A geologist by schooling, Michael Rose joined Shell Canada Ltd. in 1979 even though some told him that fossil fuels were a sunset industry. Fast-forward 45 years, and the now-66-year-old founder and chief executive of Tourmaline Oil Corp. is well aware that people still think fossil fuels are a sunset industry despite oil, natural gas, coal and even wood being used more than ever.

“The world needs lots more of all forms of energy, including the kind we produce, so I don’t see our industry going away any time soon,” he said. “The cool thing over the past four-and-a-half decades is just how much better we are at it now than we were back when I started in all aspects of the business, including environmental performance. It’s unbelievable how efficient we are now on spending capital and returns to shareholders. The business has changed a lot, and it’ll continue to change. “

Rose’s optimism seems warranted even though many governments are forcing the green shift toward renewable energy sources, electric vehicles and, ultimately, lower greenhouse gas emissions. Dutch energy envoy Frederik Wisselink recently said natural gas will continue to be widely used in some industries beyond 2050, while Shell PLC in its most recent annual report said global demand for liquefied natural gas (LNG) will likely rise by more than 50 per cent by 2040.

Part of that demand is due to increased use in places such as China and Southeast Asia to support economic growth, but it’s also due to the need for energy security, which has been emphasized by Russia’s invasion of Ukraine. For example, Germany is building new natural-gas-fired power plants and even approved bringing back coal-fired power plants on a temporary basis until March.

“The upshot is that successfully transitioning to a net-zero world will not be without challenges and costly setbacks,” Morningstar DBRS said in a note on Feb. 14.

Managing both today’s demand and tomorrow’s shift is a big part of Rose’s mandate at Tourmaline, which he founded in 2008. Despite having “oil” in its name, it became Canada’s largest natural gas producer in 2021 through a combination of its own exploration, development and production capabilities, as well as acquisitions, including the $1.45-billion purchase of Bonavista Energy Corp. in November.

“(Natural gas) is going to be the largest portion of the energy stack for 10 or 20 years,” he said. “All parts of the stack are growing, and so we fully acknowledge that, and that’s why it’s not fossil fuels versus renewables. It’s an ‘and’ story, not an ‘or’ story — we need more of everything. If you start analyzing all the different energy sources, they all have an Achilles heel somewhere. There’s no perfect energy source as it currently stands.”

That kind of nuanced thinking, as opposed to the black or white arguments many make, in navigating volatile markets, political pressures and shareholder demands for both cash and growth is just one reason why Rose has been named Canada’s Outstanding CEO of the Year for 2023, as presented by Bennett Jones LLP, Caldwell and the National Post.

“Mike Rose exemplifies exceptional leadership and phenomenal business success. It is our privilege to congratulate him on becoming Canada’s Outstanding CEO of the Year for 2023,” Hugh MacKinnon, chair of the CEO of the Year Advisory Board, said. “Mike inspires loyalty because he is loyal to his colleagues and his shareholders. He built an extraordinarily talented team that surpasses all forecasts and delivers outstanding shareholder returns. Mike and Tourmaline are truly future-focused, and the company’s environmental performance goals and technologies have made it among Canada’s lowest-emissions producers.”

Tourmaline is the third exploration and production (E&P) company Rose has built since leaving Shell, where he held various E&P positions including managing exploration and petroleum engineering research. The first was Berkley Petroleum Corp. in 1993, which was sold to Anadarko Petroleum Corp. for more than $1 billion in 2001. The second was Duvernay Oil Corp. in 2004, which Shell purchased in August 2008 for $5.9 billion.

Tourmaline went public in November 2010 at $21 a share, and is now priced around $57 with a dividend yield of 1.96 per cent and a market cap of $20.1 billion. Even more impressive is that the company’s total return is 35.7 per cent over the past three years and 291.5 per cent over the past five years, according to Bloomberg data.

“Mike Rose is a giant in the oil and gas sector. There are very few CEOs you can point to who have realized the kind of enterprise growth that he built in not just one, but three tremendously successful Canadian companies,” John Wallace, chief executive of Caldwell, said. “He is an outstanding leader, a model of insight, aspiration, hard work and personal grounding. He cares deeply about his colleagues, his shareholders and his community. He and his wife Susan Riddell Rose are active volunteers and supporters in a wide range of social enterprises.”

What follows is a condensed and edited interview with Rose in mid-February.

FP: Congrats on the award.

Michael Rose : Thanks. It was definitely unexpected. It came out of the blue.

FP: You’re dealing in a commodity that’s very volatile, so how do you manage your costs, drilling programs, acquisitions, debt repayments and increasing dividends?

MR : It probably starts with securing as much of the best tier-one inventory you can now, and you need to be very good at the execution side of the business. You need to be a low-cost driller and completer, if you like, and I think we’re probably the lowest. I’ve become steadily more debt averse as my career’s progressed. This is the third independent, and, not surprisingly, probably because we’re older, this one has by far the least debt. That’s actually a good place to be in the current world. It helps you with commodity price volatility, but the whole world’s just volatile, independent of the commodity we’re in.

Something that’s evolved over the past 10 or 15 years is the whole marketing side of the business. You have to be large enough and nimble enough to get your hydrocarbons to the best price markets and we’ve been able to do that. In all three independents, we built, owned and operated our own infrastructure, so that side of the business actually generates a return as well. It’s a more stable and smaller return than the IRRs (internal rates of return) of drilling new wells, but it’s an important part of the business as well. He who has the lowest costs can survive these commodity cycles, particularly on the natural gas side, the best, and they are self-repairing.

FP: Some champion natural gas as a transition energy source, but environmentalists would likely disagree.

MR : I’ve at times called (natural gas) the great enabler because it enables the renewables as well; you need it as backup. What you’ve observed in the past two or three years in jurisdictions — which to some extent includes Alberta and it certainly includes Texas, so it’s not just California, but they’re kind of the best example — is that if you overbuild your renewables or do it too quickly without the backup, then you create an unstable electrical grid. And that’s exactly what happened. We’ve had essentially no winter other than eight or nine days, which is why the price is so bad for gas, but even when we had bad weather, we had crises piling on top of each other in a hurry, so we just have to be smart about how we do all this.

FP: How do you approach that green shift? You say it’s not an either/or story, but many would like it to be.

MR : From a Tourmaline perspective, we spend a lot of money on what we call environmental performance improvement (EPI). We look at it on a more wholesome basis, not just emissions, that’s obviously an important part of it, but air, land and water, and no doubt man is polluting all three. We try to address all three. In our investor deck, we’ve always had a five-year plan that shows how much we’re going to grow, how much we’re going to spend, what our capital is going to be and how much money we’ll have for dividends. We have parallel EPI plans, we call them, where we have hard targets for water, for emissions reduction, for methane mitigation, for surface use and mitigation. We try to hit those targets, and we hit them in our first plan. We’re in our second five-year plan and working away at it in a scientific, technology-based way in five-year increments, and we’re making great progress. But can we hit a certain number by a certain date? I don’t know, we prefer not to go at it that way, we sort of go from the ground up: OK, what can we control now? That’s kind of in our DNA. We’re executors, so let’s go execute on that plan and see where we get to, see where technology gets to.

FP: In the energy industry, there is this mix between returning money to shareholders and growth. How does Tourmaline balance those almost competing issues?

MR : Ultimately, an investor in your company wants to see some amount of growth because if it’s static in the long run, why would they be in your equity? The trick is in balancing between growth and returns. Between, call it 2012 and 2018, we were growing at a great clip at Tourmaline. We weren’t paying a dividend, obviously, we were spending all the cash flow, and in some years more. But by 2018, investors weren’t rewarding us for our great annual percentage growth, and the commodity price wasn’t very good. We pulled back to a much lower growth model, so call it on average five per cent per annum, and we’ve stuck with that ever since. And, of course, what that allowed us to do around mid-2018 was accelerate free cash flow because you’re not spending as much money on growth, and we started paying a dividend then. It was small and we didn’t have a ton of free cash flow back then, but as we’ve evolved and grown, and we’ve had a couple of good price cycles in there, we’ve had a lot of free cash flow and so we’ve been able to increase the base dividend. I think we’ve done that nine times. And then when things got really good in 2021, we have used special dividends on top of the base.

The third leg of the stool is continued value appreciation. I think shareholders want to see that in the long run as well, and that comes through annual reserve additions. So, we keep converting our probable reserves into producing reserves, and then we keep adding more probable reserves. We have a huge drilling inventory, it’d be the biggest one in North America. I’m a geologist so I’m completely biased, but I think reserves are hugely important. But in this business, I do think in the end that he who owns the most methane molecules, which is what it is in our case, is going to win this game.

