical system to an led system, all of those things have to be taken into consideration at the same time that we’re doing the retrofit.
Speaker 1 [00:14:15] It’s always nice to think technology can save us, but of course, humans are part of the equation and you can retrofit a building in the most tech savvy way, but someone is literally turning on the lights and turning up the temperature or turning it down at the beginning or end of every day. How are you working on that human side of the equation for building owners and operators?
Speaker 3 [00:14:37] Well, so I have to challenge you on what you just said, because it isn’t always people that are turning on the lights or changing the temperature and now the building can do that itself. Now, that doesn’t mean that we’re going to eliminate the people from the equation, but I think we’ll be looking at different kinds of people to operate our buildings. And we have to think about where we source those people and how they’re trained, because we are moving much more from technicians to technologists as buildings become more intelligent.
Speaker 1 [00:15:06] You’ve got a neat group, at least on that I think you call the Geek Squad and people may not think of techies working in the construction industry. Tell us a bit about what the Geek Squad is and what it does and what it reflects about maybe where construction is going.
Speaker 3 [00:15:22] So officially they’re called our Construction Sciences and Energy and digital Services teams, but unofficially, the Geek Squad. They’re looking at everything from construction technology in terms of low carbon concrete, mass timber construction and virtual design and construction, for example, through BIM models. But also our Energy and digital services team builds bespoke platforms for our clients, whether it’s around energy management or whether it is that full digital twin that I was talking about. We also have a great team that is developing construction dashboards that will provide key metrics for clients through the construction process so they can have real time visualization of how well that project is moving.
Speaker 1 [00:16:09] At the end of the day, someone’s got to pay for all this, and I’m guessing this can make things more expensive, not less, at least in the short term. How can we better come to grips with the cost pressures of greening buildings, whether they be new or old?
Speaker 3 [00:16:23] Yeah, I think that there’s no one solution to this. It’s great to see the federal government moving to projects where net zero is a focus, and I think that creates a nice sandbox for us to try new things and helps us to build some momentum around reducing the premium around green technologies. So if we can get governments to think about changing their specifications to use a low carbon concrete and create supplementary cementitious materials, those types of things, then that becomes an easier sell when we go to the private sector and say, Look, we’ve already done this on three projects before, we can do this on your projects as well.
Speaker 1 [00:17:02] So where are we going to get all the people to take this on? This sounds like a massive national construction project, all this retrofitting, and maybe that’s what it is. You’ve talked in very inspiring ways about the technology, but that’s also going to take a lot of people with new skills.
Speaker 3 [00:17:17] We really do have to think differently about where we are sourcing the people for our projects. We are starting to look at tapping into some schools that are training folks that weren’t traditionally in our trades, right? There’s a whole ESG requirement to look outside of our traditional pools of talent. So we’re working with groups that are retraining black, indigenous, bipoc people, women who have no training in the construction industry but have some skills and talent to bring. I think immigration is also going to be a key factor for us. There just aren’t enough people in Canada right now to fulfill the needs that we have, particularly on some of the mega projects that we’re building. So we need to be working with government to think about the types of people that we need to bring to Canada to help us accomplish this.
Speaker 1 [00:18:07] Judy, I wonder if I can wrap up this segment with a global question. Ellis on works in all parts of the world. What are you seeing in other countries, other markets that Canadians should be aware of?
Speaker 3 [00:18:19] I think the biggest difference in some of the markets where we work internationally is the speed at which projects can be achieved. We tend to run a bit slowly here in Canada and we’re a bit slower to adopt those new technologies. Some of the work that we are doing in the MENA region, MENA.
Speaker 1 [00:18:37] Middle East and North Africa, if I’m correct.
Speaker 3 [00:18:39] Yeah, that’s right. So some of the work that we’re doing there, they’re very ambitious projects, but when they decide to make a project happen, it happens very quickly. And there’s a boldness to their embracing of innovation and new technologies. I think we can learn from that. And I think if we can move projects to market faster, it’s to the benefit of the economy and all of us working in it.
Speaker 1 [00:19:04] Be fast, be bold. What a great message. Jody, thanks so much for being on disruptors.
Speaker 3 [00:19:08] Thank you.
Speaker 1 [00:19:17] Our last guest today knows a thing or two about consumer behavior when it comes to how we use and sometimes abuse our home and office energy. Jaime Gray Donald is senior vice president of sustainability at Quadrille Property Group. That’s a global real estate investment operating and development company based in Vancouver. Jamie, welcome to Disruptors.
Speaker 2 [00:19:39] Thanks, John. Great to be here.
Speaker 1 [00:19:41] Jamie, Let’s start with QuadReal. Not a household name to a lot of people, especially away from British Columbia. Give us a sense of the company and also what is driving it with sustainability.
Speaker 2 [00:19:54] Yeah, so QuadReal is wholly owned by a BCI that represents the public employee pensioners of B.C.. One of the ways that we help secure long term returns is the real estate investment. So we invest in office residential, retail and industrial in Canada and globally. And one of the things that we hear very regularly from the pensioners is how important sustainability is.
Speaker 1 [00:20:19] That’s a perfect point to kick off with, because real estate is by definition a long-term investment and climate is both a near-term and long term challenge. How do you explain to pensioners that you’re going to meet the pension obligations? That’s probably first and foremost in many of their minds and help the planet over a decades long journey?
Speaker 2 [00:20:39] Yeah, we’re in a very fortunate position that the pension obligations are met, so we’re above where we need to be on returns. But the next is really looking at long term risk and long-term returns. And what we see is that you need to invest in keeping buildings up to date. You need to invest in making sure they’re appealing to tenants. And carbon is just another way, both from a risk avoidance mitigation standpoint to make sure the buildings aren’t prone to flooding so they can handle extreme heat. And then also, more recently, tenants are looking to be in buildings that align with their net zero obligations.
Speaker 1 [00:21:18] And our tenants, I’m sure this varies by category, but generally willing to pay more for that.
Speaker 2 [00:21:24] Tenants are very rational. And so if we can time things so that this is, hey, we had to replace the roof anyway. Here’s a perfect time to put solar on it or in an office building. Hey, the domestic hot water needs to be replaced. It’s a little incremental charge to go for low carbon. They’re fully onside. The other is that the carbon tax helps. So while we might be paying a bit more now, we know that over the lifetime of that boiler, the numbers are going to pencil out pretty close. And we find people are very reasonable when you engage in the conversation saying, hey, the next two, three years you might be paying a little bit more, but six years from now you’re going to really thank us both from a values perspective and from a cost perspective.
Speaker 1 [00:22:14] I wonder if you can take us into a couple of examples. Jamie, Maybe we can start with Vancouver’s Park Place, which has gone through a retrofit. What were the key learnings from that?
Speaker 2 [00:22:24] So in Park Place, it’s a 700,000 square foot office building or had offices there. We done LEED, we’d done, you know, 30% energy reduction. We’ve done a lot of the low hanging fruit. We keen to do heat recovery. So instead of taking excess heat and cleaned up to the cooling tower, we put in the heat recovery chiller, which basically redistributes the excess heat within the building. It was anticipated to save, you know, 50 to 80% of our natural gas-powered steam that we use. It’s probably closer to 30 or 40%. And the big learning here is before you electrify, you need a lot of data.
Speaker 1 [00:23:05] I’m not sure I can recall a Disruptors episode where the word data didn’t come up, and it’s great that it’s coming up in one about construction and buildings. Jimmy, can you give us a deeper sense of both the data challenge and opportunity for a building’s investor and operator like Quadrille?
Speaker 2 [00:23:21] Typically, when you have no data for a building, you’re just paying your monthly utility bill and that’s it. And you move to interval meter data where you see the live data for your main electricity account. We usually see about a 10% reduction in energy when you move to sub meters. So each tenant in an office building or each tenant in retail paying their own bills, you get another 10%. And then when we add in live building automation system data and emerge that with really granular energy data, you can save another 10%. So you’re looking at 30% really from how engaged are you in managing the building and have you lined the incentives of everyone in the building towards conservation?
Speaker 1 [00:24:07] I imagine this immediately leads you into AI conversations. And Jamie, I’m curious where Quadrille is thinking in terms of the. Power of I and what I can do in this space.
Speaker 2 [00:24:19] Yeah great question about I. So we think that’s the future for now. Buildings are quite complicated and each building’s a bit different. A.I. works really well when you’ve got the same thing happening over and over again. So we found it very effective to get a lot of data and then have an engineer look at it. But we haven’t, with success, handed over the keys to an AI system and said, Do it for us. We imagine that future and we’re getting all the pieces in play to get there. But I think it’ll be another 5 to 10 years before we really get AI in buildings. I think there are lots of other applications that come first.
Speaker 1 [00:24:58] In the meantime, we’re going to rely heavily on human behavior. What sort of tricks are you seeing in terms of nudging different kinds of behavior, whether it’s tenants in an apartment or occupants in warehouses or shopping malls?
Speaker 2 [00:25:12] Yeah, my background is I have a Ph.D. in environmental education. So I had this belief that if you just gave people the knowledge, their behavior would change. But really, it’s social norms play a major part of it. And so we’re really focusing on reinforcing that. Sustainability in all its forms is a social norm. Conservation, recycling, turning lights off. I think that really creates the groundwork. What we see on energy is if people see the impact of their actions, they tend to do something about it, particularly if the impact is financial. So we see in residential units when the lease turns over and there’s a new person in the space, they’re using typically 40% less energy than the person who was in that suite before. They know they’re paying the bill and so they’ll turn the lights off. They won’t leave the windows open all the time in the middle of winter. There’s just a real personal responsibility that takes hold. And I think people want to do sustainability stuff, but you need feedback. And if you don’t have feedback, it’s hard.
Speaker 1 [00:26:21] That’s remarkable. The power of pricing. We started the podcast talking about the footprint of the build sector. It’s significant, but it’s really exciting to hear about the progress that’s being made, but also the opportunities right before us as we move towards close. Jamie I wonder, recognizing the scale of this challenge, what message you would want to leave Canadians with?
Speaker 2 [00:26:44] I think we’re at a very exciting time where we have 20 years of work on sustainability. That is really just the groundwork we’ve made 2030 present progress, but we’ve created capacity, industry and innovation. I think we’re going to double that progress by 2030 and it’s exciting. It’s a fun place to be. And then the last I’d say is there are a lot of really good jobs coming in, retrofit of real estate. These are good paying middle class jobs that are accessible to a range of people, and it’s going to be a really big employer. And I think that’s going to be exciting for Canada. A lot of good jobs and good places that people can feel great about.
Speaker 1 [00:27:31] What a great message to end with. Jamie, thanks for being on Disruptors.
Speaker 2 [00:27:35] Thank you, John. My pleasure.
Speaker 1 [00:27:40] I’d like to thank our guests Ken Petersen of P2S, Jody Becker of Ellis Don and Jamie Gray-Donald of QuadReal. What a great conversation. As Jody said, we need speed and we need to be bold, but we also need to be mindful about the fact that this is a transition. There’s no single technology, no single change that is going to get us there, frankly, in any sector, but particularly in the buildings sector. Ken laid out the challenges, but also the choices we’re all going to need to make and we can make as consumers in the years ahead. But we need to make them thoughtfully. And as Jamie said, we need to make them data informed. We don’t have enough data in terms of how we operate our buildings, whether it’s our houses or apartments or offices or shopping malls. They give us real time information that lead to smarter decisions, both in what we’re doing in the moment and what we’re investing in for the future. This is truly a national challenge and it’s also a household challenge. There’s opportunity for us all to do more today or this summer where we work, where we live, where we play to help Canada move closer to net zero, particularly with the buildings that are such critical parts of our lives. Who knows? Maybe this can be the great Canadian Rainbow Project. Join us next time for part two of our special series on Greening Canada’s build sector. We’re going to look at new builds and the new technologies, techniques, designs and innovative materials that are going to help us build a more sustainable future. Until then, I’m John Stackhouse. And. This is disruptors, an RBC podcast. Talk to you soon.
Speaker 3 [00:29:25] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. For more Disruptors content, visit our RBC.com disrupters and leave us a five star rating if you like our show.
Speaker 1 [00:00:01] Hi, it’s John here. It’s no secret that innovators are wired differently. I recently attended the premiere of BlackBerry, the movie. BlackBerry is, of course, one of Canada’s most beloved stories of innovation. Even though it didn’t end well and the movie does a really nice job of capturing the spirit of innovation, whether it’s the Mike Lazaridis character speaking from the heart about his desire to build the world’s best phone, That’s why you would come to work for BlackBerry or the Jim Balsillie character flying all over North America and the world to sell that phone. Innovation is about drive. It’s about passion. It’s also about corporate partners. It’s about a supply chain, and it’s really about talent constantly building and adding to that team. As BlackBerry did so well and then struggled in its final years. But my big takeaway from BlackBerry, the story, as well as the movie, is the power of assumptions and how all of us innovating in our daily lives or in our work need to check and challenge our assumptions pretty much every day. Because even though we may have invented the best phone for today, tomorrow in innovation is going to be another day. As Professor Danny President told us last year on disruptors, innovation is not just about invention. Invention is the act of coming up with new ideas. Innovation is the act of taking ideas and making them into new products and services. In other words, making things better, faster, cheaper. You know, it may be the Canadian way that we have a lot of inventions under our belt, everything from green garbage bags to the two-way radio to the pacemaker. But we have a much leaner reputation when it comes to innovation. And that’s exactly where the Governor General Innovation Awards began. It was created by former Governor General David Johnston and that great Canadian innovator, Tom Jenkins. I’ve been on the selection committee a few times now, and it’s always inspiring to see nominations from every region and every sector and to see that innovation really is a Canadian pursuit. But what makes a great innovator? What goes into forming and building great teams of innovators? And can Canada truly be that innovation nation? This is Disruptors, an RBC podcast. I’m John Stackhouse. It’s Canadian Innovation Week. And on today’s show, we’re talking about that buzzword innovation and what makes an innovator. Are you born with it? Can it be taught? Is it nature or nurture? We’ll hear from three of this year’s six Governor-General Innovation Awards winners spanning pharmaceuticals, mining, even social justice. Proving that innovation takes place everywhere. Joining me first is Garry Agnew, co-founder and CEO of Iodine Technologies, a BC based mining technology firm that provides valuable intelligence to those who explore beneath sometimes way beneath the Earth’s surface. Gary, welcome to Disruptors.
Speaker 2 [00:03:11] Hi, John. Thanks very much for having me on the show.
Speaker 1 [00:03:13] It’s great to have you, especially talking about innovation and what makes an innovator. And I want to start with the intersection of mining and technology, and that intersection is innovation. Mining probably doesn’t spring to the top of the mind when people hear the word innovation. Maybe give us a sense of the DNA of a miner and the DNA of a techie and how those can intersect.
Speaker 2 [00:03:37] Historically, mining has been thought of as one of the late adopters of technology, and certainly there’s some good evidence as to why that’s the case. You know, I would, John, in the last five or more years, the acceleration of innovation in mining is absolutely breathtaking. And because there’s a long history, I don’t think the public truly appreciates the amount of innovation that’s happening in mining today. And just to give you an example, there’s a lot of talk about autonomous vehicles on the road. Autonomous vehicles have been running in mining probably for over a decade now. And so the mining industry is innovating and we’re excited to be part of what I see as a huge acceleration in innovation in this sector.
Speaker 1 [00:04:15] Give us a quick sense of what Adyen does.
Speaker 2 [00:04:17] Yeah, we use the energy from supernova explosions in space in the form of cosmic rays, and we use that energy to image down to a kilometer beneath the surface to help our clients identify areas of mineralization.
Speaker 1 [00:04:31] That’s awesome. What have been the big hurdles in making that happen?
Speaker 2 [00:04:36] Certainly over the last decade, we have had to repeatedly develop world firsts in order to bring the technology itself to market. But the technology and science is only one part of the equation. Partnering with the world’s largest mining companies, helping really understand their problems, and then being able to apply technology and change management with the client to be able to actually get the outcomes they’re searching for. What we don’t want to be in the business of is just delivering technology. We deliver technology to help improve and transform the customer’s business. And so that’s really a lot of the work is non technological work, if you like.
Speaker 1 [00:05:14] But we’ve talked a lot over the years on this podcast about how sometimes technology is easy, people are hard. Give us a sense of that change management challenge on the people front and how you help miners who have centuries old traditions and practices that work really well in some of the world’s harshest conditions, regardless of the economic conditions? How do you help them change?
Speaker 2 [00:05:37] Yeah, I remember a client for many years ago using the phrase with me that it’s very difficult to be a prophet in your own land. And what I think he meant by that is sometimes it takes an external force or body to actually help stimulate and be a catalyst for innovation with inside the company. Now, because we provide a breakthrough technology that really gives the customer a step or a change in terms their ability to understand the subsurface by delivering that technology, it opens up a whole array of possibilities for the mining company. And so, yeah, it’s what the technology makes possible is what excites us. Obviously the science is pretty cool, but the science in itself is not with the values that.
Speaker 1 [00:06:21] Confidence can also be a key word in innovation, and innovators tend to be very confident because they’re taking on those great unknowns. I wonder if you can give us a sense of how you maintained confidence in what you were doing, even when it wasn’t proven?
Speaker 2 [00:06:37] Yeah, I guess we’ve been told many times over the last decade that it’s impossible. You will never do it. And in actual fact, in our facility up on the wall is a Nelson Mandela quote. And that quote is it always seems impossible until it’s done. And what we try to embed in our organization, John, is this sentiment that not giving up is actually what gets you to breakthrough innovations because there’s hundreds and thousands of problems we have to solve along the way. And so the moment when you’re just about to give up, when you push and push again, suddenly there’s this amazing breakthrough on the other side that seemed impossible only a few steps before.
Speaker 1 [00:07:16] I love that Nelson Mandela, quote, Innovators tend to love the word impossible. It’s the great idea. I wonder if you can give us a bit more sense of how you’ve built a culture for innovation in ideas.
Speaker 2 [00:07:28] Yeah, well, it very much started with our vision, mission and values. One of our values is informed by industry, driven by science. Another one of our values is boldly ambitious, exceptionally human. And what we’re trying to characterize in that, that kind of double edged sword. And each value is creating a tension, but ensuring this science is leveraged to solve real world problems for the industry and being boldly ambitious because our customers needed us to be. But being exceptionally human in the way we show up without arrogance and a partner prepared to roll up our sleeves and really lean into solving the problem with the client. So yeah, a definition is the start of creating a great culture and that of course it’s in in every act that you do as a leader, in every communication that you have with the team engagement with customer. People pay more attention to what you do than what you say as a leader. You’re being assessed every single day in terms of the actions and the decisions you make.
Speaker 1 [00:08:25] Those are really great insights, Gary. People often look to the leader as being kind of the lead dog of innovation, and yet innovation is also a team sport or a pack activity with everyone playing different roles. How do you pull out the really innovative people in a team and also pull out the innovative spirit that exists in everyone, regardless of who they are or what they do?
Speaker 2 [00:08:51] Yeah, and just to clarify, I absolutely do not see myself as the chief innovator and far from it. And my role is much more about creating the environment, hiring the very best talent, creating the culture that supports innovation. And then my job is to ask the right questions and to encourage the team and challenge the team to take on difficult problems. And I CTO Doug shooting is really a remarkable innovator, a great scientist and technologist. And so Doug really takes the credit for the technological innovation that happens at IBM and of course with huge support from the cast of the Alien team.
Speaker 1 [00:09:31] Gary, I feel like you’ve already given us a masterclass in both leadership and innovation. As we wrap up, I wonder if you can share with our listeners, regardless of the sector there and your best advice for being the best innovator that we can all be?
Speaker 2 [00:09:47] Yeah, I would start with leadership. The words have to be aligned with the actions. If you say one thing and do something different, people see through it very, very quickly. It’s inauthentic. And so really, as a leader, be focused on being your authentic self, creating an environment where people want to come and do great work and then creating a culture that is about never giving up, a culture that relishes those problems, wants to get after those problems and get the other side of those problems. For me, that’s the crux of what innovation is about.
Speaker 1 [00:10:18] Keep an open door to problems. That’s part of the recipe of any great innovator. Gary, this has been a great conversation. Thanks for being on disruptors.
Speaker 2 [00:10:25] Thank you very much, John. Enjoyed the show.