FP: Tourmaline has made a number of rather large acquisitions over the years: Bonavista, Black Swan, Jupiter Resources. What is your M&A strategy? What do you look for?

MR : First of all, it’s got to have a geographic fit. But probably our most important criterion is that the business we’re buying has a free cash flow return, or we have a line of sight to a free cash flow return, that’s as good or better than what we have in our base business already. That’s in our five-year plan, and all the acquisitions have a fit. How does that happen? It’s our lower execution or lower capital costs. And, usually, we see something in the subsurface that we think we can do better than the previous owner. We shy away from the merger of equals. Bonavista and Black Swan were billion-dollar-plus companies, but we’re a $20-billion market cap enterprise. We’re not doing some of those large M&A deals you’ve been observing in the States for the last little while.

FP: Tourmaline isn’t the first company you founded. Did you always want to start companies? Is that what you thought when you went to Queen’s University?

MR : No, I did not know that. I knew I liked geology. And then I found out about the oil and gas industry. I was a mineral collector as a kid. That’s why I went into geology — you can guess tourmaline is my favourite mineral. And then I loved working at Shell. I had a great time, drilling wells right away, worked in exploration development, ran E&P research in Canada for a while. I’d say as my Shell career moved along, I kind of saw how the independent world worked and thought, ‘Yeah, I think that’s probably in the long run a better place for me.’ And so it was an evolution.

FP: Your former father-in-law Clay Riddell is not only a legend in your industry, but Canadian business in general. Did you ever get any advice from him when you were starting these companies?

MR : I’d say I got the most advice when I started my first company. But he was pretty hands off and he was like, ‘Well, you’re gonna figure it out on your own if we’re really going down the wrong track,’ but we never did. He was on the board of Berkley and he was on the board at Duvernay, and then for the first part of Tourmaline. I’m happy how it all turned out because, certainly, particularly at my first company, Clay being on the board was helpful for raising money. But in the end, I got to make him a whole lot of money. He was a true independent.

FP: What have been some of the bigger lessons you’ve learned over your four-and-a-half decades in the business?

MR : Oh, well, the glass is always half full because you’re not always successful. Don’t carry too much debt. We got close in Berkley and it’s never been an issue since. Find and retain the best people. Tourmaline is a team effort and I’m pretty sure I’ve got the best team. What’s happened is that you now have to be the best in every discipline. Say, 30 years ago, you could be good at a couple of things and get by. But now you’ve got to be top decile in all aspects from geology, through engineering, execution, marketing, you’ve got to be good at all of it. And be patient, you’ll get another crack at things, be it an acquisition or a play that you can’t get into.

FP: Is there any challenge that sort of sticks out in your mind that you overcame and that brings in some of those lessons?

MR : We had the hostile (takeover) at Berkley at Christmas time in 2000. Our stock price wasn’t very good, but it had recovered from the bottom. That’s when we had a little bit too much debt, but it wasn’t like we were in any kind of true financial difficulty, but Hunt (Oil Co.) bid opportunistically, and that was a process. We did the data room, tried to find a white knight and it was exhausting. It was kind of 24/7 for three months, but we did find a better bid in the end. And I think in the end, we were all smarter and better for it.

FP: What keeps you going?

MR : I love the business, and I love drilling wells and finding stuff. I like that all the people we have hired are doing well financially. I want Canada to do well. I think our natural gas industry offers so much opportunity for Canada, particularly with the LNG pathway. I think that’s something we should be doing as a country for all those reasons that we’re still allowed to tell you about. I think the facts are on our side on that one. I like working anyway.

Selecting Canada’s Outstanding CEO of the Year

Celebrating its 34th anniversary this year, Canada’s Outstanding CEO of the Year award was established by executive search firm Caldwell in 1990. This highly respected award honours an executive in Canadian business who exemplifies integrity, insists upon excellence, earns the trust of others and has built a globally competitive organization. It is the preeminent recognition for Canadian CEOs.

Canada’s Outstanding CEO of the Year advisory board comprises more than 20 of the country’s most respected business leaders and academics, including past honourees of the award. The board meets annually to select the current year’s recipient based on five key criteria: vision and leadership, corporate performance, global competitiveness, innovation and social responsibility.

The 2023 advisory board members are:

James Balsillie; Charles Brindamour, CEO, Intact Financial Corp.; Marie-P. Charette-Poulin, corporate director; Dean Connor; George Cope, chair, Bank of Montreal; Patrick Daniel, chairman, Daniel Family Foundation; Paul Godfrey, executive chairman, Postmedia Network Canada Corp.; Linda Hasenfratz, CEO, Linamar Corp.; Krystyna Hoeg, corporate director; Dezsö Horváth, dean emeritus, Schulich Chair in Strategic Management, Schulich School of Business, York University; Eric La Flèche, CEO and president, Metro Inc.; Jim Leech, chancellor emeritus, Queen’s University; Elio Luongo, CEO and senior partner, KPMG Canada; Hugh MacKinnon, chair emeritus, Bennett Jones; Dave McKay, CEO and president, Royal Bank of Canada; Nadir Mohamed, former CEO and president (retired), Rogers Communications Inc.; Gordon Nixon; Philip Orsino; Sarah Raiss, corporate director; Calin Rovinescu, former CEO and president, Air Canada (retired); Indira Samarasekera, president emeritus, University of Alberta; Lino A. Saputo, chair, CEO and president, Saputo Inc.; Guylaine Saucier, corporate director; Frank Vettese, corporate director and CEO emeritus, Deloitte Canada; Donald Walker, former CEO, Magna International Inc. (retired).

• Email: aholloway@postmedia.com

Interactions with potential investors tend to follow a similar pattern when you are Lionel Conacher and you live in the Google era and are a partner in a new venture-capital firm. Whomever the meeting is scheduled with will typically shake hands and offer a warm hello, but before getting down to business they will ask him not about Lionel Conacher, financier, but about his grandfather, also named Lionel, famed sportsman. “I can’t go to a meeting with somebody new where they haven’t Googled me, and if you Google me, you will get 12 pages on my grandfather,” Conacher says from his California home.

It is little wonder why: Lionel (Big Train) Conacher was arguably the greatest Canadian athlete ever. He won a Stanley Cup, a Grey Cup, dazzled in rugby — and baseball and lacrosse — wrestled professionally, became a politician and died on Parliament Hill in 1954 at age 53, after stretching a single into a triple during a softball game and suffering a massive heart attack.

The Conacher story is woven into this country’s sporting fabric. Being asked about it makes the present-day Lionel proud, but it also makes him laugh, at least on the inside, since his business partners have had to sit through multiple meetings listening to stories about his famous grandfather without, oddly, being asked to tell stories about themselves, which isn’t an every day occurrence for his current partner, Lance Armstrong.

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That would be The Lance Armstrong, cycling’s notorious liar/bully/jerk who, almost six years after admitting to Oprah Winfrey in an exclusive television interview that, “yes,” he did take Erythropoietin (EPO) and other assorted banned substances in each of his seven consecutive Tour de France wins, is reinventing himself as a venture capitalist in partnership with a direct descendant of the presumably EPO-free Canadian sports hero.

“You can’t fool Lionel Conacher on a spreadsheet,” Armstrong says via email, an endorsement of Conacher’s financial chops that doesn’t address a more fundamental question: how did this partnership come to be? Conacher, like 28 million others worldwide, watched Armstrong’s 2013 Oprah confession. He was embarrassed by it. He had been an Armstrong defender to the bitter end, and an acquaintance of the cyclist since 1999.

In those days, Conacher was working at a brokerage firm in Toronto when a close friend, John Koshan, was diagnosed with cancer. Conacher knew someone who knew Armstrong, then just starting his miraculous, bounced-back-from-cancer-to-win-the-Tour-de-France-myth-making rise. He had him ask the cyclist if he could send something. Armstrong delivered. “He sent this massive poster of himself in the Tour de France time trial, and on it he had written in huge letters, “John. Stay strong. Fight like hell. Your friend, Lance,” Conacher recalls. “John had that poster, literally, on his deathbed — until the day he died — and I still have that poster.”

Conacher went on to raise quite a bit of money for cancer research and was introduced to Armstrong by comedian Robin Williams (but that’s another story). They remained acquaintances thereafter, crossing paths, here and there, until Oprah happened. Instead of fleeing for the hills, as most in Armstrong’s extended orbit did, Conacher “leaned in,” partly because of the poster Armstrong had sent to Koshan years before, partly because Armstrong had made similar gestures in the ensuing years without ever expecting anything in return, and partly because the Armstrong Conacher knew didn’t match the guy being vilified.

“I just decided that, if it were me, and my world came down, I’d want the people who were my real friends to show up,” says Conacher, who in 2002 co-founded Westwind Partners Inc., a former Toronto investment bank purchased by San Francisco private-equity giant Thomas Weisel Partners Inc. in 2008 for about $145 million.

Conacher was working for Altamont Capital Partners in Palo Alto, Calif., when Armstrong called him about a year ago seeking advice. He did not disappear post-Oprah, but had begun a process of reinvention, launching a hugely popular cycling-focused podcast, The Move, in 2017, and following it up with The Forward, a podcast featuring chats with other sports and celebrity notables, including former Dallas Cowboys quarterback Troy Aikman, skier Bode Miller and rocker Sammy Hagar.

Millions have downloaded the podcasts and, as Armstrong would explain to Conacher, people were constantly soliciting his input on sports products: what worked, what didn’t, which were best? Armstrong knew gear — and marketing. He is still the guy who won sports’ toughest endurance race seven times by beating a field now widely acknowledged to have been just as dirty as he was. What he wanted to know, Conacher says, was whether his “time out” was over, and whether there might be a way for him to launch a fund in the wellness space?

Conacher didn’t have an immediate answer, but promised Armstrong he would kick some tires among the Silicon Valley venture-capital crowd to determine if the “pendulum” on him had swung to potentially viable sports-tech investor from sports villain. Runners, cyclists and weekend warrior gearheads of all sorts buy into a global wellness industry valued at several trillion dollars. The verdict around Silicon Valley was Armstrong’s past wasn’t an issue. More important for Conacher was the word of his wife, Joan Dea, a former chief strategist at Bank of Montreal. She currently sits on the board at Charles Schwab Corp. and is an angel investor in female-led startups. Dea spent hours with Armstrong before giving her husband the thumbs-up to give him advice as well as to go into business. “I said to Lance, ‘If you want a partner, I’ll do it with you,’” Conacher says. “And he said, “Really?” And I said, yep.”

Their firm, Next Ventures, is “designed to maximize growth opportunities in the exploding sports, fitness, nutrition and wellness markets,” according to its website. Part of the appeal is the alchemy between its two general partners. Much like Armstrong, the 56-year-old Conacher is ultra-competitive. He was a top college decathlete at Dartmouth College in New Hampshire and is now a five-mornings-a-week California surfer with good genes and size — he is almost two metres tall — a combination that produces some friendly athletic tests with Armstrong.

Conacher admits the former cyclist “crushes” him in running and swimming, and is about 20% faster on a bike. Both men are terrible at golf. Where Conacher holds a decisive edge is as a skier, surfer and possessor of knowledge around the intricacies of corporate governance, deal structuring and company valuations.

Armstrong brings his own strengths, including a global network of contacts, a global audience in the digital space and the core belief as an investor — and this is a guy who got in early on Uber Technologies Inc. and Docusign Inc. — that a company’s most valuable commodity is its people. “I invest in talent and hard work,” Armstrong says.

In that regard, Armstrong and Conacher are invested in one another, crisscrossing North America to raise capital, and positioning their firm as a second- or third-round investor in wellness gadgets, including PowerDot, a portable electro-muscle stimulator controlled by a smartphone app, and Oura Ring, which measures heart rate, body temperature and movement while you sleep.

On the side, Conacher is working on a documentary about his grandfather with his son, the actor Lionel Charles Conacher, better known as Chas. It is the story of a Canadian sports hero. Lance Armstrong knows it well.

• Email: joconnor@nationalpost.com | Twitter: oconnorwrites

Bank executives aren’t always what they appear to be. The chief executive title conjures up an image of a stuffy numbers’ nerd focused on meeting targets, growing business lines and slashing unproductive expenses. Dave McKay, chief executive at the Royal Bank of Canada, certainly has banking in his blood. But when he’s not in the boardroom, you may find the 59-year-old catching a pick-up game on the basketball courts or jamming out on one of his 10 or so guitars.

Part-time B-ball player, part-time guitar player and full-time RBC lifer, McKay has worked his way up through the ranks since starting a co-op work placement in 1983 while studying computer programming. Since taking the top spot at the country’s biggest bank in 2014, he has led the acquisition of City National Corp. in 2015, launched a youth-focused skills program in 2017 and, most recently, won the hand of HSBC Canada , Bay Street’s belle of the ball, after weeks of courting from the other Big Six banks.

Those are just a few of the feathers in McKay’s cap, but he’s likely staring at his greatest challenges as the country grapples with recession risks and works out a collaborative green transition plan to combat climate change.

But his accomplishments so far are why McKay was named Canada’s Outstanding CEO of the Year for 2022, as presented by Bennett Jones LLP, Caldwell Partners International Inc. and the National Post.

“RBC is one of the world’s largest and most sophisticated banks and Dave McKay has taken its performance to another level,” said Hugh MacKinnon, chair and chief executive of Bennett Jones and chair of Canada’s Outstanding CEO of the Year Advisory Board. “He is passionate about innovation and technology and is a steadfast champion of using them to shape the future of financial services.”

Added John Wallace, chief executive at Caldwell: “Dave is that rare and inspiring executive who merges work excellence with dedicated philanthropy. He’s committed to advancing Canada’s interests both globally and locally, and is a real champion for issues such as climate change, preparing youth for the future of work and combatting inequities in the workplace.”

The following is an interview with McKay in January that has been condensed and edited for clarity.

FP: How did you navigate the economic storm of the past three years?

Dave McKay : It brought out in almost every way the best of Canadians and the best of leaders. We work together better than we ever have before. It brought government together: there was the minister of finance, it brought the regulator together, it brought the Bank of Canada together with bank CEOs. I hosted a meeting twice a week with all those constituents, and from the very first days, we just talked through what was going on. It was all new. What was going on with the economy? What were the risks in the economy? What were the options to fix these things? And we had just fantastically productive dialogue and worked on great macro policies, and then implemented those very well through the system and in a really short amount of time.

We levered technology like we’ve never levered before; it was just amazing how we could send, less our branch staff, 75,000 people home and we were functional on day one and fantastic by day five. It was just unbelievable; we didn’t miss a beat. And we ran the organization from home for the most part for a year and a half.

FP: What was the biggest lesson you’ve learned from those uncertain times?

DM : How resilient people are. We underestimate the resilience of society in general. All elements of society are incredibly resilient. We adapted quickly, whether it was to technology, to health-care risks, to pull together without a doubt.

FP: What’s another important lesson that jumps out at you?

DM: We learned that fundamental economic principles still hold today. When you print a lot of money, it’s inflationary. Those are really important lessons, because for a while there it felt like we thought we had reinvented economics. (The pandemic) accelerated trends. I don’t think it started as many new trends, we already had these digital capabilities, we just accelerated it. It accelerated the digitization and disruption of many business models. We’re going through a fundamental reimagination of our entire economy … innovation is disrupting every business model from transportation to health care to banking to commerce to manufacturing. Business models and value chains are being decomposed into pieces and then getting rebuilt in different places with different economics.

Banking is no different. The whole discovery process in banking has been intact for 300 years — 150 years in our case — where the customer, when they have a financial need, comes to a traditional bank channel. Bank channels evolved, but people told their friends, maybe their family, then they told their banker what was going on in their life and what their financial need was: from buying a home, starting a company, investing, retiring. And now that information is being shared with the planet almost by what you post in Facebook, what you post in various channels, whether it’s TikTok, Facebook, Instagram, WhatsApp, Google Search. Your whole life, and where you are in your journey, is being communicated to the world. Everyone else is reading your signals now as a consumer, as a small businessman, as a corporate leader. The whole world knows, and the world is acting on those signals and the monetization of those signals is changing form in our economy.

That’s very disruptive to all industries including our own. Build a branch before and they came for 150 years. Build it now and they might not come, or you must go find your customer in a digital world and in the physical world. And we’ve reimagined our whole bank to do just that … and that accelerated during the pandemic and decelerated a bit post-pandemic. That thematic was a big part of our journey for the last seven years of my tenure as CEO, to reimagine the bank’s thinking about how that ecosystem is changing.

FP: If you could go back and offer yourself a piece of advice on day one of taking the CEO role, what would it be?

DM : One thing that has differentiated me as I’ve taken this 30-plus year journey through the organization is I was always willing to take risks. But just what does taking a risk mean? One way I define risk is declaring a goal or an ambition where failure is noticeable. But if you can take a risk where nobody knows about it, is it really a risk? Risk to me is when something doesn’t go right and people notice or something goes right and people notice, so it’s got to be visible and noticeable to be a meaningful risk. And, therefore, as I went through my early career, I set a bold ambition, and I declared that bold ambition.