Speaker 1 [00:10:29] Up next, I’d like to welcome a social justice innovator helping victims of domestic abuse. In 2020, the Canadian Women’s Foundation launched the signal for help to help abuse survivors in the pandemic spike of gendered violence. The hand gesture innovation is simple Talk the sum into the palm and cover the thumb with fingers to ask for help without leaving a digital trace. It has saved lives and continues to do so every day all around the world. Joining me now is the president and CEO of the Canadian Women’s Foundation, Paulette Senior. Paulette, welcome to Disruptors.
Speaker 3 [00:11:08] Thank you, John. Great to join you today.
Speaker 1 [00:11:10] Before we get started, I want to extend a sincere thank you for all the incredibly important work you do to fight domestic violence and supporting women, particularly through difficult. Times in their lives.
Speaker 3 [00:11:22] Thank you, John. It’s been a life long journey on this path to supporting women to live their full lives without the barrier and the devastating experience of gender based violence.
Speaker 1 [00:11:36] Well, I’m looking forward to learning more from you about innovation, particularly social innovation, because too often when we hear the word innovation, our minds go to technology, but it’s also about human behavior and how do we innovate our ways to being better people, better humans. Maybe you can start by sharing a bit about the COVID 19 pandemic. There were increased levels, shocking levels of domestic violence, particularly during the lockdown. I’m curious how the idea of creating a secret hand signal came about.
Speaker 3 [00:12:06] Well, as you said, when the pandemic came about, we were seeing and hearing from frontline gender based organizations, shelters, who were hearing loud and clear that they were seeing very eerie increase in numbers. And so we were really thinking, what is it that we can do to address this? And so we immediately started raising more money. And we were also approached by your PR firm who also wanted to do something based on what they were hearing in their community together. We came up with a signal for help, this hand gesture, something that seemed innocuous, something that couldn’t be traced by their partners because their partners were home with them as well. And so we needed to figure out how do we keep women safe in the circumstances we’re in, where everyone had to be paying attention and listening to the order to stay home. And so we put our heads together and came up with something that could work in this sort of new reality we’re all living in.
Speaker 1 [00:13:08] And it’s clearly had a very positive, profound impact. Some people hearing this, though, may think a hand gesture. How is that innovation?
Speaker 3 [00:13:18] That’s true because there are many hand gestures in the society that we live in, some that are good and some, you know, will tell you different messages. And so we had to kind of figure out something that is not currently being used. That doesn’t mean something else in another language or in another culture. So we did the research and that was an important part of it because we didn’t want to send confusing messages to society or to different cultures. And so we were able to kind of land on something that seemed innocuous but had a serious meaning behind it and was translatable across languages and cultures and societies. And also, Don, it was also the opportunity to send a message that was clear yet simple, which is I need help. It had to be that simple. It had to be that clear.
Speaker 1 [00:14:07] And innovation is often most effective when it is simple. I wonder if I can focus a bit on management approaches, especially in leading a large, high performing organization and how you think about innovation as a leader, setting the aspiration and the ambition that creates the right pathways for your teams to do this kind of innovation.
Speaker 3 [00:14:28] Well, I’m a strong believer in diversity. I’m a strong believer in collaborative discussions, debates, dialogs around issues, having the right people at the table, but also with a deep understanding of what it is we’re trying to address. And so we had all of that. We also had a strong desire and passion to not just make a difference, but to have an impact. We know gender-based violence steals lives in this country and around the world. So how can we develop something that’s going to have an impact that’s going to be accepted by the wider public? And so with the diversity of voices and understanding and perspectives that people brought to the table, it’s helped us to really create something that had behind it a ton of meaning and a ton of expertise upfront. It was simple and it was clear.
Speaker 1 [00:15:35] As a leader, how do you take that inclusive and diverse culture and also make it one that is focused on execution? You’ve talked in very inspiring ways about how you bring people together, and that usually leads to better ideas than anyone would have, certainly on their own. Then there’s the challenge of executing, getting to market. How do you balance that?
Speaker 3 [00:15:55] Well, for me, being a leader is not necessarily about having most or all or even any of the answers. I truly have a deep belief that we actually have the solutions for the problems we face because we are the ones that cause them in the first place. Right? And then the execution part to me is a bit of an insistence. You know, execution has to happen because the man that we’re charged with is about addressing something that is taking people’s lives. And so I work with some really great people who come to the table with the same passion and understanding, but also want to make a significant difference now. And I think that in itself kind of pushed us to not just create and be proud of something we’ve created, but to implement it in a way that actually was living in the world.
Speaker 1 [00:16:51] We’re all looking for great people. I’m curious how you make the Canadian Women’s Foundation a destination for the great people that you want to continue to add to your team?
Speaker 3 [00:17:01] I do my best to lead from a place of authenticity, from a place of unapologetic love and passion for this work, from a place of really believing that change is possible.
Speaker 1 [00:17:19] Those are really inspiring words. I’m curious, Paulette, just since we moved to close for the segment, what’s next for the foundation? What’s your next great challenge?
Speaker 3 [00:17:27] I love this question because I’m excited about the future. I see nothing but growth. I see nothing but the ability to speak to more people, to influence more people, to bring more people to the table, and for us to actually have the impact that we desire. And in order to do that, we have to keep innovating. We have to keep thinking about how can we reach the public in a different way than the usual. Because preaching doesn’t do it right. I’m convinced that people are essentially good and essentially want to see change and essentially want to see justice. And it’s our responsibility in terms of the work that we’re doing to support gender justice, to end gender based violence, to tap into that desire of people.
Speaker 1 [00:18:20] I can’t wait to see all that. You’re going to continue to build. Pull out. Congratulations on all that you’ve done. And thank you for being on disruptors.
Speaker 3 [00:18:28] Thank you so much for having me.
Speaker 1 [00:18:36] Welcome back. Most of us have taken some type of prescription medication in our lives. Joining me now is a Canadian chemist responsible for inventing a key component of relevance to the pharmaceutical industry, which has been commercialized and used around the world. Dr. Marc Strada Otto is the Arthur B MacDonald research chair and the Alexander MacLeod, Professor of Chemistry in the Department of Chemistry at Dalhousie University. Mark, welcome to Disruptors.
Speaker 4: Thanks for having me.
Speaker 1: You and your team at Dal, created the active ingredient in medicine, and here I am, way out of my comfort zone called Delphos, which stands for Dalhousie Phosphine. I wonder if you can just explain it to all of us non-chemists listening what that is and why it’s important.
Speaker 4: Sure. When you take a medicine, it has an active pharmaceutical ingredient and it has filler and binder and other things. What we’ve developed are catalysts that allow the pharmaceutical industry to assemble those active pharmaceutical ingredients. So if you like, we provide them with a tool that they use to build their drug molecules faster, cleaner, more efficiently. So where the hammer were, not the house itself. There’s no house without a hammer. Thank you for that explanation. Your work was seen, as I understand it, as a bit of an unconventional approach. We’re talking on this episode about innovation, and innovators tend to follow unconventional approaches. How did you navigate this course, which maybe some of your peers were questioning in the early days? It’s a complex interplay, to be fair of a variety of factors. We come from a different sort of branch of chemistry than is conventionally applied in this area. So we bring just a different vantage point altogether. Also, one of the big innovations that you’re referring to and thank you for your kind words, was the idea of going from palladium based catalysts to nickel based catalysts. And the assumptions that many made is that to do that you would have to sort of trick nickel into doing this work properly. And we thought, well, no, we we’re not going to take that approach. We’re going to take a different approach where we design what are called ligands that connect to the metals. I know I’m skipping over a lot of chemistry here, but having a ligand approach allowed us to approach the challenging problem in an innovative way that from our perspective looked obvious but from other perspectives looked that it wouldn’t be feasible. And I guess we’re just lucky that we stuck to our guns.
Speaker 1: One of the questions I like to ask innovators is Did you see the end state? Did you have that goal in your mind’s eye and you just had to forge a path to get there? Or did you find the end state by forging a path that got you eventually into that discovery?
Speaker 4: That’s a perfectly framed question, in fact, because science often is a collection of both of those things. And so we had done a lot of successful work in other areas that had sort of prepared us for what solutions were going to be needed for these other larger problems. And so you definitely need some preparation, a bit of luck, a bit of timing. But we certainly did see how our approach, if successful, would deliver on solutions to those problems. I suspect one of the critical ingredients in that, it’s nice to say preparation plus luck plus timing, but there’s also the ecosystem that you’re in and particularly a large public research university.
Speaker 1: I’m wondering, Mark, what it is about the atmosphere of a university that makes it ripe for innovation?
Speaker 4: You’re exactly right. This is not done in isolation. The colleagues that I have the privilege of working with, both in the university and around the world, in the pharmaceutical industry, them sharing their problems with me helps me understand how we can make impactful solutions. And then the key factor is attracting the best and the brightest people to join my team. I’m not even the quarterback. I’m the coach. So I would say the people I work with have made this entirely possible, even though I might be the one who had the big sort of top down vision of how it might work.
Speaker 1: Tell us a bit about how you’ve evolved as an innovator and leader. I suspect you’re a player, coach. You’re as busy in the lab as you are sort of building the lab and building the team.
Speaker 4: So I’m in my 22nd year at Dalhousie University as a professor. And when I started, you’re absolutely right, I was the player coach, I was the quarterback, I was the waterboy, I was everybody. And as you grow, it’s like a small company. You grow and then eventually you get to the size where you’re no longer benefiting the group. By being in the lab, you’re better to be working with industrial collaborators, you know, forging new areas, seeking funding, seeking investment. The truth is the people who work with me in the lab are better scientists experimentally than I am, so I’d rather leave them to do the work at the high level that they do in terms of the. Direction in the focus evolution. It was about ten or 15 years ago. We developed some catalysts for a different reaction. To make a very long story short, it resulted in some interesting academic publications and some interesting chemistry. But in the end we realized it lacked practicality to then be translated into the real world. And so that evolution might be the most important evolution that’s happened to me going from sort of academically interesting, but in practical to academically interesting. But with the requirement that we’re only going to go down roads that we know we can deliver big impact within, if that makes sense.
Speaker 4: That’s such an interesting challenge that so many innovators are up against in terms of letting their team just go off on those exploratory journeys. Literally this morning I had a meeting with an industrial partner and we were trying to strike that balance because they too want the student or postdoctoral scientist to be excited and explore. But they also want them to solve the problems they’re looking for. So I proactively frame their time to protect both. That certainly is not the right set up to either have them only doing the dreamy work or having them just solve a company problem without excitement. Both end up being typically merged in the best projects.
Speaker 1: Mark, you’ve got such a great story and good on Dalhousie for being part of that. I wonder as we move towards close, if you can share some insights on what Canada has and what we need to be the nation of innovators that we know we are, but that we can truly be for the world. This is Innovation Week in Canada. Part of Innovation Week is the Governor General’s Innovation Awards, and you’re being recognized for that. So congratulations to you and your team. But just as we wrap up, Mark, what should Canadians be thinking about in terms of what we have and what we need to come to grips with?
Speaker 4: Well, thank you for this opportunity. I mean, the most precious resource that I think we have is the outstanding trainees that we generate in our not just university system, but in our entire sort of research ecosystem as an evolution from the university into the private sector, etc.. My personal story started in a very basic research setting, funded by basic research programing from the government. Things like the Natural Sciences and Engineering Research Council Discovery Grants. These are very, very important funding sources. That’s the money where you can just dream, create, be risky, try to come up with weird ideas. And it’s those ideas that ended up germinating into this multitude of industrially connected projects that are also funded in many cases by search through other programing. So we need fundamental science research, applied science research, and then the tools to do that work. I really couldn’t envision that the Delphi system would have evolved had I not been supported from a fundamental research point at the start of my career.
Speaker 1: We need the whole country to get behind innovators like you. And that’s a great point maybe to wrap up on. Mark, this has been a great conversation. Thanks so much for your time today. Oh, thank you very much. It’s been fun. My guests today have been Garry Agnew, Paulette Senior and Dr. Mark Straley, OTO. I’d like to thank them each for spending the time with us. Those were incredible conversations I’ve learned so much. Among the points I’ve jotted down. Don’t just think of ideas as being innovation. You’ve got to test and retest, aim for impact. We all want to have impact in the work that we’re doing. That’s how you attract great people, that make great teams. But it’s also what drives innovation. And then finally, I loved what Mark had to say about being part of a bigger ecosystem. Every innovator needs to see themselves as part of something bigger, whether it’s a corporate value chain, as we heard from the mining sector or a coalition of NGOs, as we heard from Paul that we’re a university, or you’re the community that you work in, Innovation doesn’t take place in a lab. Sure, it needs labs, it needs offices, it needs garages. But all those garages and labs and offices are part of bigger communities, physical and virtual. And Canada, as we’ve heard for decades, is a community of communities. So let’s keep that going because that’s what’s going to drive innovation right through the 2020s and beyond. I’m John Stackhouse. This is Disruptors, an RBC podcast. Join us next time as we dig into another topic. How can Canada’s building sector, whether it’s homes or shopping malls, office towers or industrial buildings, forge a better path to net zero? Talk to you soon.
Speaker 3 [00:28:26] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. For more Disruptors content, visit RBC dot com slash disruptors and leave us a five star rating if you like our show.
Speaker 1 [00:00:00] Hi, it’s John here. Returning to the pod this week is my colleague Naomi Powell from RBC’s Economics and Thought Leadership Group. Naomi, welcome back!
Speaker 2 [00:00:10] Thanks for having me back, John. It is great to be here today. We are going to be talking about supply chains and more specifically, the Port of Vancouver. And you were lucky enough to just be out there having a look at the port’s major transformation.
Speaker 1 [00:00:23] Yeah, Naomi, I was lucky to be in Vancouver, one of my favorite places in Canada, if not the world. And it’s always intriguing to me to see this massive port. Of course, it’s overshadowed by those even more massive mountains, but it is the gateway of our economy to the world and has been that way for generations. It’s always striking and in some ways inspiring to see all that one would expect to see in a port. The big ships, the cranes, the rail cars that are going to go to the far ends of Canada with all sorts of stuff from around the world, as well as bringing stuff from every part of Canada to Vancouver to ship out across the Pacific to some of the world’s best markets. But the most exciting thing that’s going on right now in the Port of Vancouver is not really visible to the eye. It’s the digital transformation of ports and shipping that is going to transform supply chains and in many ways, every part of the economy. And that’s what we’re going to talk about today.
Speaker 2 [00:01:22] Yeah, John. Supply chains are things we don’t think about when they’re working well, but over the last few years, we’ve had the pandemic. We’ve had that catastrophic flooding out west Ukraine more. And they’ve given us all, I think, a brutal education and just how important supply chains are and how they work. The pandemic, I think, was distinguished by how abruptly so much economic activity was shoved online overnight. We were shopping for groceries for our kids, toys for our clothes, all of it digitally. But then almost as abruptly, we became aware how much of that is actually dependent on the nuts and bolts of physical supply chains?
Speaker 1 [00:02:02] That’s right. Now, I mean, we have all sorts of physical constraints on the economy, including the number of ports. There’s only a few ports that connect Canada with the world. But now we have the power of technology, whether it’s automation, renewable energy or data, lots of data that can transform the way we operate that infrastructure. And there’s no better place to see that transformation that’s underway than Vancouver. This is Disruptors. An RBC podcast. I’m John Stackhouse. Today on the show, we’re talking all things supply chains and the digital innovation, making the marine shipping industry both greener and more efficient. Joining us today is Peter Exeter, who’s vice president of operations and supply chains at Vancouver Fraser Port Authority, where he oversees land and marine operations and supply chain optimization. Peter, welcome to Disruptors.
Speaker 3 [00:03:16] Thanks for having me.
Speaker 1 [00:03:17] You and I actually met last year in Toronto when there was a Japanese business delegation traveling through Canada talking about their interests and concerns over the coming decades. And for me, it was a really crystallizing moment to hear these Japanese business leaders outline all the things they want from Canada, whether it was canola or natural gas. And to have that 25 year view, they could tell you largely what they might need in 2040. And they really want to get all that from Canada. We are a reliable, trusted, credible producer of many things that the Japanese and many others want, but they also have concerns about our ability to deliver, and that’s on a number of fronts. It includes our infrastructure are choked up, rail lines are overworked ports. They were wondering what’s Canada’s game plan for the next 25 years? I wonder if I can take you back to that moment, Peter, and get your thoughts on what it meant to you.
Speaker 3 [00:04:17] At the time that we were having that conversation. No surprise that people were concerned about supply chains globally, including those in Canada. We had a tremendous run up of opportunity that’s led to volume growth and much of that has been centered on Western ports and in Vancouver in particular. So in a way, notwithstanding the pandemic related challenges, a good problem to have that Canada as goods and services are in demand globally. But we do need to continue to invest in capacity to serve those historical and new customers that want to trade with our country.
Speaker 1 [00:04:52] What do we need most?
Speaker 3 [00:04:54] It’s probably a basket of all things, but you and I chatted at that time about the priorities within the Port of Vancouver. It starts with terminal infrastructure. Increasingly, it is supportive infrastructure. It also the roads and rail leading up to the port facilities where terminals make investment and the need for us to optimize the use of the assets that we do have. Often that is through digitization effort. So those three layers of things are kind of a central theme for the port. And I would say for Canada in terms of investment in and modernization of some of the systems that we use to manage our supply chain.
Speaker 2 [00:05:30] It feels like businesses are rethinking the way they’ve done things for a very long time. We’ve seen this shift from just in time supply chains to a little bit more, just in case companies keeping more components on hand, just in case there’s more disruptions. How does that change the demands on what you do at the port? Have you had to rejig your priorities to make that change.
Speaker 3 [00:05:52] Dealing with much greater variability in the supply chain than we have historically has led to people trying to protect their position and metering capacity to make sure they don’t get choked up whether that’s a terminal or a railway. As we move through the pandemic and see, I would say more normal order restored, those kinds of I’ll call it buffer stocks, for example, in in major retailers I think will be drawn down as confidence is restored. Question is how do we build resilience into the supply chain so that we don’t have those kinds of challenges again? I dare say we’re not ready. If we had the kind of shock that we experienced through the pandemic. But it’s clear that these questions are top of mind for government and the private sector alike.
Speaker 1 [00:06:33] Peter, I’m hoping you can give us a sense of where the world of ports is going over the next couple of decades. Then it comes back to that point about both digital capabilities and data to get a sense of where that’s going. We reached out to a supply chain software firm called Ascent, and here’s a bit of what they had to say.
Speaker 4 [00:06:52] Hello, my name is Jared Connors. I’m the director of sustainability here at Assent. We recently did a study where 25% of manufacturers reported having high confidence in the capabilities of their suppliers to support their ESG and sustainability goals. Now, being the cynic that I am that showed me that 75% of companies are basically crossing their fingers when it comes to their confidence level in their supply chains, ability to support their overall mission and not engage in activities that could hit them behind the left ear or cause a regulatory infraction. When I think of supply chain disruption, I always think of operational risk issues cost quality, lead time availability. Companies can’t afford noncompliance concerns. So having the right technology to provide the data, transparency and due diligence and your supply chain is key.
Speaker 1 [00:07:40] It’s really interesting how many companies now are wanting and demanding to understand where the stuff comes from that is moving through your report. Give us a sense, Peter, of where the port world is moving as we accelerate our understanding of ESG.
Speaker 3 [00:07:57] Canada’s value proposition, I think historically was buy our stuff and we’ll get it to you. And that’s kind of table stakes for ports. We thrive in Canada in our supply chains by creating a framework for private investment to happen in the supply chain, whether that’s in productive capacity in the prairies and new potash mines or in rail infrastructure and services, and very much so at the ports. We want terminals to invest to continue to add capacity. And I think again, if you look at the trajectory of volume over the years, clearly that has been happening and we’re at this interesting tipping point of making sure that we continue to move that agenda forward from a demand perspective while we are fully embracing things like reconciliation, environmental issues and social issues because of the impact that goods movement have on local communities. So it’s like we’ve got this great opportunity, but the challenge associated with meeting those obligations or moving meeting those opportunities has also increased in some cases exponentially.