When you do that, you attract a very different type of person around you. Because when you have ambition and you state it and you want to do exciting things, that attracts people who are like-minded who also want to do exciting things. Versus the opposite: if you’re conservative and you sandbag everything you’re doing and you’re always successful, but you don’t really take any risks, that attracts a different type of person as well.

FP: We called HSBC Canada the Bay Street belle of the ball when the Big Six banks were courting it. What ultimately made this the right match for RBC?

DM : It’s a good match for RBC because it’s a good match for Canada. The HSBC deal is really good for Canada because it keeps all this capital in Canada. When HSBC Global decided to exit the Canadian marketplace, a Canadian buyer like RBC, paying $13.5 billion, does a bunch of things. One, it is really good for customers. We spend $5 billion a year on technology; $5 billion is a lot more than HSBC spent. We get to offer these online banking capabilities, mobile banking capabilities, partnerships with Vantage and WestJet, cents off at the pump, the credit-card lineup we have, the mutual-fund lineup we have. All these capabilities that we built over the last decade, we now get to offer to the HSBC customer, which is really exciting.

The second thing is it’s good for Canadian taxpayers, because … when we do all this, we’re going to make 50 per cent more profit in Canada than the previous model because of the greater efficiencies, the greater activity within the client base. We’re going to probably, depending on your forecast of the business, pay upwards of $200 to $300 million more in taxes a year than today. That’s a lot of money. A quarter (of that incremental profit) gets shared with the taxpayer, then half of that gets shared with equity owners. We’ll pay 40 to 45 per cent of our profit out in dividends.

FP: You took a stand last year that other bank CEOs and the federal government have to get more serious on climate risk. What are you hoping to see from the private and public sector to tackle this issue?

DM : You’re starting to see businesses commit to a plan. At RBC, when we set our targets for the journey and our lending portfolio, we’re ascribing to a one-and-a-half-degree scenario, which means that’s the journey curve you need to be on to get this much carbon out by 2030 before you get to net zero in 2050. We’re doing a lot better job of (having businesses and governments work together) now than pre-pandemic for sure as we’ve really found an urgency to make a difference.

Another thing business and government can do is to think through how much pressure you put on the supply side to change, because right now I’d say the supply sides bear 99 per cent of the responsibility to change. You’ve got to change your product, or change your service, you’ve got to take the carbon out of what you’re selling. The demand side has proven to be highly inelastic and that’s “I’m not really willing to change my behaviour very much. I’m definitely not willing to spend any more money on a green product.” Our survey said it’s something like $50 a year or $200 a year that (people will) pay more for green. That’s not a lot. Therefore, the consumer needs to be encouraged to change their behaviour in some areas.

That will help us reduce the risk of the journey and the cost of the journey. Because if you just leave it all to the supply side, which is service delivery and product owners and value chains, it can be very expensive to change and risky. If we combine that with behavioural change in demand and consumption, then we can de-risk this journey. No business can do it all by itself, but in partnership with government, we can get the right policies in place and, therefore, it is about de-risking this journey and ensuring an orderly transition. The No. 1 risk of failure is a disorderly transition.

FP: Now for something completely different: What do you do for fun? What are some of your hobbies?

DM : I played basketball and I coached a bit of basketball. My son played basketball, my daughter played volleyball and I loved watching the kids. Now the kids have grown up. Throughout the year, though, I’m an avid guitar player. I love playing music, I find playing music incredibly cathartic at the end of a long day. I probably have 10, 12 guitars, and I love YouTube — it’s awesome. Thanks to YouTube, I can play along with anybody or play any song. It was a lot harder when I started in college, because we didn’t have YouTube, so you played by ear mostly, listening to often-scratchy records that you played over and over again. Now, it’s so much easier, so much more fun.

FP: If you could have a jam session with any musician, living or dead, who would it be?

DM : Right now? Well, everyone knows I’m a massive Pearl Jam fan. So, it’d be Mike McCready, lead guitarist of Pearl Jam, and/or Eddie Vedder of Pearl Jam would be pretty cool at the end of the day.

FP: What have you been reading lately?

DM : What have I been reading lately … the HSBC strategy? It’s a lot of internal stuff. A lot of my reading is consumed by keeping up with what’s going on in the world. I do like books on leadership. I’ll try to pick up a book on leadership from successful leaders, obviously … but even some leaders who have faced challenges. There’s so much to learn from, whether it’s Jeff Emmons’ new book, or David Rubenstein, who wrote a great book on leadership. Ray Dalio has written some great books, as well … he did a brilliant job talking about how to read the world and economy around you.

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FP: What’s next for Dave McKay?

DM : Getting HSBC implemented and approved at the end of the day. It’s a big year ahead of us, it’s a big acquisition for us. Getting it approved and implemented and taking care of the customers and employees is a big part of that. And then continuing to help the bank adjust to a changing future and helping our communities, country and bank thrive and in a fundamentally changing world. The technology curve’s accelerating the size of the impact; it’s getting bigger and bigger. The climate journey and helping Canada and RBC get the climate journey right is really important to me, important to my kids, important to our country. I’m all in on Canada and I’m all in on RBC.

• Email: shughes@postmedia.com | Twitter: StephHughes95

Selecting Canada’s Outstanding CEO of the Year

Celebrating its 33rd anniversary this year, Canada’s Outstanding CEO of the Year award was established by executive search firm Caldwell in 1990. This highly respected award honours an executive in Canadian business who exemplifies integrity, insists upon excellence, earns the trust of others and has built a globally competitive organization. It is the preeminent recognition for Canadian CEOs.

Canada’s Outstanding CEO of the Year advisory board comprises more than 20 of the country’s most respected business leaders and academics, including past honourees of the award. The board meets annually to select the current year’s recipient based on five key criteria: vision and leadership, corporate performance, global competitiveness, innovation and social responsibility.

The 2022 advisory board members are:

James Balsillie; Charles Brindamour, CEO, Intact Financial Corp.; Marie-P. Charette-Poulin, corporate director; Dean Connor; George Cope, chair, Bank of Montreal; Patrick Daniel, chairman, Daniel Family Foundation; Paul Godfrey, executive chairman, Postmedia Network Canada Corp.; Linda Hasenfratz, CEO, Linamar Corp.; Krystyna Hoeg, corporate director; Dezsö Horváth, dean emeritus, Schulich Chair in Strategic Management, Schulich School of Business, York University; Harold Kvisle, former CEO and president (retired), TransCanada Corp.; Eric La Flèche, CEO and president, Metro Inc.; Jim Leech, chancellor, Queen’s University; Hugh MacKinnon, chairman and CEO, Bennett Jones; Nadir Mohamed, former CEO and president (retired), Rogers Communications Inc.; Gordon Nixon; Philip Orsino; Calin Rovinescu, former CEO and president, Air Canada (retired); Indira Samarasekera, president emeritus, University of Alberta; Lino A. Saputo, CEO and president, Saputo Inc.; Guylaine Saucier, corporate director; Frank Vettese, corporate director and CEO emeritus, Deloitte Canada; Donald Walker, former CEO, Magna International Inc. (retired).

Outage outrage

We love to hate our telecoms and Rogers Communications Inc. provided plenty of fodder in July when a 19-hour network outage forced more than a quarter of the population off the internet and wireless. Debit and credit machines failed to work, emergency calls went nowhere and the Weeknd was forced to cancel a concert in Toronto due to the lack of connectivity. Telus Corp. took advantage of the opportunity to tweet, “Outages aren’t appealing. Switch to Telus.” Rogers eventually filed a 39-page reply to questions from the Canadian Radio-television and Telecommunications Commission about the outage, but CEO Tony Staffieri in an open letter blamed it on “a network system failure following a maintenance update in our core network.” He said Rogers would learn from its mistake, but just one thing: its wireless network in April 2021 similarly crashed, with the company at the time blaming a software update. Good thing it learned its lesson back then.

Food fight

Galen Weston’s public declaration in October that Loblaw Cos. Inc. would freeze prices on its 1,500-strong No Name product lineup was met with an odd mixture of praise and scorn. The former because food prices have been soaring by double digits this year; the latter because competitor Metro Inc. quickly revealed that all the big grocers freeze prices on all products — store brands and national brands — at this time of year. “It is an industry practice to have a price freeze from Nov. 1 to Feb. 5 for all private-label and national-brand grocery products and this will be the case in all of Metro banners (in Ontario, Metro, Food Basics Ltd., Marché Adonis),” Metro stated. Loblaw tried to make the case that wasn’t true, but to no avail.

Beware of the pod, people

Coffee pods are a brewing business, but there have long been questions about the extra waste they create, so it’s a market ripe for a recyclable version, something Keurig Canada Inc. in 2019 claimed it had developed. Just one problem: the fancy K-Cup pods were still not recyclable in most parts of Canada despite Keurig advertising them as such. After following up on complaints, the Competition Bureau in January fined the company $3 million and made it give $800,000 to a Canadian charitable organization focused on environmental causes. To add insult to injury, Keurig had to pay an additional $85,000 for the costs associated with the bureau’s investigation, change its recyclable claims and publish its mistakes on its website and social media, as well as on national and local news outlets.

The art of delay

The Canadian Transportation Agency (CTA) now requires airlines to provide passengers with either a refund or rebooking, at the passenger’s choice, when there is a flight cancellation or lengthy delay for any reason outside of the airline’s control or unrelated to safety issues. The new rules close a regulatory loophole in the agency’s 2019 rules that stated ticket holders were entitled to $900 to $2,400 in compensation for flight delays within an airline’s control. But both Air Canada and WestJet Airlines Ltd. have denied ticket holders compensation for delayed or cancelled flights because they claim staffing shortages are a safety issue. The CTA has disputed that as a valid reason. The CTA received a total of 28,673 complaints for the year up to March 31, 2022, including 12,158 new complaints and 16,515 carried over from the previous fiscal year. Of the total, about half involved flight disruptions, while ticketing and reservations complaints also numbered in the thousands.

A weighty matter

Weight-loss schemes are always popular, especially since many of us have been sitting on our duff for the better part of three years, but they’re often too good to be true as consumers of WeightOFF Max!, Forskolin+ and Forskolin Nx might have discovered. The Competition Bureau in April ruled that NuvoCare Health Sciences Inc. and founder Ryan Foley “made marketing claims that gave the false or misleading impression that their products have been proven to cause weight loss.” In the settlement , they agreed to pay $100,000 in total penalties, change or remove all weight-loss claims about their products and agreed not to do it again. Turns out, there’s just no substitute for hard work.

Hello dad … I’m in jail

You’ve no doubt worked some voluntary overtime during your career, but probably not because you were threatened with jail time if you didn’t. Scaffolding company AlumaSafway did just that, sending a memo to workers at a Suncor Inc. site demanding they accept “voluntary” overtime shifts or face termination, a hiring ban, legal action and possible fines or jail time. But the company had the Alberta Labour Relations Board on its side: “The board finds the employees’ concerted refusal to accept overtime shifts for the purpose of compelling the employer to agree to terms and conditions of employment, which constitutes a refusal to work, to be an illegal strike,” it ruled after workers refused to take on overtime despite it being a condition in their union agreement.

Finance, schminance

We’re cheating a bit here because the Ontario Securities Commission issued a press release on Dec. 30, 2021, to say that cryptocurrency exchange Binance was not authorized to “offer trading in derivatives or securities to persons or companies located in the province,” but the is-it-or-isn’t-it debate lingered on into 2022. That’s partly because Binance on Dec. 29, 2021, notified users it was allowed to continue operations in Ontario despite earlier saying it would withdraw from the province because it wasn’t. It all led to the OSC publishing a pledge in March by Binance Holdings Ltd. and Binance Canada Capital Markets Inc. to cease opening new accounts and trading in existing ones. The OSC later permanently banned Mek Global Ltd., incorporated in the Republic of Seychelles, and PhoenixFin Pte Ltd., incorporated in Singapore (collectively, KuCoin) for operating an unregistered crypto asset trading platform. It’s not called crypto for nothing.

Grey matter

Certain companies and industries have image issues, including, it seems, Bell Media Inc., which decided not to renew Lisa LaFlamme’s contract in August despite her being an incredibly popular anchor with more than one million nightly viewers and a 35-year career with CTV News. Change happens, but the timing was a bit suspicious given that vice-president of news Michael Melling had allegedly questioned the 58-year-old anchor’s decision to let her hair go grey, prompting suggestions that ageism and sexism were the cause behind her departure. Parent company BCE Inc. later issued a memo to employees denying anything along those lines was behind the decision, adding that Melling had gone on leave. No word on how many grey hairs he has now.

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The fine print

Various surveys indicate a waning trust in the media, perhaps because a lot of the things we read in the “media” aren’t by accredited news organizations at all, but thinly disguised propaganda or promotional material. Take Bearing Resources Ltd. (now known as Bearing Lithium Corp.), a penny stock miner that in 2017 hired Stock Social Inc. to, among other things, write an advertorial for newswires and websites, and push promotional posts from 19 social media influencers on platforms including Twitter, LinkedIn, Facebook, investFeed and iHub. All of which is fine except nothing indicated that Bearing had paid for the promotion, thereby violating the British Columbia Securities Commission’s act. As a result, the commission in August ordered the company and its former CEO Jeremy Arthur William Poirier to pay a combined $35,000 in fines .

Tag ’em and bag ’em

Karolina Zikova of Chilliwack, B.C., in May was surfing Amazon.ca for a bathing suit for her eight-year-old niece when she came across a third-party seller ad for a “girl’s sporty swimsuit” showing a young girl wearing a white bathing suit. OK so far, but there was a message on the suit: “I love c–k.” Amazon Canada removed the offending items after being informed about it, but Zikova then came across a children’s hoodie displaying the same explicit slogan, this time modelled by a young boy. It was not initially removed by Amazon after being notified so she went public with her complaint . And then she found even more children’s items bearing the same slogan. Amazon eventually removed the offending items and told the CBC that its technology and dedicated staff constantly scan all products listed for sale and immediately remove ones that violate its policies. Except, of course, when it doesn’t. FPM

Clear Finance Technology Corp.’s offices have glass walls, wood-panelled floors and streaming natural light that combine to induce a Zen-like state. The noisy commerce of Toronto’s downtown falls away when the elevator opens on the 12th floor of the modern office tower where Clearco’s offices are perched. The Hockey Hall of Fame across the street belongs to a different world. The faint gurgling of a fountain in the building foyer, far below, is the only sound.

I tread lightly across a catwalk to an unmarked door — there are no signs — and, as directed, call Augusta, Clearco’s chief of staff and Strategic Initiatives lead, who unlocks the door and directs me to an office where two chairs sit astride a narrow desk. A flourish of green palm leaves on one wall is the room’s single distinguishing feature.

The only other people I see in these vast offices are two men, both in jeans, bearing laptops. They pad by without making eye contact. Michele Romanow bursts into the small meeting room, flashes her megawatt smile and gives me an enthusiastic hug. Two decades ago, I worked alongside her father, Marvin Romanow, at Nexen Inc., an energy company in Calgary that was sold to Chinese buyers in 2012 for $15 billion. He had looked at every possible financial re-engineering to hold onto the assets, but was pushed out as CEO of Nexen before the sale.

This is the first time I’ve met his daughter, the 37-year-old business mogul on Dragons’ Den who figured out ways to raise bucketloads of cash on Zoom during the COVID-19 pandemic, vaulting Clearco, the financial technology company she co-founded, into the realm of unicorn status. It’s putting to bed the notion that you have to be in the same room with potential investors to raise capital.

Nevertheless, conventional bankers and venture capital funders whisper of Clearco’s demise, even by year-end. Romanow is swimming against tidal waves of unpredictability and she knows it. A year ago, the tech sector was in a growth-at-all-costs mode, and now everyone, including her own company, must focus on profitability. She’s tossed aside five-year, two-year and even six-month business plans. Clearco has done a 180-degree-turn on international investments, laid off personnel, and adjusted profitability formulas to reflect changes in input costs, interest rates and risk.

The numbers are sobering and Romanow’s instinct in a volatile environment is to take less risk. No entrepreneur dreams of taking the blocks that were so hard to put together and knocking them down. It’s super scary and feels terrible, she says.

What parts of business as usual can she rely on right now? The founders she funds. They want to build business in good times and in bad times. “Founders. That’s who I was put on Earth to defend,” Romanow says with not a hint of hubris while thrusting a fork into her spinach and lentil salad. There’s a fierceness to her spirit.

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Clearco built an algorithm, a unique formula built on artificial intelligence, to get capital to entrepreneurs who have trouble accessing traditional banking and venture-capital funds, and to do that in the most egalitarian way possible. It doesn’t meet founders, doesn’t care where (or whether) they went to school and doesn’t review pitch decks.

In a woke world caught up in the spin of environmental, social and corporate governance, it’s surprising how Romanow has built a meritocracy for founders. No targets or quotas for female or BIPOC investors were set, but two years in, Clearco realized that from their portfolio of 10,000 companies, 50 per cent of their founders were female, one-third BIPOC and one-quarter didn’t have a post-secondary education.