Speaker 1 [00:08:56] I love that line by our staff. I’m sensing an ad campaign coming on. We certainly have a lot of stuff in this country that the world does need and is demanding, and that’s going to put more pressure on our ports, particularly Vancouver. It’s an exciting time for you. The federal government just approved a major expansion. With all this in mind with the Robert Bank Terminal two or ARB T2, as it’s called. I wonder if you can give us a sense of the significance of this announcement.
Speaker 3 [00:09:22] We are continuing to grow at a pace that consuming available capacity and anticipated to consume the available capacity by late this decade or early into the next one. And so we’ve been working to deliver this new facility. We currently have four container terminals operated by two companies. This development would be a land reclamation project. So essentially building an island, building more Canada, as I like to say. And on top of that would be a 2.4 million TEU capacity facility, and the cost is estimated to be over $3 billion. We need to get moving on the construction of that. So it’s available in the early 2030s and this would give us a 50 or so percent increase in our container capacity. It would serve Canada’s west coast for quite a number of years.
Speaker 1 [00:10:15] We’ve talked a lot on the podcast about the potential, indeed the imperative for Canada to produce more food, which our farmers are excellent at. What do we need from our ports to ensure that if we are to produce, let’s say, 25% more food, we can get it efficiently to the world?
Speaker 3 [00:10:31] It’s not good enough to have terminal facilities if they can’t access the rail services that they need for that volume to be realized. Agriculture is also sensitive to loading in the rain, which we get a fair bit of in Vancouver. So improving technology to make sure that we’re not losing time to weather. And then coordination of vessel arrivals, which is also something with the growth of all volumes. But agriculture in particular has created some congestion on the vessel side of things that we need to remedy. A lot of these things are hard infrastructure at that terminals or lengthening rail lines and building overpasses. But some of it is the processes and the systems that we use to coordinate activities in the ports. And I think that’s where some of the digitization initiatives that Canada has in mind and that the port is advocating and working on will help us make sure that all of the capacity that we have, we’re using it as efficiently as possible.
Speaker 2 [00:11:24] I wanted to ask you about the flooding out West, which had a huge impact on the port and had a huge impact on agricultural exporters. And I was curious to know extreme weather events are more frequent all the time. How much is that playing into your thinking as you’re planning for the next ten years? The next 20 years?
Speaker 3 [00:11:41] Absolutely. It was a very significant event and taking out the supply chain, essentially severing it for several days. Clearly, we don’t want to go through those kinds of events. Again, a big part of what the port has been doing is really thinking about the other things that we need to do with sea level rise and where there are opportunities to build more resiliency into our supply chain. We’re anxious to see investment continue to occur in the core parts of the supply chain. Those roads and rail lines and overpasses are really critical. There was a recommendation for a supply chain and infrastructure strategy. I’m anxious to see or we are anxious to see what comes from that. Also, establishment of a supply chain office, I believe, will occur in in western Canada. All of these things, I think, to bring greater focus to how the supply chain is performing, do a better job of anticipating when there may be events, emergency or otherwise, that we need to. Coordinate around. And then again, I’d say senior government need to focus on where are the targeted investments that can build resiliency into the physical supply chain.
Speaker 1 [00:12:49] Of course, all this can’t be done. Expansion can’t be done without considering sustainability. The global shipping industry in its current form is responsible for about 3% of global greenhouse gas emissions, and the shipping industry’s regulator, the IMO or IMO, has set a target of cutting greenhouse gas emissions in half by 2050. And Port of Vancouver has also set an ambitious goal of becoming net zero by 2050. Peter, I wonder if you can give us a sense of what your team’s top priorities are to get there.
Speaker 3 [00:13:21] Certainly, as you mentioned, the IMO and rules and regulations with respect to shipping is a big step forward. We’re also partnering though, with industry and with local and provincial government on initiatives to introduce cleaner fuels to equipment that’s used more domestically, whether that’s tugs and ferries. Our own harbor patrol, for example, we’re slapping biodiesel into those pieces of infrastructure. We continue to expand. As another example, we’re just on the cusp of another cruise season shore power at our cruise facility because we’re trying to get to a place where more and more of the cruise vessels have both the capability and the opportunity to plug in to shore power. We’re probably hovering around 50% in terms of our strike rate when the ship is in the right location and has the capability, we’d like that to increase. And of course, we’re very focused on the marine ecosystem and protection of endangered species. Some of the conditions attached to that terminal to approval that we receive have specifically to do with Southern resident killer whales that are an endangered species and slowing vessels down or suspending operations when they’re in proximity to that industrial activity so that they are impacted. And then finally, I would say doing our part with respect to reporting and visibility and transparency of all of those efforts so that we are as an organization and a catalyst for trade in this region, demonstrating those communities and interest groups that are concerned about these things that we’re doing everything that is possible to protect the environment that we cherish here.
Speaker 2 [00:14:52] Okay. We’re going to take a quick break. But coming up, John and I explore the various technologies and innovations at Canada’s largest ports. Welcome back. Peter, I was really interested to learn that you’re trialing the use of renewable diesel and biofuels in and around the port. What can you tell us about that?
Speaker 3 [00:15:18] The transition to fuels, whether it’s in deep sea vessels or local service industries, is something that we want to find a way to move forward with. And these are trends that are happening globally at other ports. And so we’re trying to do our part to Pathfinder and lead, but also we’re happy if someone has some success to take those and implement them in our gateway as well. A big trend that is occurring is the replacement of fuels in deep sea vessels from heavy diesel or heavy marine fuels to other forms of energy. One of the ones that is, I’d say a transitional fuel is LNG. We’re seeing that as probably being a good proportion of the global fleet is adopting that as part of their kind of pathway to meeting those longer term objectives. So we expect that to that will be fairly common in the port and we’re taking steps to support those that are setting up the systems to provide that fuel within the gateway.
Speaker 1 [00:16:13] That’s such an interesting example. We talk a lot about fuel substitution and fuel transitions and going from the heavy fuels that ships rely on, ironically, to get a lot of products to us. Consumers here in North America can be replaced with a cleaner fuel like LNG, and on it goes from there. But there’s all sorts of onshore technologies as well and technologies within the port that can add to sustainability. You’ve referenced a couple of them, Peter, but I wonder if you can help our listeners better understand a few of these technologies and maybe I can just throw two or three at you and get some quick explainers from you as we try to understand how the world of ports are transforming. Let’s start with semi automation. What’s that about?
Speaker 3 [00:16:55] Often what you’re finding at ports, what they’re doing is they’re focused on modernization through densification. So stacking higher and doing other things to increase their throughput and reliability, looking at ways to take those jobs that are particularly challenging as maybe less safe and removing the argument from the actual mobile equipment and putting them in a control room, for example, where they actually still perform the function but in a safe, temperature controlled environment. This has created, you know, concern on the part of labor groups that, you know, where does this start and where does it end? And often I would say just my observation is it’s an economic calculus to some extent of what’s possible in the footprint that’s available.
Speaker 1 [00:17:42] Maybe we can shift to shore power. BC, of course, has an abundance of hydroelectricity and you’ve got a lot of ships, as we’ve been discussing, a lot of cruise ships coming into Vancouver. How far off is it before we see the electric vehicle equivalent of cruise ships pulling into ports like Vancouver and plugging in for their charge?
Speaker 3 [00:18:03] You’ll see globally the focus is often on cruise and container vessels. They have the greatest onboard electrical draw or electrical requirements. So in our case, both container and cruise terminals have a shore power capability to some extent. The idea is to try and get that more fully deployed, particularly a cruise first, where the highest draw of electricity is or highest potential transmission is. And then at each of the container terminals. And big challenge that ports have is particularly where they are upgrading facilities in legacy jurisdictions. While there might be an abundance of electrical power in the country, it may not be immediately adjacent to those facilities that are looking to transition. And, you know, normal course of things in most jurisdictions is if you’re building a new house and you want electrical power, you go to the utility and that you are doing that, you bring the power to that location. Often this is an impediment to the electrification of some of these systems, hence transitional opportunities like LNG or even leapfrogging to new technologies like hydrogen for some of the terminal equipment where if the adjacent grid doesn’t have power to immediately go to proven technologies like electrification on, those are pieces of equipment they’re testing whether they can get to those emission reductions by bypassing electricity altogether and going to two different systems. So it’s a smattering, I’d say, of things that are going on in our port. And what that does is it kind of mirrors what’s happening globally in circumstances like ours, which are unique in every port.
Speaker 2 [00:19:36] So just to go back to emissions reductions, tell us about the eco action program and how you’re working with shipping companies to try and shrink their environmental footprint.
Speaker 3 [00:19:46] Yeah. So the port runs a suite of environmental programs, one is called Eco Action, that really incents the use of low sulfur or low emission fuels and other technologies that reduce the impact on the environment. And increasingly the vessels coming into and out of the port will be members or participants in global organizations that give them ratings. Ratings for low noise, ratings for other technologies that they might have deployed. And we want to recognize that so that as much as possible, what we’re doing is incenting good behavior rather than trying to turn around and punish bad behavior.
Speaker 1 [00:20:22] Peter, as we move to close, I wonder if you can leave us with a thought on what’s at stake if we don’t get this right and don’t do it faster.
Speaker 3 [00:20:30] Sure. You’ve heard the narrative from our organization for many years, Canada, through the Port of Vancouver, trades with about 170 economies around the world, creating well over 115,000 jobs just in the transportation sector. So it’s a really big business in and of itself, but it pales in comparison to the underlying strategy of our country. And we talked about this, you know, about the agriculture, the minerals, the consumer goods that are necessary for us to maintain our standard of living really depend on having a strong core of activity in the supply chain. Because take agriculture as an example. I mean, we produce vast quantities, far in excess of what we could ever consume within this country. Why? Because we want to be a global competitor in agriculture and create those employment opportunities. What’s necessary is encouraging agriculture, companies, railways, etc., to continue to make investments, to not just sustain our capability, but to actually enhance it, to protect and enhance our competitive position as it relates to markets. Think about what’s happened geopolitically and kind of both the challenge and tragedy of some of that, but the opportunity for Canadians, if we were more nimble in terms of being able to turn these things on, which many companies and sectors are trying to do right now, thankfully those opportunities create new markets. They create sustained opportunity for further investment. And it means really having a national strategy around transportation and economy, frankly. But transportation as a component of that and really being thoughtful about how to fund the investments that are necessary to make sure that in our case, the next time a terminal investor wants to come along and plunk down $1,000,000,000, that the question about whether it can access the market, whether that’s the Marine on the Marine side or the inland side is taken off the table, which is historically where we were, there was never any question that if we did these things that I could get my stuff to and from, that’s what we need to restore.
Speaker 1 [00:22:30] What a great message to wrap up on, Peter. Thanks for being on disruptors.
Speaker 3 [00:22:33] Excellent. Thanks very much.
Speaker 2 [00:22:37] John. That was fascinating. What were your biggest takeaways from that.
Speaker 1 [00:22:41] To state the obvious? We all take sports for granted when we talk about inflation. When we talk about growth and jobs, it really does rest a lot on what’s going on or not going on at our ports. But we also take for granted the role the ports can play in both decarbonization and the digitalization of our economy. Two big forces that we talk about a lot on disruptors, and it was really interesting to hear him talk about the need to iterate, that there isn’t a simple solution that you can plug in literally or figuratively. And great to see the Port of Vancouver kind of test and learn. And then lastly, it’s interesting to hear about the power of imagination to imagine what a port can be 25 years from now and what that can mean for the Canadian economy and the global economy in a net zero world. And Port of Vancouver is going to be taking us there.
Speaker 2 [00:23:32] So what I was struck by and I hadn’t thought about before when it comes to ports is the degree of collaboration that’s required. It’s like a supply chain in miniature. One hand relies on the next to take the baton, and there needs to be a degree of consensus, and there needs to be that creativity that comes with many different stakeholders working together and probably different ports. One of the things I was hoping to ask Peter was the degree to which he collaborates with other ports, right? You can create one of these incentive systems saying, here’s an award for low noise or whatever, but if Shanghai is not doing it, do they care? So I just think there’s so much potential and opportunity there, and it’ll be interesting to see how Vancouver takes advantage of it.
Speaker 1 [00:24:12] I suspect we’ve got lots of questions for future episodes on ports. Naomi, it’s been great to have you on the podcast.
Speaker 2 [00:24:18] Thank you so much for having me. This was really fun today. I’m Naomi Powell.
Speaker 1 [00:24:21] And I’m John Stackhouse. This is Disruptors, an RBC podcast. Talk to you soon.
Speaker 2 [00:24:31] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. For more Disruptors content, visit RBC dot com slash disruptors and leave us a five star rating if you like our show.
Speaker 1 [00:00:00] Hi, it’s John here. And joining me in studio today is a special co-host, my colleague, Lindsay Patrick. Lindsay is the head of Strategic Initiatives and ESG at RBC Capital Markets, where she leads the Sustainable Finance Group. Lindsay, welcome to the show.
Speaker 2 [00:00:16] Hi, John. Thanks for having me.
Speaker 1 [00:00:18] It’s so great to have you on disruptors, Lindsay.
Speaker 2 [00:00:21] So, John, Earth Day is coming up. How will you be celebrating this year?
Speaker 1 [00:00:25] Well, Earth Day means a lot of things to a lot of people. And for me, it’s a chance to get my bike out of the garage if I haven’t already and get back into the ravine system of Toronto. It’s one of the things I love most about the city is it’s got, in my view, the world’s best ravine system. You can go for tens of kilometers without ever crossing a city street right through the downtown core out to the suburbs. So it’s a reminder of how even in a big metropolis like Toronto, Nature and the Earth is integral to our lives. But I also like to reflect on Earth days past and one in particular way back in 1990, when a remarkable Canadian, Matthew Coon, come the grand chief of the Grand Council of the Crees, led a group down the Hudson River to Manhattan in a large freighter canoe in protest of a big hydro dam in northern Quebec. That protest came and went. The world has moved on in many ways, but the message and that iconic image of them outside Manhattan stays with me. That Earth Day is about people and planet, and we always have to keep that balance in mind. Lindsay What does that mean to you?
Speaker 2 [00:01:34] I, to John, really love the concept of Earth Day is the start of spring. And spring often means spring cleaning for many people. But we can also take that spring cleaning of cleaning up the ravines and time before the grass is grown and the leaves are out to protect the earth, to clean up some of the debris that has accumulated over the course of the winter. And that’s an annual tradition I do with my four boys in the ravines close to our house. But coming back to the events of 1990, I agree with you that that was really a powerful reminder of the importance for humans to protect nature and in a peaceful way. But they can also galvanize attention across the country, here in Canada, but around the world. And really hard to believe that that was 35 years ago. And in that spirit, with Earth Day coming up, we figure that there is no better time to tackle climate questions that you may have been too shy to ask.
Speaker 1 [00:02:29] That’s right. We’re dedicating this episode of Disruptors, not just to Earth Day, but to questions that a lot of us have about climate. So we called up a bunch of experts to answer climate questions, such as Are batteries truly recyclable and what is a small modular nuclear reactor? So let’s dive in. We promise you’ll learn something new. This is Disruptors. An RBC podcast. I’m John Stackhouse.
Speaker 2 [00:03:02] And I’m Lindsay Patrick. Today on the show, we tackle the top questions on climate. You’ve always wanted to know. We’ve got a lot of ground to cover, so let’s get right into it. John, going back to Earth Day, what’s the relation to technology here?
Speaker 1 [00:03:23] It might seem unusual that we’re talking about technology on Earth Day, but they’re inextricably linked, as Rachel Dawn is going to point out. We called up Rachel, who is the director of policy and strategy at Clean Energy Canada, to ask what role does tech play on Earth Day?
Speaker 3 [00:03:40] We live at a crucial time in human history. For the first time, the majority of the technology we need to address climate change exists, and many of it is cost competitive. So what we need is not more technology alone. We live in a rapidly closing window to secure our future, and what we need is more urgency at every level. We need governments that will act on climate change. We need citizens that will hold them accountable. We need business and capital to pivot into the energy transition. And that is how we’re going to save Earth Day.
Speaker 2 [00:04:12] What an inspirational segment to kick us off. I agree with Rachel. It’s about collective action. We all have a role to play and we need to work together to achieve our common goals.
Speaker 1 [00:04:24] It’s also a great reminder that most of the transformative technologies are already out there at work. This is not about the Jetsons or some crazy sci fi world of the imagination, whether it’s hydrogen or carbon capture or batteries. It’s all out there. As Rachel said, we’ve just got to figure out a way to scale it. And I might also point out we’ve got to figure out ourselves, because technology on its own is kind of useless without humans changing the way we interact with each other and with technology, which makes me think about our next question. Electric vehicles.
Speaker 2 [00:04:58] Electric vehicles are something we hear so much about. A day doesn’t go by without news of electric vehicles in the press. But in Canada, RV adoption rate still lags behind our peers. It’s close to 9%, but we need to make more progress faster if we’re going to achieve our goal of EVs making up to 100% of new vehicles by 2035.
Speaker 1 [00:05:21] It’s true we still have a long, long way to go, and I’ve often wondered about the physical makeup of an EV. So we called up a previous disruptors guest David Patterson, the VP of Corporate and Environmental Affairs at GM Canada, and asked him, Are EVs really carbon neutral?
Speaker 4 [00:05:39] The great advantage of an EV is that it doesn’t emit carbon unlike an internal combustion engine vehicle. So you’re way ahead. The question is really, does the making of the EV itself create more carbon? The answer is it can. But if you like, General Motors are going to make the batteries from cathode active materials using zero emission electricity like we’re doing in Quebec. That’s going to make a huge difference. And then when you buy that electric vehicle, you’re quickly going to offset any additional carbon from the making of the vehicle and you’re going to be helping save the planet kilometer after kilometer.
Speaker 2 [00:06:15] John I’m a proud EV owner, and I have to say it is so much not only about the makeup of the EVs and the fact that they don’t burn carbon, but it’s all about the electrical grid and the power that you use to charge your vehicle. So what about all the electrical grid capacity for these EVs that we’re planning to drive? Do we have enough power and is it enough clean power?
Speaker 1 [00:06:39] I know this is one of the questions we probably all get into endless debates about how are we going to power all the EVs when the highways are full of them. So we reached out to our colleague Colin Goldman, a senior economist in our newly launched RBC Climate Action Institute. Collins done a lot of great research in this area, and here’s what he had to say when we asked him, Will all those EVs blow up the grid?
Speaker 4 [00:07:03] EVs are going to be a big source of future electricity demand. In Ontario alone, they could be something like 20% of all the electricity demand in the province by 2040. That’s going to be challenging, not just in terms of how much more electricity generation we’re going to need, but also in how we get that power to houses. We’re going to need significant investments in hardening the wires that bring power to people’s homes and to businesses to charge those EVs. And the real challenge is going to be how those EVs interact with system peaks. So when there is significant demand for electricity, when everyone comes home and turns on their stoves and their air conditioners in the summer, do they also plug in their EVs? But EVs can also be something that helps improve resilience in the grid. Those batteries in those cars can act as a way to sort of help meet peak demand. Doing that, we could actually see falling cost of meeting peak demand because people are buying the batteries for their cars and then selling those services to the grid.
Speaker 2 [00:07:58] I think that’s such a valid point. And from my own personal experience, I charge maybe at night while I’m asleep at off peak prices. So it’s cheaper, it’s efficient, and I’m really looking forward to at some point using that electricity that stored in my car battery to power my home on those peak periods.
Speaker 1 [00:08:16] We may even get to the day where your car is a profit center, or at least for the home, because you’re going to be selling power out of the car into the grid.
Speaker 2 [00:08:25] Related to this are the batteries that power the EVs themselves. Lithium ion batteries were initially developed and commercialized for use in laptops and consumer electronics. They’ve now become the leading battery type for use in EVs. But what is lithium? Tim Johnston, co-founder and executive chairman of Toronto based Battery Recycling Startup Lifecycle, explains.
Speaker 5 [00:08:49] Lithium is a very light metal situated perfectly on the periodic table for use within lithium ion batteries. Lithium is produced predominantly in Australia and South America in a variety of different forms. Its production is driven today largely by lithium ion batteries, but traditionally has been used in things like ceramics and industrial greases, pharmaceutical applications and a range of specialty chemical purposes.