In her jean jacket, tight-fitting tank top, belt buckle and trendy finger jewelry, it’s easy to see how Romanow would fit in anywhere in Silicon Valley, a place where magic mushrooms and other crazy new ideas aren’t crazy. Instead, she’s chosen to root her business in downtown Toronto. She talks of hypnosis and visualization when asked about how she stimulates creativity.

It’s been 20 years since Romanow lived on the Prairies, but she hasn’t given up on Alberta’s enduring entrepreneurial spirit even though she’s unlikely to relocate Clearco’s corporate headquarters. Why not Alberta? It’s an audacious idea, Romanow says with a chuckle, but you have to keep shooting pucks at the net. FPM

Correction: An earlier version of this article said Michele Romanow smokes. She doesn’t. We apologize for the error.

It is an “embarrassing” story, but no story is any “good” without the pure, unvarnished, make-a-fellow-blush truth, says Lance Uggla, so he launches into his tale regardless.

Everybody, and that includes even stratospherically successful businesspeople, begin somewhere. Uggla’s start in the world of finance was the Bay Street job interview circuit, a loop that took him in the fall of 1986 from bank to bank, and eventually put him in a chair across from Mark Landau, a New Yorker who wore his tie loose at the collar and had marching orders from his superiors at Wood Gundy Inc. to hire a team in Toronto to create a Canadian market for mortgage-backed securities. It was a market, by the way, that didn’t exist at the time.

This was an opportunity loaded with possibility, and the MBA-packing young guns interviewing for it came dressed to kill: white shirt, red tie, dark socks and black shoes polished to an exquisite shine. Several had Bay Street in their blood; their fathers, and their fathers’ fathers, had been bankers. Uggla’s father, however, worked in forestry. His home was Maple Ridge, B.C. His resumé highlighted a master of science in accounting and finance from the London School of Economics. His outfit choice was questionable. “I am in a burgundy shirt and a black leather tie in a bank,” he says. “I do not have a clue.”

But Landau had a pretty good sense the 24-year-old was different from the rest. Uggla had a salesperson’s outgoing personality, was whip-smart, good with numbers and polite in the way that Canadians tend to be. Yet what struck the American most was that he was a freethinker. “Lance had an open mind towards anything and everything, and because of that, he had an amazing knack for being able to see opportunities,” Landau, now retired, says from Arizona.

That knack certainly came in handy on Bay Street, where Landau, Uggla and his Canadian buddy from LSE, Richard Nesbitt — “the Three Musketeers,” as he refers to them — hit a home run selling mortgage-backed securities. But the guy in the burgundy shirt was destined for even more revolutionary things.

In 2003, Uggla founded Markit Ltd., a financial information and services company, in a barn in the English countryside at the beginning of the big data era. Markit brought transparency and myriad decision-making data points to the historically opaque international credit and lending markets. Banks and asset managers signed on as paying customers. Information won the day. He had hit the jackpot. “Lance is a Canadian who changed the world on a global basis in the financial sector,” says Nesbitt, who went on to become chief operating officer at the Canadian Imperial Bank of Commerce.

Now, the engaging, boundlessly energetic London-based Uggla — at age 60, mind you — has an even bigger goal in mind: saving the world, perhaps while potentially making another huge pile of money, as co-founder and chief executive of BeyondNetZero, a climate-investing venture under the umbrella of General Atlantic Service Co. LP, a private-equity investor that manages close to US$84 billion in assets. “I can’t personally stop global warming, but I can invest in companies, and I can accelerate those companies that are reducing emissions,” he says.

Uggla is not the only investor thinking this way. The existential crisis of our time is the opportunity of a lifetime for some, including those with the deep pockets looking to back them. Canada Pension Plan Investment Board CEO John Graham in a recent speech said US$755 billion was spent worldwide in 2021 on the energy transition. “This is where the money is going,” says Diane-Laure Arjaliès, an associate professor at Western University’s Ivey Business School in London, Ont.

The money pot is only going to get bigger. Annual global investment in the green energy transition will need to more than triple from current levels to US$4 trillion by 2030 to achieve net-zero emissions by 2050, according to the International Energy Association. Companies have duly taken note, says Clark Savolaine, a partner at KPMG specializing in environmental, social and corporate governance (ESG) strategy. These companies are incorporating emission-reductions strategies into their business models, understanding that a failure to get with the proverbial program is not merely a threat to the planet, but a potential blight on their bottom line. “ Climate change itself is going to be the great disruptor of the 21st century in a way that the internet was the great disruptor of the 20th century,” he says.

Look at it this way: 30 years ago, Jeff Bezos was just some geek in a garage with a dream to sell books online. Amazon.com Inc. today has close to 1.5 million employees and generated about US$500 billion in revenue last year. The next Bezos is presumably out there in the climate-change space, tinkering away, waiting to disrupt the economy as we know it, or else waiting to meet the right investor who believes in them. Enter Lance Uggla. “Where I am most valuable in any situation is the identification of the entrepreneur,” he says.

Uggla knows a lot about that journey. He grew what became IHS Markit Ltd. into a US$40-billion market cap giant, and then merged with an even bigger giant, S&P Global Inc., in a headline-making deal that closed in February. In other words, he now has enough money to wear whatever he darn well pleases, and on a late October afternoon in New York that would be a blue shirt, left open at the collar, and no tie.
Uggla could have spent his post-merger days chasing his grandchildren around — family being his chief pursuit outside of work — but he wanted to do something “relevant around climate change.” Investing in companies with the potential to combat climate change, at scale, and working with the entrepreneurs behind them to hone their business chops appealed to his strengths.

The team at General Atlantic crunches the numbers and makes the business case for possible investments. Uggla is the tire kicker, the wizened veteran who has been there, learned from his mistakes and built a winner. His role, in part, is to shake the founder’s hand, look them in the eye to take their measure and hear what they have to say about the entrepreneurial journey. Do they have a “people agenda?” Are they creating a culture? Is the leadership team designed for growth? Are they considering going public? What, pray tell, is the overall strategic vision, and is it compelling enough, emissions-reducing enough and sound enough from an investment-growth perspective for BeyondNetZero to buy in?

Should the venture’s targeted investments — including being the lead in a recent US$260-million funding round for Sun King, a solar energy provider for off-grid homes in Africa and Asia — pan out, both Uggla and the world win. Other portfolio highlights include 80 Acres Farms, an indoor, vertical, pesticide-free food grower that employs robots and other high-tech means to achieve maximum yields, and supply chain optimizer o9 Solutions Inc., which helps clients such as Walmart Canada Corp., Nestlé SA and Caterpillar Inc. become more efficient and reduce waste.

The key for Uggla is finding and talking with those entrepreneurs who could be destined for greatness. Slipping into a hockey metaphor and dating himself somewhat, he says great players such as Brad Park, Guy Lafleur and Wayne Gretzky relish the opportunity to meet other players. Transformative sports talents are a breed apart. So, too, are entrepreneurs and Ugglas.

Uggla’s octogenarian parents, Gord and Lorraine, live in a red cedar house on a three-acre property in Maple Ridge. It has been a tough year considering B.C.’s recent drought, and a difficult stretch for Gord, whose health hasn’t been great. But that hasn’t stopped the couple from working six to 10 hours a day, seven days a week, on the property. “I don’t like the term workaholic, but we all like to work in this family,” says Gord, who turns 85 in January.

Lance, his only son, says: “My parents treat work like their hobby, and I grew up in their environment. It was never a frustration to have to work, it was an opportunity, and I think that stuck with me, because I have never gotten up and not been happy to go to work.”

Uggla and his older sister Louise made dinner for their folks when they were teenagers, because mom and dad were busy working. If Gord was teaching a lumber-grading course on the weekend, the kids would prepare the lumber, pack the car and pull their weight, so to speak. They even helped paint the red cedar house. “Lance hasn’t changed,” Gord says.

Uggla gets home to B.C. when he can, but he calls home at least once a week, often after a nice dinner out in London, Paris or wherever he happens to be. Lorraine, a prolific baker, typically answers the phone. Mother and son will talk about food. She will fret over whether the Indian cuisine he had for dinner was too spicy. He will assure her that not all Indian food is spicy, and not to worry so much.

Decarbonizing the economy doesn’t come up in these conversations. But the real-world impacts of the climate crisis abound. In Maple Ridge, Gord’s rhubarb patch was starved for rain through September, and the elderly couple have had to relocate their bedroom to the basement to escape the oppressive heat of recent summers.

Of course, our planet’s changing weather has plenty of company in the global department of things to feel depressed about: there’s the war in Ukraine, fuel shortages in Europe, lingering global supply chain challenges, sky-high inflation , polarized politics and recession fears. But Uggla isn’t one to despair. “It is easy to focus on the negatives, but I am a person who looks toward the positive,” he says.

Part of what attracted Richard Nesbitt to Uggla when they initially met as classmates at LSE, besides him being a fellow Canadian, was his unbridled optimism. Nesbitt characterizes his younger self as someone who could look at something and see the “99 ways it could go wrong.” Uggla was “one of these guys who has an optimistic view of the world: ‘Right, we are going to work hard. It is going to get better. We are all going to do really well.’”

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But even Uggla could never have predicted just how well he was going to do with IHS Markit. He went from a barn in the English countryside to the ranks of those the British press write about in their “rich lists.” (The Sunday Times pegged his fortune at a bit more than $1 billion a few years back).

The best part of having money in such vast sums has been giving it away, Uggla says, warming to the subject, and reaching for his smartphone to share a recent message he received on WhatsApp from an Uggla Family Scholarship recipient at LSE. He donated $58 million, divided more or less evenly between the London school and his Canadian alma mater, Simon Fraser University in Vancouver, to establish the scholarship two years ago. It covers every expense — room, board, tuition, books and transportation — for successful applicants, who come from diverse backgrounds, show strong academic and leadership potential, and would not otherwise be able to afford a university education.

The financial component of the gift is substantial, but arguably even more valuable is getting access to the scholarship’s namesake along with his extensive global business network. In short, Uggla is committed to doing whatever he can to help these students out, assuming they hold up their end of the academic bargain, which is why they keep pinging him with questions on WhatsApp, such as: “Hi Lance. I was wondering if you had some free time to check my CV and cover letter before I send them off. Will has been helping me a lot, but I would like your opinion also.”

A student at Simon Fraser asked when they should start applying for summer jobs and what to wear. “If they are applying at the banks, guess what, I can just tell them: no burgundy shirts and black leather ties,” Uggla says, with a chuckle.

The joke is that the outfit didn’t matter in the end, because the guy with the unrefined fashion sense had a nose for opportunity, the Uggla family work ethic and an optimist’s belief that the best is yet to come. FPM

• Email: joconnor@nationalpost.com | Twitter: oconnorwrites

Marilyn Furlan is older than the town of Kitimat. At 74, the Haisla Nation elder has lived at the headwaters of the Douglas Channel in northern British Columbia for longer than the municipality has officially existed, observing the rise and collapse of successive industries that have brought thousands of workers to the remote deepwater port since the early 1950s.

An aluminum smelting plant arrived first, and the Aluminum Co. of Canada, or Alcan, built a town for its workers just 10 kilometres from the Haisla’s home community of Kitamaat Village. Afterwards came the Eurocan Pulp and Paper Co. Ltd. mill in the 1960s, and then the Methanex Corp. petrochemical plant in 1982, all drawn by the area’s powerful hydroelectric capacity and shipping access to international markets and all largely indifferent to the Indigenous people who had lived there for thousands of years.

Furlan and her family acquired a skepticism of the vaunted benefits of industrial development. “In those days, we weren’t included in any plans at all,” she recalls. “Where Rio Tinto Alcan sits now, our people used to go fishing in the little creeks.” Wastewater from these industrial projects polluted the Kitimat River, Furlan says, decimating the stocks of oolichan fish that her community relied on as a source of food and grease. “So, yeah, there’s a lot of history of mistrust with Alcan in those days,” she says.

Fearful of what further damage a potential spill of diluted bitumen would do to coastal waters, Furlan spoke out against Enbridge Inc.’s Northern Gateway pipeline project at public hearings held in 2011. But she was surprised by what she saw when LNG Canada came knocking, seeking her community’s approval to build the country’s first export terminal for liquefied natural gas (LNG) on Haisla territory. “LNG Canada is the first company that has asked our elders what we would like to see,” she says. “LNG is the first company to invite elders to view the plant. LNG is the first company that has shown us respect, treated our land with respect.”

Megaproject in a small town

Construction is now underway on LNG Canada’s massive $17-billion export terminal and more than 5,000 construction workers and contractors have descended on Kitimat and the surrounding areas. Thousands more are expected in the coming months as the megaproject approaches peak construction.

Two planes a day arrive at the Northwest Terrace Regional Airport loaded with workers arriving from other parts of British Columbia and other parts of Canada. Rental and home prices in Kitimat have skyrocketed; restaurants and stores are struggling to hire and retain staff; and there’s a severe shortage of affordable homes and daycare spaces. A rental unit that cost less than $500 or $600 a month a few years ago now goes for $1,700 to $1,800.

LNG Canada has tried to minimize its disruption to the community with varying degrees of success, constructing worker accommodations adjacent to the job site and implementing a zero-tolerance policy for workers caught breaking the law, but locals acknowledge it’s impossible to mitigate all the strains that come from a project of this size.

“LNG Canada has seen what happened up in other places like Fort McMurray and did everything they could to make sure we didn’t see that happen here,” Kitimat Mayor Phil Germuth says. “There was no living out allowance (paid to employees). If you were here, you were staying at the camp. Or if you want to stay in the community, fine, you’re doing it at your own cost. You don’t have this massive amount of people coming into the community, building things that aren’t going to be needed in the future.”

There has been some grumbling from local contractors, too, about all the out-of-province subcontractors, from Alberta and elsewhere, frustrated that larger companies won many of the contracts. Across the channel from the town of Kitimat, the Haisla are in desperate need of teachers and the band has been unable to hire an addictions counsellor since the last one left earlier in the pandemic.

Still, most locals say these are good problems to have; the problems of a community with an economic future. LNG Canada and the modernization of the aluminum smelter under Rio Tinto Ltd. have caused investment in the community to explode, Germuth says. At one point, he says, almost every single vacant property in town was attracting interest from developers.

‘Now what do we do?’

All this activity is a far cry from Kitimat’s problems a little more than a decade ago, when two big employers shuttered operations — Methanex’s methanol plant and Eurocan’s pulp and paper mill — putting more than 650 people out of work. In the wake of those closings, Kitimat’s population contracted by 19% between 2001 and 2011.

“We went through a period of time when the housing market hit rock bottom. It was very poor,” Louise Avery, long-time director of the Kitimat Museum & Archives, says. “I think the community said, ‘Now what do we do?’ Because this community is an industry community.”

That’s why it came as a huge relief for many when energy producers began to seriously explore the possibility of constructing LNG export facilities in Kitimat. Three major LNG export projects slowly emerged from a list of more than a dozen proposals, two — LNG Canada and Kitimat LNG — located in Kitimat and one, Woodfibre LNG, in Squamish.

Germuth was leaving a Def Leppard concert at Rogers Arena in Vancouver in October 2018 when he learned that a final investment decision had been made to proceed with LNG Canada by the consortium of companies backing the project. “It was raining like you wouldn’t believe and I’m in the middle of the sidewalk and I see our fire chief, of all people,” he says. The chief told an incredulous Germuth to check his phone, that LNG Canada had just given the green light after more than seven years of consultations and regulatory applications.

Germuth immediately messaged Susannah Pierce, the project’s former director of corporate affairs, who confirmed the news. “It was elation, for sure,” he says. “There’s no doubt the community was thrilled that they gave their FID to build their project here with us.”

Chevron Corp. eventually pulled the plug on its joint-venture Kitimat LNG project in 2021, followed swiftly by its partner, Australian-based Woodside Energy Group Ltd. This disappointed locals who had hoped to see a decade or more of sustained construction activity, with Kitimat LNG ramping up just as work began winding down on LNG Canada.

Still, there is cautious optimism in Kitimat as the locals brace for LNG Canada’s workforce to swell to around 7,500 strong next year during peak construction. And they’re hopeful the LNG Canada consortium, led by Shell Canada Ltd., could soon approve a second phase of the project, doubling its export capacity to 28 million tonnes of LNG per year from 14 million tonnes.

First in the world

LNG Canada has provided the Haisla revenue and resulted in more than 20 joint-venture partnerships with businesses servicing the plant, including a $500-million joint agreement with Seaspan ULC for the construction and operation of tugboat services to shepherd the massive LNG vessels that will soon ply the waters of the Douglas Channel.

The tugboat deal is important to the nation. Chief Councillor Crystal Smith says she’s focused on creating long-term prosperity and ensuring her members will be able to find jobs long after construction of the megaproject is complete. The Haisla leader has encouraged members to take advantage of training opportunities and to obtain credentials transferable to jobs in operations or at another worksite. “We don’t want our people only to have these opportunities here in our territory, but to have those skill sets so that (they) can utilize them on other projects anywhere in the world,” she says.