Speaker 1 [00:09:22] Okay, that’s a great point. But aren’t all these batteries going to lead to mountains and mountains of garbage as we have to dispose of batteries the way we dispose of so many other things in society now? Well, Tim took on that question and busted the myth.
Speaker 5 [00:09:38] Lithium ion batteries are inherently not wasteful. They can be reused multiple times to store energy. And that’s one of the real benefits of the lithium ion battery system. Today, with the benefits of recycling, we can now take the materials from a lithium ion battery, turn them back into. The same constituent materials that went into the battery in the first place and reuse them effectively in an infinite cycle. This is what we call closing the loop in the recycling world.
Speaker 2 [00:10:11] Okay. We’re going to take a quick break. But coming up, more answers to the climate questions you’ve always wanted answers to. Stay with us. Welcome back, John. I know nuclear power has been making a comeback in the global conversation on energy.
Speaker 1 [00:10:34] Yeah, there are a lot of large nuclear commitments being made right around the globe, including a lot of talk about Mars, the small modular nuclear reactors. But you know what? There’s only one functioning SMR existing out there right now, and it’s floating on a barge off the coast of Saint Petersburg, Russia. But for all the talk about Mars, many may be wondering just what isn’t. R Exactly. So we called up Robin Manley, who recently retired from his role at Ontario Power Generation, or OPG as the VP of New Nuclear Development. To break it down for us.
Speaker 4 [00:11:10] A small modular nuclear reactor or SMR, is a smaller, simpler, more advanced version of nuclear power plants that we safely operate today as members do not produce greenhouse gases. They do provide non emitting electricity, energy and heat to power homes, businesses and industrial applications, which currently rely a lot on fossil fuels. The deployment of smart cars will greatly contribute to our battle against climate change.
Speaker 2 [00:11:35] One thing I think is really exciting about ExoMars is their ability to provide clean energy to more remote locations that may not have access to solar or wind or a variety of other renewable energy sources.
Speaker 1 [00:11:48] And when it comes to competitive advantages that Canada has, and we have a lot in the energy transition, nuclear has got to be near the top or at the top of any list. Here in Ontario, we have decades and decades of global leadership in nuclear technology and nuclear engineering. That’s now being applied to the SMR revolution. And it’s going to be really interesting to watch in the coming years as Ontario and Canada tries to take the lead in this new chapter of nuclear technology.
Speaker 2 [00:12:23] Switching gears a bit to supply chains, we know the pandemic put a lot of strain on global supply chains, but e-commerce in general experienced a huge surge.
Speaker 1 [00:12:33] That’s right, Lindsay. So we reached out to Mark Ang, who’s the founder and CEO of Gold Bolt, a Toronto based startup focused on electrifying and streamlining last mile delivery. Mark had this to say about the climate implications of that next day parcel delivery.
Speaker 4 [00:12:49] So with all of their factors equal, simply increasing the speed of a delivery could theoretically increase carbon emissions at the same time, which will negatively impact the environment. So retailers and brands need to work with the logistics partners to mitigate the climate implications for next day delivery while still meeting their customers demands for convenience. And with the introduction of buy today, receive it on a planned date in the future. We’re seeing that convenience actually doesn’t just mean speed. Convenience could be schedule delivery. More awareness to deliver will arrive based on logistics providers routing. Other examples to do this I think are more environmentally sound will be things like forward placement where merchants can afford place the most popular SKUs so that next day deliveries or same day deliveries have shorter distances to travel. The other option is route efficiency, where logistics partners can help to sort and consolidate routes and map deliveries in a way that minimizes emissions. And then finally, at fleet electrification, where last mile delivery with EVs can just simply reduce and eliminate many of the emissions associated with maxi deliveries in totality.
Speaker 2 [00:13:52] John, I think this is really exciting. When I think about my own carbon footprint, I’m a working mom with four busy kids. Perhaps I have an overreliance on e-commerce and a large part of my carbon footprint can be attributed to the distribution associated with that e-commerce activity. So terrific to see that we are coming with Climate Solutions not to address individual parts of the supply chain, but actually all the parts that will come right to my front door.
Speaker 1 [00:14:23] Let’s switch Lindsay from parcel delivery to air travel. And that may be a question on a lot of people’s minds as they think I had two summer travel plans. Air travel accounts for roughly 4% of human induced global warming. And some people may say, well, the solution is to scale back or even stop flying altogether. So we thought it would be good to put that question to a Quebec based carbon credit company, Planet Air, to get their take. And here’s what CEO Mark Parker told us.
Speaker 4 [00:14:52] Should you stop flying? It’s a complex question with no easy answer. But we do know that air travel is a significant contributor to carbon emissions. While stopping flying altogether may not be feasible or desirable for everyone. It makes sense to take climate change considerations into account when making travel decisions and to aim to reduce air travel whenever possible. When travel is necessary. By investing in carbon credits, you can support projects that reduce or remove carbon from the atmosphere, such as renewable energy or reforestation initiatives. This will help mitigate the impact of flights on the environment and support a more sustainable future.
Speaker 2 [00:15:34] This is such an important point, John, because when I again look at the second biggest contributor to my own carbon footprint, it is probably my air travel. So, you know, really we’re calling for two key actions. One, really think about your travel footprint and minimize it. Try to do as many meetings as you can in one trip, for example. But when you need to fly, think about ways that you can invest in the ecosystem that will have environmental benefits.
Speaker 1 [00:16:01] As well, said Lindsay. And I know you and I both lived and worked in different parts of the world, and we both love to travel with our families to continue to explore the world. And that’s a wonderful gift that we have the opportunity. But we need to be more mindful about the impact of our travel, not to stop it, as you say, but to be more thoughtful about the impact and how we can literally offset switching to a completely different field. Much of our recent research at RBC has been focused on the agriculture sector, and we thought it would be worth asking about cows in particular. We know cows are a significant source of GHG emissions and there’s all sorts of interesting technologies emerging that are starting to mitigate or abate those emissions. So we wanted to go back to a previous disruptors, guest John Van Logsdon Stein of Dairy Land Systems, to ask him, can machines and technology really capture those things that come out of cows?
Speaker 4 [00:17:01] Indirectly, yes. Directly? No. Unless you attach a balloon to the back of a cow somehow. But I would not want that job. Indirectly. We take the manure that’s generated from the cow, run it through a biomass plant, capture that gas in a large dome, and then use it for energy production purposes.
Speaker 2 [00:17:20] John, it brings us back to how we started the conversation on what is the role of technology. And never in my wildest dreams would I imagine that technology would exist to capture methane that’s released from cows that can actually then be used for energy production.
Speaker 1 [00:17:35] Well, it’s an exciting technology to watch evolve and scale. Anaerobic digesters are a significant opportunity for Canada’s livestock and dairy industries. It’s really interesting to note how the US is investing a lot in digesters through the Inflation Reduction Act, and Canada needs to match that to ensure that as long as we’re producing beef and dairy products, we’re doing it in the most sustainable way possible. It can even make us a competitive exporter to the world.
Speaker 2 [00:18:10] Last. John, I thought we should close on something a little bit more consumer oriented. We talked about it’s the start of spring, which is the start of barbecue season in Canada. And I’m sure many of us are wondering what is the climate footprint of all that propane we burn to power our barbecues over these spring and summer months? I’ve got four teenage boys at home who love to barbecue. What can you tell me here, John?
Speaker 1 [00:18:34] Well, it’s a great Canadian question, Lindsay. So we thought we’d go back to Rachel Doran, who answered our first question. Rachel’s from Clean Energy Canada and had this answer.
Speaker 3 [00:18:44] Overall, in the energy transition, we’re going to need to burn less stuff. So that means using an induction stovetop instead of your barbecue from time to time is a positive piece of the puzzle. So is switching from a gas powered car to an electric car, But how you can get at those really big and systemic changes is also thinking not just about what you drive or how you cook, but who you vote for and where you invest. This is how we get at some of the systemic changes that we need.
Speaker 1 [00:19:15] Lindsay, I want to seize on that last point about investing, because I’d like to wrap up with a question for you. As I mentioned in the introduction, you lead our sustainable finance work and oversee the $500 billion that RBC has committed to sustainable finance. What are your thoughts on Canada’s net zero transition and what are you hearing from investors as well as company executives and innovators around the world in terms of how we’re going to manage this transition?
Speaker 2 [00:19:44] The world of finance, John, is largely dependent on facts and figures. We love numbers, and what’s really exciting about the work that we are doing is we are integrating facts and figures, GHG emissions, our clients production plans, the capital that they need to invest in clean tech solutions and how that will generate incredible offsets that can be financed. So really what I see is that we are seeing a merging of the climate world and other social economic factors that can be quantified that do have value into the mainstream world of finance. There is a lot of capital we need to fund the transition to trillion dollars as you and your team have surmised for Canada about 50 times that for the rest of the world. But by integrating climate factors into financing decisions, we are taking a step to making these systems mainstream. And by doing that, we can accelerate capital to the areas which are part of the solution in a way that I don’t think we would have if we didn’t had the numbers associated with it.
Speaker 1 [00:20:54] So Earth Day, as we’ve heard through these conversations, is about technology. It’s about people. It’s about our choices and it’s about capital. All of those coming together, not just on Earth Day, but every day. Lindsay, you’ve talked about your kids in this program. I’m wondering as we wrap up, what your message is going to be to them on Earth Day 2023.
Speaker 2 [00:21:16] My message to them is, do everything you can. You have the power, have your own climate footprint. Factor into every decision you make. You have the power to make a change. Go out and do it.
Speaker 1 [00:21:29] It’s been great to have you on the podcast.
Speaker 2 [00:21:30] Lindsay Thanks for inviting me. I’m Lindsay Patrick.
Speaker 1 [00:21:34] And I’m John Stackhouse. This is Disruptors, an RBC Podcast. Talk to you soon.
Speaker 3 [00:21:43] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. For more Disruptors content, visit RBC dot com slash disruptors and leave us a five star rating. If you like our show.
- Check out RBC Thought Leadership’s The Next Green Revolution Project hub here.
- For more information about the University of Saskatchewan’s College of Agriculture and Bioresources, click here.
- Click here to learn more about CarbonRX.
Speaker 1 [00:00:01] Hi, it’s John here. Today, we’re taking on a slightly different topic for us here on disruptors. We’re talking dirt, but let’s be respectful and call it soil. We have a lot of soil here in Canada. In fact, our farmers have the 12th largest agricultural landholding on the planet. It’s a huge opportunity, both when it comes to growing food for an increasingly hungry world and also fighting against climate change because soil has an incredible ability to store carbon and it’s going to take technology and investment from a whole range of people to help generate what we’re calling the next green revolution. It starts with soil. And to help break it down for us, I’m joined by a special guest, my colleague, Mohamad Yaghi. Mohamad, welcome to Disruptors.
Thanks, John. It’s great to be here with you.
It’s great to have you on the team as our agriculture and climate policy lead here at RBC. I should point out, you’re also a farmer on the side, so you know a thing or two about soil. And I’m hoping you can walk us through some of the basic elements of soil and what’s called carbon sequestration in soil. When you’re looking at soil, the four most fundamental properties that you have to observe are MP K’s plus organic seed. What does that mean? And stands for nitrogen. And that’s largely responsible for the growth of the leaves on plants. Phosphorous, which is largely responsible for root growth. Potassium which is a nutrient that helps the overall functions of a plant. But then lastly, you have our organic carbon, which is fundamental to the overall growth of a plant. And you can find this organic seed everywhere around the world. One of the great opportunities in all of this for Canada is that big land mass so we can capture more greenhouse gases with the soil right across the country. If we reward farmers, particularly for protecting that land and preserving it while they also produce from it. What sort of things can farmers do to enhance the ability of their soil to capture greenhouse gases? Farmers have a wide variety of functions on what they can do on their farm to increase carbon sequestration their soil, and this carbon ultimately helps plant development. Certain practices like notes help, for instance, cover crops. The application of bio char all contributes to the increase in carbon sequestration. And this carbon sequestration not only helps to grow, but also keeps our planet cool. So all of this revolves around nature, and listeners may be wondering, what are you doing talking about nature on a technology podcast? So help connect those for us, technology and nature which do come together in this field. Absolutely. So I’m really excited about this because technology has a huge promise in helping us better understand not only our world but the dirt in it. In the past, we used to try to measure carbon in soil. Let’s say I take my farm, for instance. I would go to eight different places across the farm, collect six inches of soil, go to a laboratory, put all that soil on a tray, mix it together, and then put it in the oven to measure carbon. But what we can do today is so much more that we can start using satellite imaging data to use different light spectrums to measure carpet in soil today. So the farm of the past, they use a sensor to the lab doesn’t necessarily need to do so anymore with the promise of technologies such as satellite imaging. So on farm sensors, they can measure carbon in real time. Well, sequestering carbon in soil is a huge opportunity, both economically and environmentally. But much like farming itself, you just can’t plant the seed. The idea needs to be nurtured if it’s really going to blossom and make Canada an example that the rest of the world can look up to. This is Disruptors, an RBC podcast. I’m John Stackhouse. As I mentioned earlier, Canadian farmers manage the 12th largest agricultural land holding on the planet. It’s more than 150 million acres, and that land has the potential to sequester almost 40 metric tons of carbon every year. It’s a huge opportunity, but taking advantage will require a combination of incentives, education and technology. So to help us think through that challenge, I’m excited to speak today with two experts on the topic. In the second half, we’ll meet a Regina based carbon credit company that’s helping farmers keep their soil healthy and their farms profitable. But first, I’d like to introduce one of Canada’s leading thinkers on soil science. Dr. Angela Bedard-Haughn is a professor and dean of the College of Agriculture and Bio Resources at the University of Saskatchewan. Angela, welcome to Disruptors.
Speaker 2 [00:05:06] Hi, John. Thanks for having me here today.
Speaker 1 [00:05:08] Oh, it’s great to be chatting with you again. I want to start with a bit of your own background because I’ve heard you refer to yourself as a soil nerd. How did you first get interested in soil?
Speaker 2 [00:05:19] Well, I grew up on a farm here in Saskatchewan, about an hour and a half northeast of Saskatoon, and it was central to our livelihood, obviously. But I must confess, I didn’t give it a whole lot of thought until I was well into my university career. Took my first soil science class. And I just I was completely smitten with the whole concept because it allowed me to bring together my scientific training in terms of geomorphology and understanding how landscapes had developed and formed and the agricultural landscapes of my youth. And so from there, full steam ahead, just really trying to understand the drivers of the variability of soils across the landscape and how they function. And that’s been the path I’ve been on for the last 25 years or so.
Speaker 1 [00:06:00] A child of the soil, as they say, I don’t want to date you, but when you think back to your studies, was carbon sequestration a big part of the soil conversation?
Speaker 2 [00:06:12] It wasn’t a big part of the soil conversation, certainly not the way it is now. I think, you know, there was certainly an awareness of the importance of soil organic matter. Conservation tillage was already something that was pretty widely adopted here in the prairies, and so we understood some of those benefits. But in terms of all of the additional potential as a major offset for greenhouse gas emissions, those conversations, I think, were happening, but they were much more fringe.
Speaker 1 [00:06:39] Well, you mentioned conservation tillage. Some people like to refer to zero tillage, and it’s been widely heralded for many years as a victory in soil management. I’m curious how you’ve seen the evolution of attitudes towards conservation tillage or zero tillage from the seventies to where we are today.
Speaker 2 [00:06:57] I think some of the big pieces with that, I mean, first of all, it came about as more of a risk management tool, right? So when we think about the timelines for adoption, it was coming out of some of the really rough years in the eighties and looking at ways to allow farmers to mitigate their risk for erosion. For example, there are photos from the eighties that you would swear were taken in the thirties in terms of the clouds of dust blowing across the prairies. And so conservation tillage was one mechanism whereby by reducing that physical disturbance of the soil, we were able to allow the soil to essentially hold together better to aggregate, better to form these more stable chunks of soil in the field. And that, combined with the residues left on the field, made it much more resistant to both wind and water erosion. But as an added bonus, it also allowed the soils to basically accumulate more organic matter, which allowed them to retain more water and retain more nutrients. And so the more we understood what those additional benefits were and farmers started to see that value proposition, it really started to pay for itself in terms of a beneficial management practice here in the more semi-arid to subhuman parts of the prairies for sure.
Speaker 1 [00:08:07] One of the risks we think about a lot is the question of false precision in climate science, particularly on the mitigation and abatement side. We have a tremendous understanding of how certain technologies and processes work in terms of how they reduce emissions and capture emissions, but sometimes not as precise as all of us might like to believe. I wonder if you can give us a bit of a high level sense as a soil scientist of what we know and what we don’t know in terms of the power of soil to capture and sequester carbon.
Speaker 2 [00:08:42] Well, I know we don’t have a whole day, so I’ll just try and give you those really high level points. So when we think about how soils are storing carbon, I want to just step right back and think about it. First of all, in the context of this is a fundamental part of life on earth, right? So plants are undergoing photosynthesis. They’re capturing that carbon dioxide from the atmosphere, and it’s through the return of those plant residues to the soil, the decomposition of that material that we end up with carbon in our soil. And. A form of soil organic matter. So when you think about all of the variables that would be associated with plant growth across a field, and you add to that the variables that are driving soil development and formation across a field, you very quickly start to appreciate why we have these questions about precision. So if we think about spatial variability first, so when we look at soils just taking a few steps across the field, there can be a really high degree of variability depending on whether you’re on a slightly higher or slightly lower position in the landscape, depending what the management practices. All of these things are influences in terms of the spatial variability of carbon. And then we add to that the temporal variability, because carbon is not just a one and done thing, it’s part of the global carbon cycle. What we’re seeing in the soil is a picture in time. So every time we’re measuring soil carbon, some of it is stored longer term, but a lot of that is cycling annually. So to borrow from the banking analogy, at any given point in time, what we’re seeing is the net balance. We’re not seeing the gross amount of carbon that’s gone into and out of the soil. And so if we have a number of really wet years where productivity is really high, you’re going to tend to see more carbon going into the soil. We have dry years, you might have crop failure or less vegetation growth and that in turn is going to mean there’s less gross inputs in that particular year.
Speaker 1 [00:11:04] Well, I want to ask you about how we can organize ourselves better for this. But first, let me ask you about the challenge here for farmers. Are they going to have to go around their farms and Saskatchewan? Some of them run into tens of thousands of hectares, so they are massive farms scooping soil samples from each different type of field, Or are there other technologies available to make this more efficient?
Speaker 2 [00:11:26] There are a lot of technologies in development right now, and so we’ll get more into that when we talk about that organized piece. But as an example, there are proximal sensors that allow us to essentially, you know, stick a probe into the soil and not have to collect quite so many samples to have an indication of how much carbon is in in a particular location at a given point in time.
Speaker 1 [00:12:13] It sounds like the climate smart farmer is going to need to be as much technologist and data scientist as agronomist and farmer. Is that what you’re teaching in the school?
Speaker 2 [00:12:23] We are really getting to that point now where we have to be thinking about all of those pieces. And I think we’ve gotten to the stage where, you know, not everybody can know everything, but we’re trying to build more and more of that team mentality where at least we have enough common vocabulary. So our new precision ag cert is really aimed at trying to bring together engineers and computer scientists and agronomists and soil scientists to say, okay, you know, what’s the common language that we need? And then we’ll all go and work on our components of this particular problem. But no matter what, we’ll all be able to sit down together in a room and brainstorm on collective solutions.
Speaker 1 [00:12:57] Let’s turn to this question of organizing. All this sounds incredibly interesting and important at the farm level, but someone’s going to have to pull all this together in a broader market, but also ecosystem for farmers, the entire food supply chain. What do we need to better organize all the different people involved in this?
Speaker 2 [00:13:18] Couple of pieces, I think that are going to be really important. One is getting a better sense of who’s collecting what information, right? So understanding what data is being stored, where is there somebody who is collecting widespread data that can be used as a broader net to bring disparate datasets together to link those pieces? I think at the core, we’re going to need somebody taking that responsibility and saying, okay, this is important. We need to find a way to synthesize these data and we need that collective social buy in where people are saying, Yeah, will, I’m willing to share my data because I understand that this is part of that enhanced precision that’s greater benefit in terms of being able to quantify what’s happening out here.
Speaker 1 [00:14:36] Well, that’s one of the reasons we’ve been advocating this idea of a national soil strategy. In the research we’ve done in our Next Screen Revolution project, that collaboration with BCG and the Arrell Food Institute at the University of Guelph. We tried to explore the climate transition in agriculture and how the economy can support farmers and reward them for preserving soil, not just for what they produce. I wonder in your mind, Angela, whether it’s called a national soil strategy or something else? What it would need to include or address?
Speaker 2 [00:15:07] I think the key things that it would need to include or address really is getting that that solid baseline data in place. So understanding that there’s not going to be a perfect solution. I would worry that if we said, Oh, we got to wait until we’re in just the absolute perfect space to or start from scratch with a complete new national soil sampling strategy that we might lose out on an opportunity to build that momentum. So right now there is a lot of interest. There’s an understanding of the importance of soil. It’s central city to some of the major challenges that we’re facing climate, water, food security. All of those pieces are linked so intimately with the soil. And so that national soil strategy is, I think, one of the key things is timeliness. Right. Let’s not wait. Let’s get started on it. I think that’s the key thing.
Speaker 1 [00:16:01] Well, that’s a great note to wrap up this segment. Thanks so much, Andrew Luck, for being on disruptors.
Speaker 2 [00:16:05] Great. Thanks a lot.
Speaker 1 [00:16:07] Angela Bedard-Haughn is a dean and professor at the University of Saskatchewan. Please stay with us. We’ll be right back with the CEO of a company that’s been helping Canadian farmers manage carbon for more than 15 years.
Speaker 1 [00:17:02] Welcome back. Today we’re talking about soil and how we need to dramatically change the way we manage, view and value it. Our next guest is Marty Seymour. He’s the CEO of Carbon Rocks, which is based in Regina and specializes in the origination, digitization and streaming of carbon credits. Marty, welcome to Disruptors. Yeah, it’s great to be here, John. It’s great to have you on the podcast. Thanks for being part of it. I’d love to begin by hearing about your company’s background. What’s the CarbonRX origin story? We have an interesting one in the carbon spaces. My founders were part of the first generation of carbon credits back in all five or six, and they were operating under a trade name called C Green at the time. And why I love the story is they were, I would say, the pioneers in carbon when you think of Western Canadian farmers engaging in the system. And they ran that program until the financial crisis of 2008, and all of a sudden carbon fell out of favor. And so it made founder and chairman of my board often jokes. He says, I think I was 15 years ahead of my time. And so we brought carbon our ax to life a year ago in April to really take advantage of the tailwinds around the carbon conversation that was happening. And every event I go to, every conference I go to and to the point of your podcast, it’s a conversation that everyone wants to participate in.
At the same time, I find wealth farmers tend to be skeptical about pretty much everything, but they are skeptical. Whenever I raise the idea of carbon offsets and the trading market. When you think back to 2006 and the beginnings of carbon regs, how do you think farmers attitudes towards soil management and sequestration and then more broadly, carbon credits have changed? Well, I can actually speak to it firsthand because as we brought carbon credits back in 2022, I started to meet those original first generation farmers and I keep expecting to get blasted from these guys like, Oh, carbon was a rip off, didn’t work for me. I think the first users of carbon offsets and protocols at the farming level were innovators. They knew they were ahead of their time. The other I would say that the next part of the bell curve coming in to participate in carbon is what I call carbon. Curious is they actually don’t know. I’m finding as we engage in carbon credit trading is we’re building the industry in the language at the same time that we’re trying to build our companies. But most of the expertise in the space are three years old, two or three years old. You know, the epicenter of carbon was Alberta because of the oil and gas industry. But outside of that, carbon is pretty new in every remote corner of this country. There are many different kinds of credits as well and different kinds of carbon capture systems. You play in both the industrial and nature based systems. Give our listeners a sense of the difference. Yeah, I actually hold an office up the hallway from a group of engineers. They work for a company called Delta Clean Tech, and they’ve been at carbon capture for 17 years and I’ve learned a lot from them. In hydrocarbons, you can measure how much CO2 is in oil and gas before it goes through a process of refining. And you can measure how much is emitted into the atmosphere thereafter. And so that team puts meters on things to actually measure stuff. So I think the hydrocarbon industry is very sophisticated in knowing what they have at the beginning, in what they have at the end. I’m actually jealous because I spend a lot more of my time on what’s called nature based carbon, which is what our farmers do, what our force trees do. It’s nature’s way of harvesting carbon under the atmosphere. It’s a biological system, it’s highly variable, it’s highly dependent on a lot of different things. So it becomes a complicated measure, unlike my friends in oil and gas that I wouldn’t say it’s easy. It just feels easier. After you’ve been trying to chase plants around the field, trying to figure out how much carbon they’re capturing. You’re touching Marty, on one of the great challenges and opportunities in the space, which is known as MRV, the measurement, reporting and verification of what the soil is doing to capture carbon and other greenhouse gases. It’s still pretty nascent and there’s a lot of variability in measurement systems. How do you help people through that uncertainty or ambiguity, especially in markets where people like certainty? Yeah, I would say that’s the tension that exists in the carbon credit ecosystem right now is the difference between what a grower’s capable of measuring and managing to what a buyer’s expectation is. We need to move to a system where we’re using a lot more remote sensing and data as historically we drove around in trucks testing soil to measure carbon, and it was the most sophisticated, probably still defined as the most accurate. But it strikes me as ironic that we’re using carbon to drive around and measure carbon, let alone the cost implications and the lack of efficiency. And so we’re at, I’d say, ground zero on the application of remote sensing in agriculture, which I think allows us to scale. So this next generation of technology will drive the economics. And so there’s money left for the landowner, which will drive behavior changes, which will attract more money and drive more behavior changes. And like a flywheel on a car, it will gain momentum. And that’s the opportunity inside of carbon as it matures at the farm level. Walk us through, Marty, how you think this is. Going to work. When I try to simplify this in my mind, I can imagine the day where if I want to invest in a carbon credit, I go to someone like you, give you $100 and say, Marty, give me a certificate for this, and you’re going to go give that hundred dollars to a farmer, let’s say, to protect his or her land and demonstrate that they’re capturing Ph.Ds. Is it going to work that simply. No, it’s not going to work that simple, because if it would, we’d already have that in play. It’s why people are still carbon curious. There’s a whole bunch of complexities that I’m learning as I grow in this business too. But you take forestry, carbon and avoided deforestation. So not cutting down trees, there’s a value of that carbon to the buyers. Some people love that. There’s others that only want to buy carbon that comes from planting trees. In agriculture’s version, there’s zero tail farming practices, which Western Canada would be a pioneer in that. And you get into the cover crops conversation in southern Ontario and what you end up with is varying attributes of the carbon credits based on the system they come from. And there’s open carbon trading platforms because price discovery is a problem. Is a credit worth $5 or $10 each Carbon credit, based on where it comes from, has a story attached to it. My advice to growers is make sure your story is attached to your credit because it’s the best way for you to find a premium in your pricing. Tell us a bit more about what you mean by story. Is it simply the type of crop or the farming techniques that are farmers using? I think technique for me, John, allows more for a story. So regenerative agriculture is a term that that’s used widely if a practice is for generating soil carbon. That is a practice that a buyer sees value in more than reduction. Reduction is what the oil industry is doing is reducing the intensity, the carbon emissions. Farmers need to do that too, and how they operate. Removal is the Holy Grail. And so if you could actually say I’m taking CO2 out of the air and parking it in the soil for 100 years, those credits should be and will be worth more over time, because that’s what we’re really trying to do here as a carbon economy is true removal. So reduction is necessary. That’s companies reducing their footprint. But removal puts all the power in the landholder because there’s only a few places we can park carbon. The number one is in the land, in the soil. That’s where it came from. That’s where it’s going back to. I’m intrigued that you use the word story because that sort of connects with marketing and some of those is indeed about marketing. We’re all familiar with the hamburger ads that show cattle roaming open pastures, and that’s a farming technique and cattle farmers are rewarded for that. And the hamburger chain gets to maybe charge a bit more or at least market it differently, a sustainable beef. So there’s the value of storytelling through through a supply chain that’s a little different from what I might describe as an asset model where what the farmers doing becomes more of a financial asset through the soil, or they can convert the soil into a financial asset that they can then sell to anyone. How far off is it from the marketing version, supply chain version of this model to something more open ended? That would be soil as an asset. Well, in agriculture, we’re headed down that path where farmers can and should be rewarded for the good practices they do. They’re accumulating wealth in their soil as carbon. At the same time, being recognized for those contributions to the betterment of society in some sort of lending product or lending term. I think we’re in the earlier days where we’re really still marketing carbon on its attributes. So where did it come from? How much effort was put into capturing that carbon? And then and that alone appeals to buyers because it’s important differentiation that the voluntary carbon market is different than the compliance carbon market, voluntary market. Yeah, I really enjoy it because it’s really capitalism at its finest often described voluntary carbon as the kijiji of carbon. The buyer and the seller agree on the terms, and so as a result, it allows the buyer to create a story that allows the seller to create an expectation of how much rigor went into the credit. Was it derived from no till? Was it derived from the reduced emissions and build that compliment out. Over time we will get to where we start to see carbon as an asset in terms of the soil value, You know, I still self celebrate as a farm kid, John, and at its core the farmers I talk to aren’t necessarily interested in carbon as an asset. The revenue stream is really a byproduct of what they really want to do, which is improve soil health. Simply speak to a grower. When you talk carbon, they kind of glaze over because it’s new. They know they need to do something. But if you reframe it to say, do things that improve your soil health, farmers are up for that already. This is an exciting tech race and we always need to remind ourselves that it’s a global race and there’s lots of incredible things going on and high tech all over the world as we move towards close. Marty, I wonder if you can give us a sense of where Canada is positioned in the great high tech race and specifically in the technologies that are required to create these sorts of markets? Yeah, I have many thoughts on this one, John. In my past life, I used to help market beef internationally in other countries, and I learned quickly that the Canadian brand stood for something. It’s why we market our country as clean water, lots of trees, mountains and a very environmentally friendly place to live relative to others. So there’s a pent up demand to buy a Canadian based carbon credit simply because the Canadian brand stands for something. Overlay that to your question about technology and where it is Canada set. I actually think because we have such big broad acre farms in Canada, we’re the most likely place to pioneer remote sensing, our most likely place to pioneer robots where we’re trying to scale big acres, big volume, using technology to try to address labor time and certainly drive efficiency into the system. I’m in central Canada in Regina, and we’ve got a hub of ag tech going on right here where companies are innovating all the time, and it’s because they moved to Regina to scale these businesses, because our farms are 5000, 10,000, 20,000 acres big, and you can test your stuff on more acres. So can you be a front runner in this? Probably more of us is always next, bigger than us. But if you look at application of carbon technology, I’m feeling more lift in Canada. They in any other place I go Europeans they’re heavy on the regulatory the measuring side is through the validation really good at that. I think Canada is winning the race on tech. If there’s one thing we could do better to secure that race, what would it be? Well, I think we have to be prepared to experiment a little bit. John and I, I actually look to Canadian companies in this space. So the compliance market, the government, one that’s managed, is trading. It’s all based on emissions reduction and measured and supported by government. The voluntary market requires leaders is kind of a contrary opinion, John, as we often think at the grower level and getting them to use these things. I actually think big blue chip companies in Canada set the weather so companies that need to buy offsets need to look to Canadian sources first. And so to me, what Canada could do better is start by buying local because it’ll set the weather on how important carbon is and carbon management is. And more importantly, the two clients have a set of trust that allows them to build a story around the quality of credits so the both parties can feel good about the trade. Those are great messages to wrap up with Marty. Let’s set the weather and let’s experiment. Farmers experiment every season no matter what the weather is, and that’s not a bad model for all businesses across the country to think about as we get deeper into the carbon economy. Marty, thanks for being on disrupters. Thanks, John. It was my pleasure. That was Marty Seymour, the CEO and CEO of Carbon Racks. My thanks also to Mohamed Yagi from RBC and Dr. Angela Bedard Hohn from the University of Saskatchewan, who joined us earlier in the episode. It’s inspiring to hear people speak so passionately about something most of us probably take for granted. The ground under our feet. But it’s clear from these conversations today that Canada has a remarkable opportunity to lead the world in harnessing the carbon storing capabilities of soil. I was really struck by Angela’s comments about perfection being the enemy of progress. Every farmer knows this. None waits for the perfect weather or perfect precipitation to make the perfect tomato. They deal with the imperfections every day and every season. And as we develop these new models, not just of farming, but of preservation and conservation, we’ll need to be more comfortable with embracing a little bit of imperfection. And if we get the right mix of investment and technology and, yes, mindset, we’ll get to a place where every farmer can be a carbon farmer. They’ll need the right support from government, from private companies and investors to make it happen. But the opportunity is before them. And yes, underneath the fertile ground indeed. I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon.
Speaker 3 [00:31:21] Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by our audio for more disruptors content like or subscribe wherever you get your podcasts and visit our BBC.com disruptors.
John Stackhouse [00:00:01] Hi. Its John here. It’s only March and 2023 has been an incredible year for cyber attacks. In fact, the worst year on record. There are high profile security breaches that have caused serious damage to some of Canada’s largest companies, including Empire Foods, Indigo and Maple Leaf Foods, with costly impacts that are running into the millions of dollars. Cybersecurity has become an increasingly national security issue, too. And hackers are getting more and more sophisticated. We’re going to talk to some incredible leaders in the space. But before we get going, I wanted to turn to someone who knows more about cyber than almost anyone else I know. Adam Evans is RBC Senior Vice President and Chief Information Security Officer. Adam, welcome to the podcast. Thanks very much for having me, John. Adam As I noted in the intro, it’s been a year and we’re only in March. Give us a sense of the scale of what’s going on out there today. What I’ve certainly seen in the last few years, John, is what I would call the democratization or the commoditization of crime. What I mean by that is you’ve got threat actors that are operating in criminal undergrounds and they are commodities in criminal services. They’re offering up ransomware as a service breach, as a service malware, as a service, and they’re franchising out those services to other cybercriminals. So the sophistication required to execute an attack against an organization or an individual is obviously coming down. The barriers of entry into cybercrime are coming down. And at the same time, organizations like RBC or other businesses are digitizing and the bad guys are also digitizing. They’re leveraging things like machine learning and artificial intelligence and automation so they can attack organizations or individuals at scale. And to me, the last piece I should mention is that we as a society are putting more information than we ever have before online. So we’re creating this target rich environment. These guys can collect all this information at scale. They can tailor it as they set up their attacks against individuals or organizations, and that increases their success rates of successfully compromising an institution, a business, small, medium or large or an individual. So it’s sort of a perfect storm is brewing for certainly the cyber and in the underground marketplaces that they operate in. And yet, in spite of all those incredible threats, many firms are seeing security now as an asset. It’s a strength for organizations. Give us a bit of more sense of what’s going on there amongst those who are turning more to the offense, if I can put it that way. Yeah. So I think as we become more connected or interconnected and we’re doing more and more things online, we as individuals are taking an active role in our own security. How do we protect ourselves and our families? More online and organizations are going through the same thing. They’re becoming far more educated about how these threats unfold, the types of things that they are going to be managing as they operate their their businesses in this digital threat landscape. So as companies go through their digitization and we as individuals are becoming more interconnected, we need to make sure that we take an active role in how we protect ourselves. And obviously, the more knowledge we have about the cybersecurity landscape, the better off we are and the more secure we are. And that trust is now become an intrinsic part of the customer relationship with a business. Any business that you do transactions with and a bank is no different. So we are investing in educating not just our employees, but our clients and making sure that when they’re interacting with us as a bank, they’re doing it in the safest way possible. But hopefully they take those skills and that knowledge into their daily life and they’re able to protect themselves and their loved ones more effectively. I’ve heard you say, Adam, that were attacked every day, all day, which is daunting. Most organizations are going to have the resources to deal with that. What’s the future for them? So you’re starting to see more and more services that are available to businesses through, you know, the likes of the Microsofts of the world. So you can simplify some of your technology by allowing a company like the Microsoft with their cloud services to potentially give you some of that security inherently in the services that they provide to you. But I think it all comes down to risk. You have to understand the risk that you as a business own and operate. So you look at where your riskiest services or information assets are. You divert your resources to make sure that you’re protecting those resources from compromise, from inadvertent leakage. As you hire people into your organization and you educate them, they become the first line of defense. And it’s a very human centric security approach. What can we all be doing differently and doing better? Staying educated, I think is. The biggest thing is preparing for the when of it, not if it’s going to happen, it is going to happen. That’s a great point to wrap up on. Adam, thanks for being on disrupters. Thanks very much for having me. That was Adam Evans. RBC Senior Vice President and chief Information Security Officer, talking about cybersecurity during fraud prevention months. As we just heard, cybersecurity is getting closer to one’s core business, but it’s also creating a new set of challenges. It’s a risky new landscape, but with that, a large opportunity. This is Disruptors. An RBC podcast. I’m John Stackhouse. Joining us now is Michelle Zeitlin, a Saskatchewan born entrepreneur who is the CEO, co-founder and president of Cloudflare, a San Francisco based Internet infrastructure and security company. Cloudflare, among other things, blocks an average of 126 billion cyber threats every single day. Michelle, welcome to Disruptors.
Michelle Zatlyn [00:06:11] Hi, John. So great to be here. Thank you for having me.
John Stackhouse [00:06:14] I want to start with that number, 126 billion cyber threats every day. Give us a sense of where that’s coming from.
Michelle Zatlyn [00:06:22] It’s a big number. Sometimes it’s hard to process. I think maybe stepping back, the Internet is becoming more important to everyone’s life. And you just have to think about your own life to see how that is the case, where as individuals, we’re all spending way more time on our computers or in our mobile phones and then at work, we do so much more of our work in a digital environment. And so as all of us spend more time on the Internet, cybersecurity becomes so important because it’s all in this digital space. And what’s interesting is you see in this number 126 billion cyber attacks, that’s how many attacks we stopped on behalf of our customers yesterday. And so I think it’s a real testament to Internet traffic is up, which is great, and allows all of us to do a lot of different things and in a positive way. But at the same time, there’s a whole threat landscape that businesses and people have to think about as they spend more of their time online.
John Stackhouse [00:07:14] You may not have pictured that perfectly as the future when you and one of your Harvard Business classmates founded Cloudflare back in 2009. But today, I believe it’s somewhere in the range of 20% of global Web traffic runs through your servers. You have some pretty unique insights. Given this reach, can you share some of those in terms of what the biggest changes are that you’re seeing out there, both in security and resilience?
Michelle Zatlyn [00:07:40] For sure. For sure. Well, the first is that because Internet traffic is up, so are just general online risks. And so if you look over the last year, cyber attacks globally increased 40% year over year in 2022. One of the other interesting insights is 90% of those attacks start with a phishing attack, which basically means 90% start with a person, an individual. We’re seeing some of the biggest attacks we’ve seen. And then a bunch of these attacks start with the individual who often are employees at a company and saying, well, there what are the implications around that?
John Stackhouse [00:08:19] Where is the increase in attacks coming from?
Michelle Zatlyn [00:08:21] They’re really broken down into three main areas. The first is Adidas attack and Adidas attacks. It’s called a denial of service attack. Making it hard for a business was an online service. They kind of knock it offline. A good analogy is if you’re going to the bank to try and get money out of the ATM. And there were 100 people in front of you, but they’re actually not taking money out of the ATM. 100 people in front of you actually aren’t legitimate patrons and you’re stuck 101 in line, can’t get access to the ATM. So in the digital world, that’s called the dial service attack. And that is one source of these of these increased threats where we’re just seeing a lot more DDoS attacks against businesses. And the good news is if you have the right solution, it’s very easy to deal with it. But there’s just a bunch of businesses that haven’t gotten to putting in the right solutions yet. And so they’re very prone to it and so they’re very effective. The second rise comes back to people, and as we all work from everywhere and before, you know, a few years ago, you basically went into an office building and the office building was very secure. But now there’s a lot more of a hybrid work structure where we’re doing work from our homes, from our cars, from coffee shops, as well as an office buildings. And so some of the attackers are taking advantage of that. They’re seeing it as an opportunity where all of a sudden my hybrid work setup isn’t as good as where it was when I was going to this fortress office building every day. And so there’s a big increase in targeting individuals, and it’s been a pretty effective. The third one is around ransomware. And if you are a business who receives a ransomware note, I can promise you that is not a good day. It’s very violating. It’s very stressful for your team and often you have very little time to make a decision about what you’re going to do. And if you’re not well prepared, there could be a lot of consequences to those decisions that you make.
John Stackhouse [00:10:08] I would not want to wish this on anyone, but if it does happen to someone, what should people think about and do in those early moments?
Michelle Zatlyn [00:10:15] So step one is you something you write about in the news to ask yourself, How would we have fared? And you will learn a lot both. You either feel better being like we would have fared really well, or actually it exposed all these gaps. And now let’s go fix it. So get ahead of it If you don’t get ahead of it and these things happen, let me tell you, those ransomware attacks, those emergency situations, John, always happen on a Friday evening or a Saturday, always, because teams are less staffed up. You can’t get the right access to the right people internally. They’re not available. They’re out enjoying their Friday night or they’re sleeping or they. Went away for the weekend. But if you do find yourself in this unfortunate situation, don’t pay the ransom. It’s really hard. You kind of want to call some experts to get some help and do some smart things to get ahead of it. There’s lots of great vendors who are out there to help advise and say, here’s what you should do, and then share the information so it doesn’t happen to others. A lot of organizations don’t call anyone for help and they try and deal with it themselves cause they’re worried about the media headlines. And I think often they end up in a really tricky situation when they follow that playbook.
John Stackhouse [00:11:19] This really is war. And I got to hear your co-founder, Matthew Prince, talk a bit about this at Davos a few months ago. And he explains Cloudflare is role in the Ukraine conflict, which is a pretty incredible story, both in terms of what you’ve done to help Ukrainians up their cyber defenses, but also help Russians who want to get around Putin’s firewalls. What does Cloudflare learn from the conflict that may be relevant to cyber conflicts everywhere?
Michelle Zatlyn [00:11:49] You know, it’s interesting. It’s awful. At first when the conflict happened, there was a lot of speculation that there would be massive attacks against Western businesses. And I don’t think there have been massive attacks, mostly because everyone’s been really busy with the on the ground conflicts. But we do see an increase in probing. And what’s interesting when you look at the data, John, is you would say, okay, the attacks are coming from Russia towards these Western businesses or countries. It’s not like that. The source of the attack is from many Western countries around the world, and it’s not like Singapore is doing it, but they have some devices that have been compromised that are being controlled somewhere else. And so the source of the attack actually is coming from within Germany or within Singapore looking for these vulnerabilities, but being controlled elsewhere. And that’s why sometimes trying to understand who’s behind the attack is actually a very hard question, because often the resources being used to launch it are in a physical, different location, often a physically different country than where the person who is controlling it. That’s what we’re seeing, where they’re using compromised resources around the world to look for these vulnerabilities and probes. I guess what that means we can all do or a couple of things. If you run your software updates individually, super important, like run your updates, that’s a really good security practice. And if you’re a business, there’s some messaging around it shields up making sure that you’re learning from other companies and what’s happening and using this time to do your own review of saying, okay, if this happened, how well are we prepared, Where are we strong, where we weak? What are we doing to close the gap? You’ve got to be having those conversations internally, otherwise you will be compromised and it will be a Friday night and it will then be an emergency.
John Stackhouse [00:13:35] We’ve heard in a few conversations now this idea of cyber culture, and you get to see a lot of organizations. What do the ones who have a strong cyber culture do? Right?
Michelle Zatlyn [00:13:46] It’s really this idea of it’s everybody at the companies job, not just my team’s job. And so whether you’re in marketing or sales or even security team, of course, the security team keeps the company secure. But they talk about it internally. They do training internally. There’s a mechanism to say, hey, this looks strange, even if it ends up being not a real security vulnerability versus not. I think that internal training is really important. And then the second aspect is really cross team collaboration. It’s often security teams partnering with the IT organization, with the engineering organizations saying, Hey, I understand we have this vulnerability, okay, what are we going to do to close it? So this internal collaboration and then the third piece, John, is really learning from other people’s mistakes. Sometimes they’re very public and that can be hard to read about and say, okay, using that situation, say, would we have been better prepared? What are we going to do about it? And then in the in the security world, there’s a lot of private conversations that take place to and being part of those conversations, but really saying how do we rise all tides? This is an evolution. You’re never done. You’re never 100% secure. It’s a never ending conversation. But having a system saying, okay, how are we doing? How we tracking? And if you just have that iteration in evolution, all of a sudden you’re in the top quartile trending really, really well and defending not only your customers and your employees from attacks, but protecting the business. That’s a really good cyber culture.
John Stackhouse [00:15:09] Michelle, you shared some great insights as well as advice. I wonder if we can wrap up with some thoughts on where you see things going from here. Cloudflare has a great purview of the entire world. Where do you see things going, not only through the rest of 2023, but in the years ahead.
Michelle Zatlyn [00:15:28] So right now what I see is we are going to continue to hear about breaches and cyber attacks. They’re not going away anytime soon. And we as people and businesses have to take it seriously. Now, here’s the good news. I have two pieces of good news. The first is I do believe that the solutions today are much more effective and more. More economical than they were five years ago. There’s a lot of easy to use, very effective, well priced solutions that really make it easier for businesses and people to take these things more seriously. I am hopeful as more organizations and people, as all tides rise, we learn more. We realize this is something that we just as we spend more of our time digitally, this is just part of doing business digitally and that’s okay. And our norms get more baked in. And as more organizations have layered in the security that was to be completed at a later date, like they’ve put that into their into their organizations, that five, eight, ten years from now, the whole Internet has been fortified and we are in a much better place collectively. And then there’ll be some new trend to have to deal on. But that that is kind of my prediction for the future. But right now, you got to take it seriously. And if you’re not, it’s like your organization. If you’re on a team within an organization and then you individually, we all have a role to play.
John Stackhouse [00:16:44] Everyone be on high alert, but there is hope on the horizon. Michelle, thanks for being on disruptors.
Michelle Zatlyn [00:16:50] Thanks for having me.
John Stackhouse [00:16:52] That was Michelle Zatlyn, COO, co-founder and president of Cloudflare. Canada is home to some great companies fighting the good fight, including Fredericton, based booster on security. Joining me now is David Shipley, both Orion’s founder and CEO. David, welcome to Disruptors.
David Shipley [00:17:09] Thanks for having me.
John Stackhouse [00:17:11] David, let’s start with the name Beauceron. There’s got to be a story behind that.
David Shipley [00:17:14] There actually is a bowser on is a sheepdog from northern France, and we named our company after this great breed. In honor of something we called the Sheepdog Effect. How do we turn people from the passive victims of cybercrime into the active defenders, from the sheep to the sheep dogs? Now, we would have picked sheepdog security, but the name was already taken. So we were down to two dog breeds. And as the boss, Ron had the right breed characteristics and a little nod to new Brunswick’s bilingual nature. We thought a French sheepdog would be great. We never anticipated that it would be pronounced hilariously around the world, and nor do we anticipate that gentleman from the coast region of Quebec are also known as both sirens, which we are glad to to also acknowledge as well.
John Stackhouse [00:17:56] Well, you had me a sheep dog. That’s a great introduction to the company. And I wonder if you can tell us a bit about yourself because you’ve been referred to as the accidental cyber CEO. How did you get into the sector?
David Shipley [00:18:07] So I’ve been a Canadian Forces soldier. I was an armored driver and gunner. Then I became a newspaper reporter after I graduated from university covering business, crime and politics. I left that to become the Digital Marketer website lead for the University of New Brunswick. And on Mother’s Day 2012, we got hacked by a hacktivist group called Team Digital. And on that Sunday morning, I was out walking my Greyhound and I got the nasty note from the attacker saying, We’ve posted your stuff to pastebin your IT admin suck. So I called my friends in the IT department who I worked closely with and said How can I help? And I used the skills I had from the military and from communications to help do what we would now call incident response. And from that experience I learned that cyber is more about people, process and culture than it ever is about technology. And so that’s where we went down the journey of focusing on the human side of cyber.
John Stackhouse [00:18:55] As a great point. And I’m sure we’ll get more into this, that cyber is much more about people than technology. One might say the same of real military conflict which you’ve been exposed to. What are some of the similarities and differences, David, between classic military combat that you trained for and the cyber world that many of us did not prepare for?
David Shipley [00:19:16] Well, in a firefight, you see the bullets coming. You know where your enemy is In the heat of all that in cyber, you don’t see the shot coming until it’s too late. It’s a lot more subtle. And what we’ve learned from the conflict in Ukraine is that cyber conflict is best in the period between peace and war. That gray zone when hostilities are escalating. And you can see that in the in the experience of Ukraine from 2014 right up to the launch of the invasion in 2022, they used it for intimidation. They used it to cause economic harm. So cyber is highly useful as a political tool, as an espionage tool, as a public influence operational tool, but as a destructive tool. It has not fulfilled that, that clear, easy to use operational purpose.
John Stackhouse [00:20:04] Why is that?
David Shipley [00:20:05] Well, because if you’ve got a relatively good defense behind it, it can take a long time, months or years for a team to get lucky enough to break in. Because keep in mind, most times when you break into an organization, it’s through the use of social engineering. So phishing emails, text, phone calls, etc.. But 80% of the time you’re not finding some obscure bug in a firewall. You’re getting someone to click on something in an email. And depending on how good the organization is, you may get a one in five chance where someone falls victim and then you’ve got to get by all the security tools that might catch that on the way through. So it’s tough.
John Stackhouse [00:20:43] This has been an extraordinary year. Every year seems like that in cybersecurity. But this. Truly has been. What are you seeing or realizing today that you might not have appreciated a year or so ago?
David Shipley [00:20:56] I think, number one, the focus that Ukraine put on basic cyber hygiene, the core fundamentals of of patching systems, educating users and multi-factor authentication. I think the other thing is it really did crystallize how long it takes offensive cyber operations to actually succeed. They don’t work at the same pace or tempo as physical conflict. The other thing that I wonder about is how cyber will be used in different ways to help Russia’s economy during this period of prolonged sanctions. And for those who aren’t familiar. Russia has very interesting relationships with a number of the large ransomware gangs, and these gangs build the criminal infrastructure, the evil cloud, as it were, of tools that are then resold to people around the world to execute extortion crimes and more. And they’re being used more and more to bring in desperately needed cash to the country. North Korea is also doing the same play. Iran is starting to in the same work where they’re not hacking to necessarily kick off a fight with the Western world, but they are hacking to get the money they need to continue their other conflicts.
John Stackhouse [00:22:04] All of this can and should be seen as extremely threatening to individuals or organizations. And we all probably need to be doing a lot more to protect ourselves and those we work with. There’s also a lot of organizations out there that see this as an opportunity as well. The cybersecurity can be an asset. That’s something to invest in for growth, not just for defense. When you work with organizations in a range of sectors, what kind of growth mindset are you seeing on the cyber front?
David Shipley [00:22:35] So I have the privileged position of being the co-chair for the Kenyan Chamber of Commerce Cyber right now council. And this is a group made up of all kinds of cyber businesses of different sizes, everything from giants like Microsoft and Amazon to companies like Beauceron to Phenomenal Made in Canada Cybersecurity stories like BlackBerry, which a lot of people don’t realize is a huge player now in cybersecurity. And we look at this as a massive economic opportunity. Canada has a phenomenal, trusted brand in the world, and we build amazing products. You’ve got great companies like one password, which is, you know, what we would call a unicorn. You’ve got East and Tiger out of Waterloo, Field Effect out of Ottawa, you’ve got VeriFone, which came out of Atlantic Canada, which had a massive sale to Nasdaq, which helps with online fraud and other other types of crime. So we we punch way above our weight. We’re in the top five in the world when it comes to companies making cybersecurity solutions. What’s really interesting is in it world, Canada just did a good job highlighting this is we’re abysmal at buying our own stuff. Well, the world is actually doing a lot of buying Canadian, but back here at home, particularly the federal government, it’s it’s not even remotely a priority, which is just kind of interesting and and it kind of fits a narrative. We we very rarely see how clever we are as Canadians. We often look across the border, what are they doing in Silicon Valley, etc.. But the reality is we’ve got amazing talent here.
John Stackhouse [00:24:02] Give us a better sense of why Canada has that capability. How did we get into the top five?
David Shipley [00:24:07] Well, interesting that there’s a there’s a bit of a tie here back to New Brunswick. So one of the first major cybersecurity exits in Canadian history was to radar, where Q One Labs, which is bought for IBM for more than $600 million and was part of a pair of exits featuring multiple founders that amounted to almost $1,000,000,000 in exits from tiny New Brunswick. And that started back where I started at the University of New Brunswick, where they were trying to keep their network running because residents kids kept crashing it and they had to figure out what was going on. And we’ve done a really good job of being on the bleeding edge of using the Internet. And and I would say we, particularly in New Brunswick, we embraced the Internet like no one else. We had the first broadband to the home in this country in the nineties. We had fiber going here and that meant we were also on the leading edge of seeing all the bad things that come with the Internet. And I think Canada’s climate plays a role. We’re online quite a bit. Why? Because the weather’s terrible a large part of the year. So, you know, we’re digital citizens and I think we’ve learned a lot of lessons from that.
John Stackhouse [00:25:10] Yeah, I would talk a couple of points up to immigration as well. And there are New Brunswick has been a leader, ironically, with a lot of Ukrainians coming to New Brunswick and the UNB in particular, that the cyber cluster around UNB that helped to accelerate some of that growth well before the war. And I imagine that will continue. So being a talent magnet is critical. What more do we need to do? You mentioned government procurement as a clear step. What else can Canada do to stay in the top five or even become a more dominant player in that in that elite?
David Shipley [00:25:43] Well, I think I think for me, the most important thing that Canada needs to do is put. In place. The the regulatory guardrails are going to help us be successful economically, not just in cyber, but in every other sector. Right now, Canada is lagging behind the world, and whether it’s in online privacy protection, when you look at Europe and GDPR, which hilariously is based on a principle called Privacy by Design, which was Dr. Anne CAVOUKIAN in Ontario, the former private information commissioner. So we we invented the gold standard of privacy, and we still have not implemented it here in Canada. And we’re years away from doing that. And the problem with that is if companies aren’t sent the right signal about protecting data, then all the other pressures that a business will face will override that. Now, the other part is, is unleashing more cyber talent. There’s a three and a half to 4 million worker shortage in cyber, and we have amazing programs in Canada. The leader in this is Toronto Metropolitan University’s Rogers Cybersecurity Catalyst, and it has created the gold standard. I had the privilege of being in a meeting with some of those folks and some of the folks from the White House Office of the National Cyber Director, and they were learning from some of the great things that we are doing in Toronto.
John Stackhouse [00:27:00] It’s interesting, David, how you frame the opportunity as well as the challenge around privacy. I’m intrigued when organizations and I think it’s pretty much all organizations now project themselves or present themselves as being a data organization or a data company. And with that comes the imperative, but also the opportunity to see privacy and cybersecurity more broadly as an asset, as a corporate strength. It’s not a cost of doing business, of course it is. But the more you invest, the greater that asset grows. As you work with companies in all sorts of sectors. What do you find most compelling to the operators in terms of re-imagining themselves as not only a data company but a cybersecurity, large privacy minded company?
David Shipley [00:27:47] I think what gives me hope and inspiration for companies is that they’re realizing that being secure can be a competitive advantage and respecting people’s privacy can help build better relationships and longer term brand loyalty, which is awesome. But there is a bit of an interesting cognitive dissonance between that thinking and the siren song of Big Data. So what we’ve heard for a decade, you know, if you if you keep it, if you hoard it, if you’ve got it, sooner or later, some magical I might unlock some hidden insights into that data. Except that ignores that there’s a portion of data that has a declining value or it actually becomes a liability and not an asset. And we we jokingly call it zombie data because it writhes in the grave in a data breach and it bites you in the backside. It’s the data that actually did not have the value that you thought it had, that if you had tighter retention policies, if you really went to minimum viable data, that in the event of a breach because you didn’t retain it anymore, you couldn’t lose it. And so there’s going to be an interesting tension between the drive to find greater businesses, efficiencies, insights and whatnot with the reality of dealing with these kinds of issues.
John Stackhouse [00:29:01] We started the conversation talking about both runs origins. Tell us as we wrap up about where you see the company going in the years ahead, where do you see the greatest opportunities?
David Shipley [00:29:10] It’s interesting that the human side of cyber is responsible for over 80% of all security incidents, and yet less than 1% of cybersecurity spending are the 175 to $200 billion on cyber is spent on people. And what we’ve discovered within organizations is that when you help them know more and care more about security, not just take mandatory annual compliance training or do phishing exercises, when you go further and say this is how you be successful at your job here and teach people how to use these tools, and this is why security matters to our executives, you end up with a stronger business, and that’s the mission that we’re on. When we talk about the sheepdog effect, it’s not just about reacting to in bad Guys Attack. We’ve built resilient, great businesses that people can rely on.
John Stackhouse [00:29:55] What a great message to wrap up with. David, thank you for being on Disruptors.
David Shipley [00:29:59] Thank you so much for the opportunity.
John Stackhouse [00:30:01] That was David Shipley, founder and CEO of Beauceron Security. I’d also like to thank Adam Evans and Michelle Zatlyn, who joined us earlier in the podcast. Cyber threats have been around for as long as the Internet, but things have really changed in the last few years, both with the pandemic and the conflict in Ukraine. The rush to work from anywhere, shop from anywhere, entertained from anywhere, created all sorts of opportunities, but also put organizations and all of our data at a new threat level that we’re just coming to grips with. The economic consequences have also grown as criminal gangs and even nation states have seen all sorts of new opportunities through ransomware and other cyber threats all the while. As we heard on this episode, dark forces in the world have gotten better and better, but so too have the capabilities of all sorts of organizations that are on the front lines protecting our data, protecting our devices pretty much all day, every day to battle that, as our guest said, may never end. But it’s also a battle that Canada can play a special role in. If we leverage our talent, our tech capabilities and knowledge to turn cybersecurity challenges into opportunities that will make the Internet safer for everyone. I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon.
Announcer [00:31:30] Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by Jar Audio. For more disruptors, content like or subscribe wherever you get your podcasts and visit rbc dot com slash disruptors.
Speaker 1 [00:00:01] Hi, it’s John here. 2023 is shaping up to be another tough year in tech. In the U.S. alone, more than 100,000 tech workers have already been laid off this year. Google, Microsoft, Amazon are just some of the giants that you’re seeing in the headlines shedding thousands of jobs in the last few months. As an onlooker, things appear to be pretty dreary. But how does it look from the inside? I’m in California at the C 100th annual summit asking just that. Canadians those are the C in the C 100 have gathered in Silicon Valley to talk about the tech climate. How bad is it? What do entrepreneurs have to be mindful of? And are the worst of the layoffs over? Maybe a self-correction was overdue. Maybe this is time for new companies to shine. Let’s remember that General Electric, just one example, was founded during the Long Depression. Hewlett Packard was founded during the Great Depression and Microsoft was founded during a recession in the 1970s. In Canada, Hootsuite and Shopify are among the many tech companies founded during recessions. So what better time than now to create and innovate? This is Disruptors, an RBC podcast. I’m John Stackhouse. Today, I’m reporting live on location from Silicon Valley to get a snapshot of the tech sector through the eyes of Canadians. In the thick of it, I’ll be speaking with founders and venture capitalists for their thoughts and insights. But first, let’s get a sense of the landscape from Andre Sharrock. He’s a managing partner at Maple VC, a venture capital firm with Canadian roots. Andre, welcome to Disruptors. Thank you for having me here. Andre It’s been a rough start for many in the tech sector to 2023. The recent lay off announcements all carry a sort of theme of Oops, we over hired during the pandemic and now we have to scale back. People like Mark Zuckerberg are admitting it. Microsoft, too, Is the worst over? No, that is a great observation. It feels like everyone made the same mistake in a way, and they’re correcting for it and they’re all saying, Oh, it was my fault, right? They over hired. ET cetera. It’s not over for tech in any shape where form tech really propels or excels in an environment that we are entering. Right. Like if you look back in all sorts of moments of downturns over time, the best technology companies are created in these times. Why is that? Well, one is capital efficiency, profitability, things that we are hearing now that matter more than ever before that are frankly fundamental and important for building business and profitable commerce. At the end of the day, and so for sustainable businesses to matter in this world, capital efficiency is important. The other that comes to mind is focus. When you have a ton of capital at zero cost, everyone and their mother has an innovation lab and oh, there’s this department. And I was speaking to a prospective LP, they were doing a tour of one of their portfolio companies and the CEO was doing this tour of the office and they skimmed by a room and they were like, Wow, there’s a lot of people over there like, What are they doing? And the CEO could not communicate or articulate what that team was doing. And that is like that. That is an example of the times we came out of capital wasn’t properly being allocated. Yeah, many people forgot that technology is a business, right? It’s not a charity. It’s not religion, it’s a business. Right. And so business discipline is back. Yes. You’ve been through cycles before. A lot of the entrepreneurs I’ve been talking to seem to have suffered, and they now recognize they suffered from two binges in 2020 and 2021. One was the hiring binge, one was the capital binge because money was free. So it was easy to raise. And because of the pandemic and so much changing all around us, everyone went crazy with hiring. In some ways, as painful as it is, you can adjust to the hiring binge more easily than you can to the capital binge. And that may be one of the challenges I’m hearing for the year ahead. People are going to be hearing a little more stern words from their investors, saying your runway is not infinite. What do good entrepreneurs and great founders need to consider as they kind of stare at that somewhat limited runway of on the capital side? So to set that up even further. Last year, no one really went to the markets as much, at least in the earlier stages, where I play because everyone had 24 months of runway or plus. So let’s not let’s not mess with this environment right now. We’ll wait till next year. But to your point, rightly so. Well, of course, next year you’re going to this year, i.e. you’re going to have 12 months of runway. So guess what? You’re going to have to go to the market. And that valuation you got with that runway that you touted last year, well, the economy changed. So your contracts that you thought you were going to close are not closing. Now, some can get very creative. I think the best founders will find ways to make money, maybe from customers they didn’t think would be customers or didn’t put an emphasis on or a priority on or whatnot. And so I think some of the best founders will find a way to make money a B, now that they’re running out of cash, it’s okay to do A down round. You know what no one talks about matters down round in 2009. We should talk about that. I don’t know all the details because it wasn’t talked about, but some of the best companies in the planet have down roots. It’s okay. And my message to the VC is, and speaking also to myself is don’t put a bunch of structure around that. I like If you are in the world of venture, the game is about upside potential, not protecting downside risk. At the end of the day, one or two or some small relative small percentage of your portfolio will outweigh all the losses. And so while you shouldn’t reward the founder with the same valuation and that’s completely fair, I think founders should be open to down rounds and VC should be open to clean terms on those down rounds. And then we will we will grow out of it. Can you explain, Andre, to our listeners what a downright. Is and why it matters to a to a startup. Sure. And so a valuation is ultimately implied at the earliest stages, less so on the fundamentals of the business, right? These businesses are either pre-revenue or very inconsequential revenue, so you can’t really give them a revenue multiple to imply a valuation. And so the valuation is really comprised of how much someone is willing to pay on the investor side and what the founder is willing to give up on the founder side. And that math take one and divide it by the other implies the valuation. And so while that is effectively a vanity metric, founders ultimately want to see that valuation going up. It does imply what they physically kind of on paper own of this business. And so when a valuation is 100 million due to some infusion of 10 to $20 million of cash, a down round implies you’re going to do that at 80, at 70 at 50 half of your valuation, and that will signal to the market or you think it will signal to the market. You know, my company is not doing well. But again, I emphasize that that metric was a vanity metric. You could actually have revenue going up if you could talk about your revenue or talk about the amount of engaged customers or users or whatever that number actually might be going up. How about we get to a time and I think we might be entering that time where people talk about an actual business that is solving a customer’s problem and as a bunch of customers paying for that problem, does the way we solve that problem and by the way, that’s going up and right now the markets don’t see that and we understand that, but we have a long view. And so we raise that a down round, you know, 30, 20%, 60% down. But we have a long term view and we’re solving customers pain points and we will get there and eventually the valuations will catch up to underlying business performance. You’re an optimist. And one of the things that always inspires me in Silicon Valley is it is it’s a place for optimists. And even in these dark moments, people here are more optimistic than people outside the valley about the Valley’s prospects, about tech prospects. What gives you what gives you optimism? The biggest outcomes in tech happen at major shifts, And so us VCs, particularly those in Silicon Valley, have been waiting for a shift to happen for the longest time, and it was been a head fake in 2020, 2016, 2017. Well, now we have a real shift finally after 1213 years. So when there is an economic shift.
Speaker 2 [00:08:56] Pair that with.
Speaker 1 [00:08:57] A technological shift like the last time we had this was in 2008 was nine when there was also an economic shift combined with a mobile shift. We are seeing that with generative AI and this economic shift. And like when those two things happen, historically the best things are created. And so like we are giddy, like we are really excited that these moments have presented itself for the best values to take advantage of. So we’ve got a technological shift, an economic shift, a capital market shift, one might add to that. So the shift is on. The shift is on. Andre, thanks for being on disruptors. Pleasure to be here. Next up, I’d like to introduce Chris Arseneault. Chris has more than 25 years of experience and is the co-founder, president and CEO of Adobe Capital. Chris, welcome to Disruptors.
Speaker 3 [00:09:45] Thank you very much, John.
Speaker 1 [00:09:46] It’s great to be with you again. I don’t want to age you, but you have lived through a few tech market downturns and that includes the dotcom crash from way, way, way back when wondering how you’re seeing this one being any different.
Speaker 3 [00:10:01] What’s interesting is that it’s totally different and it’s exactly the same. There’s a lot of elements that touches the emotional front of decision making for an entrepreneur and for an investor. That’s literally the same roller coaster that you’ll see in any events like this one. And at the same time, everything is different because all of the data is different, right? So you have to adapt.
Speaker 1 [00:10:24] How would you describe most of your conversations with entrepreneurs as we look deeper into the year?
Speaker 3 [00:10:29] So entrepreneurs are kind of like trying to figure out how do they stay in the driver’s seat, how and when to raise, what type of relationship do they really want to have with their cap table and their numerous investors? What has happened from our perspective over the last year is that entrepreneurs that had maybe five or seven investors on a cap table, they’re choosing one or two with who they’re really going deep, deep in decision making, deep in reviewing their strategy, reviewing their burn, considering lower growth, but with confidence, it’s hard to do reviewing their mains and how to basically build a company when everything is changing rapidly under their feet. Right. So I think it’s a unique time in the market to actually build strong relationships between investors and the entrepreneurs and between boards and the entrepreneurs, because this is a time where you have transparency like never before. You have honest. Russians. You have time to actually do due diligence. You have time to actually review what’s going on in terms of the plans of the of the business. And you have time to build trust. So this is a unique time to figure out with who you want to work with. And that’s equally for the entrepreneur as much as the investor.
Speaker 1 [00:11:46] That’s a great expression. You have time to build trust. A lot of entrepreneurs may not quite see it that way as they’re scanning their cap table, thinking about which investors to spend more time with to try to deepen that trust. What sort of things should they be thinking through and looking for?
Speaker 3 [00:12:04] Well, some entrepreneurs right now are still scratching their heads because their first time entrepreneur, they’ve only been in the market for the last 5 to 7 years and they’re like, hey, investors were willing to pay 30 times IRR. Why are they barely wanting to be ten times now? Like, why did that shift happen? And what does it mean for me, right? So building trust basically means understanding where the entrepreneurs are coming from, why they’re there, they’re interested in investing. We’re continuing to invest in your company, what they’re willing to do over and beyond, just putting in capital to help you become successful.
Speaker 1 [00:12:39] For founders who are facing those kinds of pressures and no doubt lots more, what kind of advice do you give them just in terms of managing their own psychology, their own emotional state, but also their business brain through more challenging times than many of them have probably ever seen?
Speaker 3 [00:12:54] We often talk about optionality, and optionality basically means a way for founders or the executive leadership team to stay in the driver’s seat. What does it mean? It means you have to take the hard decision in terms of your burn. And most of the company’s burn comes from compensation, right? So it’s the salaries that are the bulk of the burn of the company. So you have to take the harsh and hard decisions with regards to your own roadmap of product, of hiring, of letting go, reorganizing that helps you stay in the driver’s seat. You also have to decide what type of company are you going to be, not just now, but in the future. And sometimes in order to be able to be there and be in good shape, in order to execute on the long term vision of the company, you have to take different type of decision in the short term. And there’s no easy decision here. It’s tough.
Speaker 1 [00:13:50] Yeah, nothing is easy right now, it seems. How long do you figure this will go on?
Speaker 3 [00:13:55] Well, we already are starting to see a shift. I think there’s still going to be a lot of layoffs in tech this year because of companies that didn’t take the hard decisions last year. They burned through even more cash and now they’re forced to take, you know, decisions that are even more radical. So we will see more layoffs. But net net, we still came from an industry in a world that was hiring at high, high speed and at a higher pace. I just looked at the I know, a portfolio of active companies. At the end of 2021, the active portfolio had 15,000 employees. At the end of 2022, they had 16,000 employees. So even though there was over 2500 layoffs, we still net hired close to a thousand people. A lot of the roles that were let go either are finding jobs in other industries. Therefore, they’re we don’t expect that they’re going to stay on the market very long or they’re starting their own companies. So we already are starting to hear and see people that got laid off last year that are starting to own tech companies in 23. And we expect that by year end and for 2024, we most likely will see the biggest boom in startups in tech. In terms of growth numbers.
Speaker 1 [00:15:13] That’s a really hopeful note to to wrap up on and incredibly sage advice from someone who’s seen these challenging times before. Chris, thanks so much for being on disruptors. Thank you.
Speaker 3 [00:15:23] Very much.
Speaker 1 [00:15:25] Up next, more predictions on the path forward for the tech industry direct from Silicon Valley. Stay with us.
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Speaker 1 [00:16:18] Welcome back. Today, we’re talking with Canadians who are living through the tech sector’s new reality. I’m at the C 100 Summit in Silicon Valley, surrounded by many of the industry’s top thinkers and innovators. Our next guest is Sherry Hash Jones, founder and managing partner at Sightline Coaching, an executive coaching firm based in the Bay Area. Sherry, welcome to Disruptors.
Speaker 2 [00:16:40] Thanks. Good to be here.
Speaker 1 [00:16:42] It’s great to have you here. And talking about talent because everyone is talking about talent in 2023. It was in many ways the most common thread through the C 100 summit. What did you take away?
Speaker 2 [00:16:55] Well, I mean, it’s interesting looking at this year versus last year. And I feel like last year we were tussling with will remote continue. And I think this year it’s just really just continuing. The same story, which is remote is here to stay. The question is how do we as leaders and companies deal with this new kind of environment? And, you know, me and my work, I work with a lot of young leaders. And I think what we lose when we go entirely remote is the stuff around culture, around connection, around leadership development. Leadership is apprentice craft, right? Like we learn by watching other awesome leaders. And if you are only seeing a leader on a little square on your Zoom screen, I’m kind of concerned about how we actually help that next generation of leaders come up.
Speaker 1 [00:17:43] One of my takeaways is, and I think we all see this, that hybrid, however you define that, is here to stay. And it’s really on companies and managers to optimize remote work using technologies and their rapidly growing, but also optimize in-person work. Make sure that you’re mentoring, coaching, inspiring in ways that even with the best immersive communication tools, you’re not able to be that true human perhaps. Yeah, that we are.
Speaker 2 [00:18:09] It’s like in-person totally. It’s like human with a capital H and whereas that may have happened organically before because we were with our teams in person, they could watch how we work. I think now to your point, we need to be really intentional and almost create programing around it and be really intentional with our leaders that they are mentoring, coaching, making that a part of their of their bottom line in terms of how they’re working with their teams.
Speaker 1 [00:18:34] Now, another factor that’s changed from last year is layoffs in the tech sector and job uncertainty. And we talked about that, how to communicate to teams who are perhaps nervous about their future, but also wondering how best to work in person or remote. What did you take away in terms of how leaders, founders, entrepreneurs can communicate with tech workers in this very different environment?
Speaker 2 [00:18:57] I mean, what I heard was more communication and not less and more transparency, not less. If anything that we gained over the pandemic was, you know, showing up as human capital, age, human again. And, you know, our leaders can show up that way, too, and trust that our employees can have more of a seat at the table in terms of how things are going. I think that we really heard that from the CEOs who spoke the last couple of days, that, you know, there needs to be a level of trust there, a level of transparency that, yes, there’s going to be hard news. You can’t share everything. But the more that you share or probably that, the better the outcomes will be in terms of generating that trust in connection with your teams.
Speaker 1 [00:19:39] How do you think this year is going to be different from last year or last several years from a from a talent point of view?
Speaker 2 [00:19:46] I’m based here in San Francisco, so we’ve had a lot of layoffs in the tech sector. Having said that, we still have a lot of industries that are really booming. And so I think there’s a bit more pragmatism in how we hire being more selective. But, you know, if you’re top talent, there’s still going to be lots of opportunities for you to always be recruiting, right? I say this to all of my leaders. It’s definitely not something that you outsource to just your recruiting teams and be maintaining those networks. We all have eyes on top talent, right? This might be a time where folks are more open to moving and shifting.
Speaker 1 [00:20:21] We also have heard about a hyper intensity of the year ahead, given economic conditions, the cost of capital, the challenges of the sector, and a lot of entrepreneurs and founders are being told you have 12 months to kind of get this this right. Hard to lead a team with that kind of pressure, but good leaders do what differentiates them.
Speaker 2 [00:20:44] You know, my background was in consulting and I remember every minute counted, but the great partners were still those who could get in solve a problem. But we’re still taking time to develop along the side. So I think of it as, you know, double KPI. It’s not just, you know, what the outcome is, it’s how you’re doing it, because that’s going to retain the team longer term. And I think what we heard over the past two days is it’s not necessarily the pace of the work or the amount of the work that burns people out and gets people frustrated. It’s more about how the work gets done. And if you if you have a sense of purpose, if you’re feeling. Like you’re engaged. People are going to give their best.
Speaker 1 [00:21:19] Whether in-person or remote. High fives have a value. I’m going to give you a high five sherry.
Speaker 2 [00:21:24] Thank you.
Speaker 1 [00:21:25] Thanks for being on disruptors.
Speaker 2 [00:21:27] Good to be with you.
Speaker 1 [00:21:28] Our next guest is Dominic Penaloza, founder and CEO of Peace, which offers on demand work pods in public locations. Dominic, welcome to Disruptors.
Speaker 4 [00:21:38] Thank you, John. Thank you. I’m super happy to be here.
Speaker 1 [00:21:41] You’ve had an incredible career journey, almost 30 years in China, and you’ve just been in lockdown in Shanghai for probably feels like 30 years and now you’re here in Silicon Valley. Give us a sense, Dom, first off the top of how different things are coming out of the pandemic in China from a tech sector point of view.
Speaker 4 [00:22:04] Yes. So that part of the reason I said I am super happy to be here is because of the fact that this is my first trip in about three years. So I’m super grateful for that. I think the rate of change was so, so fast in China recently with the changes in the Zero-covid policy that things are still rapidly evolving. I think from the tech industry specifically, perhaps from the entrepreneurs perspective, there might even be more opportunity than before. This might be an interesting implication if there is a decoupling that is happening within tech. I suppose that might be bad for global efficiency, but it might be good for local opportunity because different teams have opportunities to build different products or similar products because of decoupling.
Speaker 1 [00:22:53] I’m curious how you see things evolving in China, but also elsewhere because you’re innovating in the future of work spaces. Where do you think work goes as the world reopens?
Speaker 4 [00:23:04] I think one of the fascinating events right now is that as I spend some time reconnecting back here in North America and I’m seeing for myself that everything I’ve been reading for the past three years about the remote work revolution, the hybrid work revolution, how approximately 30% of all American workers are now hybrid. So this is really a new normal and this is really a megatrend. And it’s quite real. It’s amazing to me because so far in China, it’s almost zero. So despite everything that we’ve gone through over there in terms of managing COVID and the great opportunity to work remotely during those periods for everyone, it’s fascinating that the reaction has been so different and basically everyone is scrambling to get back into the office. And so it’s still office five days a week as normal or as you’ve seen in the headlines from the last two years, even trying to get people to not do 996 the 9 a.m. to 9 p.m. six days a week. But everyone is still in the office and not much has changed in terms of workspace and how people work and the way that people interface within China. And so that’s fascinating to me.
Speaker 1 [00:24:22] That that’s going to become a fascinating almost AB test in the world. If you have especially brain centers like Shanghai where you live that are all in-person and then other brain centers like here in Silicon Valley, where the occupancy in San Francisco is somewhere in the 20 to 40%. Do you think innovation is going to take a different course in China because of that in-person work habit that seems to be taking root again?
Speaker 4 [00:24:49] I think that is a that might be $1,000,000,000,000 question, because if we’re talking about broadly innovation in general and the whole tech industry, maybe it will be better possibly, but maybe it will be worse. I think old school thinking tends to believe that we need to spend time together physically because a lot of innovation comes from those random collisions of ideas in the cafeteria, in the elevator, in the hallway, or at the watercooler. And so if that is happening, much less in the Western markets, will someone gain an advantage in terms of innovation If things are quite different in China, where everyone is still spending a lot of face to face physical time?
Speaker 1 [00:25:37] I want to get your perspective as a serial entrepreneur. You’ve had a number of startups, many great successes operating in fast growth markets, particularly in Asia. As you look at the current environment, it’s really tough time for or for leaders, for founders, for entrepreneurs. What advice do you like to give people in these sorts of environments?
Speaker 4 [00:25:59] The advice I’d like to give people is that if you’re a younger entrepreneur, perhaps you can take something from us more experienced entrepreneurs. I am encouraged to see that. It turns out in the latest data I saw that the age of 50 is the best time to start a company. And perhaps. The reason that is so is because by that age the person has been able to see several cycles. For myself, I was there at the beginning of the Internet and I also experienced the great dot.com crash, which gives me a certain kind of perhaps calmness or at least perspective when we talk about the current recent market shifts. And so I think having that kind of perspective will help you to be calm, to navigate your new company, or think about how to navigate your new company in these waters and knowing that these are cycles and entrepreneurs must carry on no matter what the cycle and to see the cycle as an opportunity. There are some silver linings of being in a tougher market for fundraising, for finding customers who have budgets to spend.
Speaker 1 [00:27:08] These are cycles. Very wise words. Dominic, thanks for being on disruptors.
Speaker 4 [00:27:13] Thank you. Thank you so much, John.
Speaker 1 [00:27:15] That was Dominic Penaloza. I’d like to thank our other guest to Andre Charoo, Sherry Hatch Jones and Chris Arsenault. The tech sector is once again in a period of transition. Funding that once came easily is now scarce. The narrative has completely flipped Headlines about massive investments in tech, unicorns and IPOs have now become headlines about mass layoffs. Perhaps the only thing we can say with certainty is it’s going to be a bumpy road ahead. But, you know, those who fasten their seatbelts and keep their eyes on the destination will get there. And they may find they’ll get their way ahead of their competitors. Those are the real disruptors. I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon.
Speaker 2 [00:28:12] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content like or subscribe wherever you get your podcasts and visit RBC dot com, slash disruptors.
Speaker 1 [00:00:02] Hi, it’s John here. 2023 is already shaping up to be a critical year in the showdown over semiconductors, which are arguably the most important technology the world has seen in 50 years. They’re the size of your fingernail, and yet they power everything from your coffee machine to kitchen appliances to all those toys you might have seen at Christmas. They also effectively run the Internet through data centers and so much more. To state the obvious. Chips play a central role in the global economy, and we’re just getting going. We’re going to need a lot more chips in the coming years to run everything from electric vehicles to the Internet of Things in your home. And yet, as we’re seeing in the news every day, the factories that build them are largely located in one place, Taiwan. You know, the U.S. in the 1990 accounted for almost 40% of global chip manufacturing. And today that share hovers around 12%. The U.S. has started a kind of space race in the semiconductor world, but it will take more than a few months to change things. In fact, it took 30 years to move a lot of that production from the U.S. and Europe to East Asia. And it may take just as long to move it back. And while all this is going on, Canada is going to have to make some key decisions. Are we going to be a leader in the new supply chain of semiconductors? How can we fit into what the U.S. is doing through the massive CHIPS Act that is going to put hundreds of billions of dollars into semiconductor manufacturing and fabrication on U.S. soil? And what kind of innovative thinking can we bring to the next generation of semiconductors and chips? The question is not just where will chips be made in the decades ahead, but what kind of thinking and innovation is going to go into those tiny little things that power everything in our lives? This is Disruptors. An RBC podcast. I’m John Stackhouse. We’re recording this special episode of Disruptors live in Ottawa, where industry leaders, innovators and policymakers have gathered to figure out what role Canada can play in the semiconductor business of tomorrow. To get a hands on perspective, I’ll be joined later by Jim Keller. He’s the CEO of ten Storefront, a leading Canadian company that makes specialized chips for air applications. The first, I’m joined by Benjamin Bergin Benz, the president of the Council of Canadian Innovators. That’s a group that was set up by Jim Balsillie and John Ruffolo to champion Canadian innovation and all the entrepreneurs who are trying to disrupt everything around us. He’s also the coauthor of a thought provoking op ed that ran recently in The Globe and Mail called The U.S. is seizing the moment on chips and semiconductors. Why can’t Canada? Ben, welcome to Disruptors.
Speaker 2 [00:02:56] Thanks so much, John, for having me.
Speaker 1 [00:02:58] So, Ben, the U.S. is seizing the moment on chips and semiconductors. Why can’t Canada?
Speaker 2 [00:03:03] That’s a great question. And I’m actually currently in Ottawa engaging with the federal government from a civil servant, but also a political side. And I think Canada actually can seize the moment. And so there’s this sort of, you know, cautious optimism that is kind of abound with me right now. And I think why we need to seize the moment is maybe the important piece. You know, this isn’t something where Canada has had capacity in a long time. And I think that’s a number of reasons. I think it’s the way that supply chains were created. I think it’s the way that the geopolitics existed in the eighties, nineties and 2000. But what has happened has been a dramatic transformation in the circumstances in which we find ourselves, where there is obviously concerns about what’s happening in Russia and Ukraine. There’s concerns about what’s happening in China and Taiwan, but also how that plays out with places like Japan and South Korea. And so the markets and capacity that actually produces semiconductors is being upended. And in this moment, in this crisis, there is an opportunity. And I really think that this is an opportunity Canada must seize on, because there is a tremendous amount of value that we can generate as a country for this. There’s an environmental component, right? Building ships that are more energy efficient will help us meet some of our targets in terms of clean technology and things like Paris Agreement, but also defense. And I think that this week has really demonstrated that with, you know, balloons floating across the ocean and us, do we have the capabilities to take them down? And semiconductors are a fundamental component of the economy. They will actually fuel all other areas in the innovation economy. And what I mean by that is that when we look at how we’re going to generate a I like catchy beat that requires a tremendous amount of semiconductor capacity, but also a tremendous amount of energy.
Speaker 1 [00:05:04] And I really want to come back to that energy question because I don’t think many people appreciate what the era of chat chips, amongst other emerging technologies is going to do to energy demand literally at our fingertips. But let me start first with the CHIPS Act. We’ve been talking a lot, including on this podcast about the Inflation Reduction Act and probably overlooking its twin, which is equally important, and that’s the Chips and Science Act, which puts $280 billion on the table to in many ways reshore a lot of chip manufacturing, boost American competitiveness, innovation, national security. How on earth does Canada keep pace with that?
Speaker 2 [00:05:45] The first step is we’ve got to get organized. We’ve got to figure out what do we have in terms of actual capability and actual capacity in this country. And that’s going to sound like a bit of a cop out of an answer. But here’s the thing. The federal government and provincial governments are actually spending hundreds of millions of dollars in semiconductors, whether that be through research and development or whether that be through other grants and other programs. Let’s take a country like the Netherlands, which has had a real cohesive policy and has made themselves indispensable in the supply chain of semiconductors, so much so that the Americans had to actually go to the Netherlands and back, beg them not to give the technology to China. Here is a small country, you know, smaller than Ontario, having the capacity to be able to say we have real strength in the supply chain. So what we need is a bit of coordination from government. And what we need is thinking about, you know, not right now, but ten years from now, where is let’s use a clean analogy, the puck going and how do we get there? How do we make some bets? And so the piece here is not that we need to match it dollar for dollar, but what we need to do is think about it in a smart way, about where the real value is in the supply chain.
Speaker 1 [00:07:00] When I think of what Canada’s superpowers, if I can call them, that might be in the space. Certainly post-secondary education is one of them. We have centers like Toronto, what’s grown out of the University of Toronto that are equivalent to any of the great brain centers in the world? Is it not enough to simply develop the talent and let them loose to to pursue ideas? Or do we need to take a more directional approach to this?
Speaker 2 [00:07:28] So on the talent piece of allowing it to flourish? God, no. This actually requires strategic thinking from people thinking about how and where we want to go. The idea of allowing it to just sort of be this organic structure is not going to lead to any actual outcomes. Look at any of the other countries. They have had a strong centralized government which has pulled forward areas where they can be successful. So places like South Korea focused on imaging chips. That is why Samsung is a titan and a giant and you cannot compete with them. If you look at what Japan has done, they have focused on another area. If you look at the Netherlands, it’s another area. So allowing sort of a thousand flowers to bloom is not the right answer here. And if we want to take a more Canadian example of why this policy doesn’t work, I suggest we look at the federal government’s A.I. strategy, which was similar in that node, John, where yes, we’ve got amazing people like Geoffrey Hinton and folks like Yoshio Bengio. And we thought, Let’s just give them money to build talent. Well, fast forward five years from then when that was first struck, we see that 80% of the intellectual property generated out of places like Vector have gone to large foreign multinationals like Microsoft. And so not only have we helped subsidize the R&D of foreign multinationals, but we have shut ourselves out of the future of fundamental intellectual property. And so my real concern here is that if we do that same thing in semiconductors, we’re going to find ourselves in the same situation. So to your point, John, yeah, we’ve got some really smart people. We’ve got some amazing academics. But if we don’t go from IP generation to IP retention to corporation building, we’re going to find ourselves or as the century continues to move forward.
Speaker 1 [00:09:25] You suggest. Ben, we’ve got to start with an inventory. Figure out what we have. So beyond the inventory, what do we need to do in the coming months?
Speaker 2 [00:09:33] So we are we’re already doing it to some extent, which is the good part. Industry is beginning to call us. And so the meetings we had in Ottawa were that congealing of the ecosystem. And so we brought together 15 really amazing semiconductor companies that are headquartered here in Canada. We’ve had outreach to close to 40. And we’re going to begin to pull together a document and a list of things that we need to begin building on. And it’ll have timelines. It will have a structure to it. And government has committed to participating in this discourse. And so the next step really is to figure out, sure, champions for our supporters and how do we move this forward. And I think one of the things that needs to really be communicated to Ottawa in this strategy is foreign multinationals will have to be somewhat involved in this discourse, but they cannot be at the center of it. So if, let’s say Minister Champagne or Minister Freeland goes out and announces, you know, $500 million in the budget to a foreign multinational to build a plant here, that should be considered an utter failure. What really needs to be focused on is how do you support these domestic firms to figure out where they can play in the supply chain and then give them all of the tools that they need in order to succeed? Because that’s actually how we’re going to build industrial policy in this country.
Speaker 1 [00:10:55] But don’t you need those multinationals, a lot of them American companies actively involved in building up the Canadian ecosystem, just as we’ve seen with automotive over the decades? I think of Intel and, you know, the plant it’s trying to build in Ohio. Some estimates say it’s going to be 60 to $100 billion to develop that one plant. Well, it’s hard to imagine a Canadian company doing that. So why not bring intel in or any other company, for that matter, to be Tesla and have them working actively with your members, with Canadian entrepreneurs to build up that cross-border supply chain that we’ve seen fairly successful over the decades and in other sectors?
Speaker 2 [00:11:40] So I would say ish. John Right. I mean, you’re talking about the auto sector, which was the tangible economy, not the intangible, where it was about the actual building of things, and it was really less about the intellectual property that went into it. And so my critique or argument is that the reality we are in is very different. This is about data. This is about IP ownership and all that basically doing in terms of bringing in a large foreign multinational to, let’s say, build a stop here will lead to low wage jobs in the semiconductor ecosystem. It is us playing for kind of bottom of the barrel.
Speaker 1 [00:12:21] Then we could talk about all sorts of aspects of chips, but one that I do want to focus on that you mentioned off the top is energy efficiency, the way that things are going with Chad GPT. But that’s just one example. It’s going to create a new generation and demand a new generation of chips that are energy hogs on a level that we’ve not seen before. How does Canada help? Not just Canada through that, but the world? As we shift to much more advanced technologies, much more energy intensive technologies? Surely there’s a role there for Canada to to bridge?
Speaker 2 [00:12:58] Yeah, no, look, I think that that’s a great question. And I’m not going to sit here and say I’ve got a fully baked up plan, but I’ll maybe throw a couple of trial balloons into the air because balloons are obviously the name of the game right now these days. One in this inventory that we’re going to do as a country, we’re going to find that there are some companies here that are making chips that are energy efficient. So one company that was at the table, zany, they make ships that are about 25% more energy efficient, but they also have higher capacity because of the way that they’re structured. So looking at what are opportunities in terms of energy efficient within our own ships industry, I think will be really, really critical. And how do we support them? How do we actually create those opportunities? So ultimately, it’s this kind of strategic thinking about it from various complex areas is how we, I think, to arrive at that energy component and I think is, you know, truly our responsibility as Canadians.
Speaker 1 [00:13:57] Then you’ve laid down a gantlet for the country. I want to wrap up with some inspiration that you draw from your members when you’re with these incredible companies that many people may not have heard of. What inspires you? What are they doing that we can all get behind?
Speaker 2 [00:14:14] So hopefully the way I’ve kind of communicated, but this hasn’t been Debbie Downer. I’m actually super excited about all of this and hopefully you can kind of share it in the center of my voice and that excites. It comes from the CEOs and the leaders in this space that I engage with. These are wildly smart people. These are wildly ambitious people. These are people who have decided to stay in Canada. And it’s their sort of continued dedication and excitement that fuels me. And when you hear about the things that they are building and their ability to see into the future of where we are going, not only as a country but as a planet, you get both a sense of urgency, but also a sense of how can we help shape it?
Speaker 1 [00:14:56] Then you both challenged us and inspired us. Thanks for being on disruptors.
Speaker 2 [00:15:00] Thank you so much for having me.
Speaker 1 [00:15:04] That was Benjamin Bergen, president of the Council of Canadian Innovators. Stay with us. In just a moment, I’ll be joined by a global leader in semiconductors to get his take on Canada’s opportunity.
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Speaker 1 [00:16:13] Welcome back. Today, we’re talking about the race to secure a homegrown supply of semiconductors. Canada used to be a leader. And while that may not be the case today, there’s all sorts of promising prospects out there, including ten store, which is based in Toronto. It’s my pleasure now to introduce the CEO of ten Story, Jim Keller. Jim, welcome to Disruptors.
Speaker 2 [00:16:33] Thanks for having me.
Speaker 1 [00:16:34] Jim, I want to start with your own background. You’re a well-known name in the semiconductor business. You’ve got an extensive career in processor design, worked on Tesla’s fully self-driving Chip, Apple’s A5 processors and served as senior vice president at Intel for several years. Take us into the ten storied story. How did you first come across the company?
Speaker 2 [00:16:55] So the founder is Ljubisa Bajic, and he worked for me at AMD. I was working at Tesla at the time and I was his angel investor, so I gave him the first check that he and a couple of guys did the classic, you know, two years in a garage making that work. I stayed in touch. So we had a lot of conversations about, you know, the direction they’re pursuing, how their engine work, what they thought was great about it. But I wanted to get back in the start startup. And then rather than start an air company, I joined Canstar to work with the media because I thought his approach to it, his team were doing something especially good.
Speaker 1 [00:17:30] What are the biggest challenges that you’re up against a ton store?
Speaker 2 [00:17:33] The biggest challenges is the fundamental, you know, how do you build an air compiler and how do you build the hardware that works properly? It’s complicated for for some unknown reasons, and then that’s complicated for some novel reasons. The scale of the data that they want to process on is just immense. And then that data, you know, if it was a nice big chunks that you could process through, that would be great. But now it’s spread all over the place.
Speaker 1 [00:17:56] And we’ve got chips in pretty much every aspect of our life from the coffee maker that gets us going in the morning to the vehicle that moves us around and way beyond that. The sorts of applications that Tenstorrent is perhaps looking towards. I’m guessing are going to be at the more sophisticated end of the spectrum.
Speaker 2 [00:18:15] Well, in the short run, we’re targeting developers who want to write software and get faster and around, especially if they’re building novel models. We want to start aiming at smaller data centers where people own their own applications and they want to co-develop with us. But going forward, I computations going to end up with everything servers, and it’s going to be in phones, it’s going to be in game machines, like you name it, it’s going to be all over the place. It’s going to be ubiquitous. But to get to that point, you know, we need a lot of development.
Speaker 1 [00:18:44] Does it matter where the development takes place? There’s a lot of debate about onshoring these days.
Speaker 2 [00:18:51] Nothing is co-located in this world. And so the supply chain is so diverse. It’s just amazing. And you can say anything you want about where stuff comes from that comes from everywhere. When I was at Tesla, we had really good supply maps where parts came from, which half the countries in the world and you know, the distance parts move. It’s it’s really remarkable.
Speaker 1 [00:19:11] Is that going to continue?
Speaker 2 [00:19:12] Probably. There are centers all over the place. What you tend to see is the high end development aggregates. You know, Boston and Silicon Valley were big centers. Toronto is an unusual class because University of Toronto has produced many, many of the top AI researchers, compute researchers. And then I had was a great graphics company center in Toronto. Altera is an FPGA company in Toronto. Intel and a couple other people had HPC programmers there that built high end machines, so that core Tens torrent software team was this interesting mix of AI research, HPC, FPGA and graphics programmers, which actually was it was fairly novel to have such a diverse software set but all different kinds of high performance problems. So you so you see you need critical mass to get going, but rather the software development, the hardware development and the sourcing and supply chain are very different things and they’re spread all over the place.
Speaker 1 [00:20:10] What does a country like Canada need to do to keep that advantage and more importantly, build on it?
Speaker 2 [00:20:15] Well, it’s interesting. You know, our team is very diverse and Canada opened their arms to people from Eastern Europe, from the Middle East, from India. And so that to build up a big technical pool. But the reason they went there to start was University of Toronto. And way back, if you remember Nortel, there was quite a number of tech companies in the networking space that established. And so you see this kind of multi-generational thing happen, like that technology wave that was big and one generation kind of built the infrastructure that the next generation took over. The Prime is an interesting place, the big metropolitan city. And you know, because of their policies, they attracted like say, an outsized percentage of people looking for a good place to go live and do development work.
Speaker 1 [00:21:03] One of the challenges with Canada’s air strategy has been commercialization of a lot of the ideas coming out of places like U of T, And there’s some concern that Canadian businesses aren’t doing enough to tap into that in the air ship world. Does that matter a whole lot or are you just selling to and developing for ambitious companies wherever they may be?
Speaker 2 [00:21:26] There’s two answers to this. One is, are you funding the fundamental research capabilities and startup funding so things can get going? That’s separate from picking winners. So you say, well, we need the pixel winners. Well, good luck with that. The marketplace 100 people start to finish helping the supply side. There’s good research institutions. There’s good support for students who want to study at their support for startups or who want to get going. Canada’s support tends to aren’t really well. I know they’ve assisted us in hiring people. They’ve funded universities which source great students. They create an environment where a whole bunch of people want to be. On the whole, we’re pretty happy with our Canada work.
Speaker 1 [00:22:09] When you see very significant investments like the CHIPS Act in the US, is it a game changer or is that just more kind of politics around the sector?
Speaker 2 [00:22:20] My my guess is it’s a good thing to have a national policy when they start spending large amounts of money. What happens is the companies who have a lot of money and have the ability to lobby for it will get a lot of that money. So there’s never been a revolution in tech or giving money to existing players, did they? There’s no example of it. So having a policy that says, you know, we have the right policy is about immigration, that the right policy is about import export, the right policy about taxation, that that creates the playing field. But, you know, way back when, you know, lots of people were giving IBM money to develop PCs, they contracted out to Microsoft. Right. The start up and so on that one.
Speaker 1 [00:23:01] So is that going to be the same in chips as anticipated?
Speaker 2 [00:23:04] Well, it’s always complicated because the money goes to the big companies and they hire people and try and do stuff and then they get frustrated and they go quit and they start a company and, you know, who knows the pedigree.
Speaker 1 [00:23:17] And you’ve made the point that one of the best investments country and a government can make is in the education system, especially post-secondary education.
Speaker 2 [00:23:25] I’m a fan of people who go to college and are so excited about work and they quit a semester early and they want to go do a hands on stuff and coding and all that. You know, speech patterns are good for some people, but they’re a waste of time for a lot of people. So it’s hard to say how that works out.
Speaker 1 [00:23:39] Jim, as we move towards close, I want to get your thoughts on the geography of the chips world, because that’s in some ways what’s sparked this episode and the debate about reshoring, semiconductors. If you can think out five or ten years, do you think the chips landscape is going to be fundamentally different now?
Speaker 2 [00:23:58] It’s really complicated because there are so many kinds of technology. You know, I talked to a few people about, you know, we need to bring, you know, chips back home so we can manufacture stuff. And I was thinking, are you trying to make more refrigerators or are you trying to make iPhones? Because those are really different technologies. Like, even in a server you look inside or it’s a power supply or power transistors, there’s all different kinds of technology. So you have to think hard about what you’re trying to impact. So I think, you know, the recent, you know, political stuff and funding stuff has made people think hard about it. But I think that’s what a lot of people took away from. This is like diversity of supply chain and actually knowing where your stuff comes from. Yeah, I think that’s going to be really important. Getting it all in the same place, that’s going to be possible. Our supply chain is already global, international, diverse, and that’s partly because there’s there is way more different pieces of technology in everything we do than you think. Even if you buy one chip, there is a thousand companies behind that chip. And so how are you going to bring 2000 companies onshore?
Speaker 1 [00:25:03] Jim, I wonder if you can leave our listeners with a sense of where you think chips will take us. Go out five, ten years. What will be the big differences?
Speaker 2 [00:25:11] Well, first, you know, in the big data centers and stuff today, it’s like 5 to 10% of the compute that’s going to go to 8090. So that’s a really big change. And whether that’s five years or ten years, it’s hard to say. But directionally, it’s going to happen. There are so many pieces of software you interact with today that are so clunky and painful to use, and there’s going to be a big wave of start ups building all kinds of user experience software that’s actually better. Now, whether it stays better, that’s another question and we’ll see what happens. You’ve already seen the stuff that like the ability to create imagery, the ability to create language, to build it, use it to assist in writing. That’s going to be become pervasive now, just like, you know, there was a point when you finally knew a lot of people who used a word processor to write stuff. Pretty soon you’re going to know a lot of people use A.I. to write. You know, it’s one of those technologies. There’s no going back.
Speaker 1 [00:26:04] Jim, thanks for being on disruptors.
Speaker 2 [00:26:05] Great to talk to you. Thanks.
Speaker 1 [00:26:08] That was Jim Keller of Tenstorrent. I’d also like to thank Ben Bergin, president of the Council of Canadian Innovators, who joined us in the first half. As we’ve heard, semiconductors affect every facet of our lives, and they’re going to play an even greater role in the future. A large majority of them are made far away in a place whose future is, at best uncertain. Building domestic manufacturing facilities may be difficult and it may be expensive, but it’s clearly a race. Canada can’t afford to sit out. We need to make our mark. And today we talk to people building the industry in the hopes of doing just that, putting Canada again on the semiconductor map. Join us next time for a special live on location episode at the C 100 Summit in Half Moon Bay, California. I’ll be in Silicon Valley getting the Canadian perspective on the tech sector’s new reality. Until then, I’m John Stackhouse and this is Disruptors, an RBC podcast. Talk to you soon.
Speaker 3 [00:27:10] Disruptors, an RBC Podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by JAR Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit RBC dot com slash disruptors.