But the linchpin of the Haisla’s economic strategy is far more ambitious and unlike anything attempted by an Indigenous group in Canada before. In 2021, the Haisla Nation announced a partnership with Pembina Pipeline Corp. for the construction and operation of Cedar LNG, a $3-billion LNG export facility proposed for a site not far from LNG Canada and the Rio Tinto Alcan smelter in Kitimat. If it receives regulatory approval, the facility would be the first Indigenous majority-owned LNG project anywhere in the world.

Haisla’s leaders have talked about the project as a powerful example of economic reconciliation, from consultations on major projects to partnerships and, finally, to Indigenous ownership. Cedar LNG has also become meaningful for individual members of the nation as well.

Furlan says Cedar LNG representatives have welcomed Haisla community members to tour around the project site and they held meetings in Kitamaat Village with chiefs and elders. “I am proud,” she says. “This is nothing like what Alcan did in the years (before). They just did it. Now, our people are more aware of what our leaders can do and what we ask our leaders to do, because they have to come to the public. They have to come to the public to get the OK and that is good. I like that part of it. I go to every meeting.”

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Despite the progress she’s seen, Furlan says the arrival of the LNG industry in Kitimat has not been without some painful moments for the Haisla and neighbouring Indigenous communities. Indigenous workers are the frequent targets of racist remarks on worksites, and she says she has seen people quit in frustration. A relative of Furlan’s, while working on the Kitimat LNG site in Bish Cove, confessed to her that he would never tell anyone at work that he was Haisla because he knew he would be treated differently. “He said the remark that they make is, ‘You got the job because you’re Haisla.’ Comments like that, even written on the walls,” she says. “That was the one thing that really, really got to me.”

But Germuth says one powerful change for the better can’t be overlooked. LNG Canada executives brought representatives from the District of Kitimat and the Haisla Nation together for meetings with the project’s investors when they first began visiting the town in 2014. Despite the proximity of the two communities, “our relationship before LNG Canada was basically non-existent,” he says. Comments echoed by the Haisla. “They brought us both together in the same room, really in neutral territory, not in one of our council chambers where you feel the pressure,” he says. “We got to get to know each other very well and the relationship between us and the Haisla has been going very, very well since. LNG Canada was really the catalyst behind that and we’re very thankful to them for that.”

In a town where it’s easy to find boosters for industry, some residents still admit to harbouring doubts about the long-term future of the LNG industry on Canada’s West Coast. Concerns about the risk of global demand slowing for the commodity have been temporarily dispelled by an energy crisis that has sent gas prices skyrocketing in Europe following Russia’s invasion of Ukraine in February. But there are still apprehensions about the possibility of new federal environmental policies or a change in the provincial B.C. government derailing local ambitions for more LNG development.

There is one kernel of hope, however, for Haisla who long for the return of oolichan stocks in the Kitimat and Kildala Rivers. New graduate positions in conservation and recovery research have been funded for five years by LNG Canada, a collaboration between the Haisla, DFO Science and Fisheries Management, and B.C. universities and environmental authorities. Many Haisla believe the band’s elected leadership about the long-term benefits of LNG development for the community, Furlan says, before adding, “Our people aren’t afraid to ask questions anymore.” FPM

• Email: mpotkins@postmedia.com | Twitter: mpotkins

It shouldn’t surprise anyone that legacy automakers are leading with their core strengths as they charge towards a battery-electric-vehicle (BEV) future. Mercedes-Benz’s EQS SUV is exactly as stately as you’d expect a top-of-the-line Benz to be even if there’s nary a sound from its engine bay. Similarly, Bayerische Motoren Werke’s iX M60 is every bit the speed demon that BMW always leads with, though its 610 horsepower are driven by lithium ions rather than fossil fuels. Even Toyota Motor Corp. is staying true to form: the bZ4X, its first BEV, is as perfectly sensible as any Camry.

Closer to home, Detroit is straying no further from its traditional modus operandi. For example, Ford Motor Co. started its own electric revolution by fobbing off its most iconic brand name on an SUV — a battery-powered supercar, no less — with the Mach-e looking more like an Escape or Explorer than any Mustang that’s gone before. As a follow-up, it’s electrifying the F-150, its best-selling vehicle and the most popular vehicle in North America.

As simple as it might sound, remaking the classic pickup isn’t nearly as simple as substituting a battery for a V8 engine. Indeed, the truck and SUV segments that North American automakers dominate may yet prove the most difficult to electrify. Multiple reviews have concluded that even the Lightning, which boasts the biggest battery, can barely eke out 160 kilometres of range when towing a trailer. And with battery minerals scarce, the cost of the Lightning’s big batteries — the largest of which is about 140 kilowatt-hours — has begun to threaten the F-150’s affordability, government incentives for electric vehicles notwithstanding. Nonetheless, the waiting list for the first zero-emissions truck on the market is long.

If an electrified pickup is shocking, wait until you get a look at General Motors Co.’s Hummer EV. As outrageous as the original — Arnold Schwarzenegger-approved — the Humvee, GMC’s electrified sport brute, is completely over the top. Its 212.7 kilowatt-hour battery weighs 1,326 kilograms — that’s 2,923 pounds — or more than an entire Honda Civic. It stands over two metres tall, is 2.2 metres wide and stretches more than 5.5 metres from stem to stern. The General even had to invent a low-speed “Crab Walk” function — which makes all four wheels steer in the same direction — for better low-speed maneuverability. Even if it was designed to make off-roading easier, you just know that you’re going to see some giant yellow SUV slithering sideways in a Walmart parking lot somewhere, the suburban equivalent of the Rubicon Trail.

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But the prize for sticking to your guns goes to Dodge. In what parent company Stellantis NV is billing as piston power’s “Last Call,” 2023 will be the last year for the traditional Charger and Challenger muscle cars. Gone will be the superchargers and V8s; in are high-voltage inverters and electric motors. Even though this is just the beginning of Dodge’s electrification project, it promises that the first model, the Charger Daytona SRT Banshee, will scream through a quarter-mile in less than 12 seconds.

Despite the hue and cry from traditional Dodge diehards, electrifying muscle cars makes perfect sense. For one thing, the instant torque of an electric motor is every drag racer’s dream. For another, battery-electric’s biggest drawback — namely, its heavy batteries — doesn’t really matter since all Dodge muscle cars are already overweight. And who cares if their range is lousy? How many owners of supercharged Challengers take their gas guzzlers on cross-country tours? Dodge even invented something called a “Fratzonic Chambered Exhaust” to make the new Charger sound a bit like a muscle car. It may not sound like a Demon — or anything piston powered, for that matter — but it’s still loud, brash and impossible to ignore. In other words, it’s as in your face as any Hellcat Redeye.

Just like a 9,000-pound Hummer or an electric SUV named after the most iconic pony car of all time, this is Detroit doing what Detroit does best: big, overpowered vehicles that get your attention. The propulsion system may have changed, but the cars remain the same. FPM

By David Lee

Fashion seems to be borrowing trends from the 1990s, television shows and movies are reviving that decade’s top shows and cocktail bars seem to be following along. Drinks such as espresso martinis and cosmopolitans have been surging in popularity over the past year or so and bartenders say they will continue to be popular as consumers seek comforts from when times were better.

If you’re not familiar with cocktails from the 1990s, The Difford’s Guide says the era is defined by fresh, fruity vodka-based drinks, especially if it’s served in a V-shaped martini glass. It’s also the era that kicked off the current wave of cocktail popularity. “Their fun and sometimes wacky nature makes us think of times when we were younger,” says Madeleine MacDonald, an instructor at the Southern Alberta Institute of Technology’s School of Hospitality in Calgary.

These cocktails might even take us back to iconic pop-culture offerings such as Sex and the City, which co-starred the cosmo (vodka, Cointreau and cranberry juice), and The Big Lebowski, which featured the white Russian (vodka, coffee liqueur and cream). Although it might have come out in 1988, Cocktail starring Tom Cruise also had a huge influence on both cocktail and mainstream culture.

“Everyone’s enjoying things from that time whether they were alive at that time or not,” says Josh Lindley, lead bartender at Eataly’s Trattoria Milano in Toronto and co-creator of Bartender Atlas, an online community of bartenders and cocktail lovers. “I think that everything from the ’90s has become cool again and that was a decade when people were celebrating more often and were used to going out more.”

It’s not only life returning to normal after two-plus years of pandemic restrictions that has people going out again. The 2000s had a dramatic recession that put a damper on excess, something that lingered long after the economy ticked back up. Lindley also says “a lot of people who have spent the past two decades focusing on kids and careers finally have the time to go out again and are just ordering what they remember.” MacDonald agrees. “People are looking to step outside of their usual go-to drinks. They want to switch it up and spark more joy in their lives and often nostalgia is the best way of evoking this feeling.”

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But ’90s cocktails haven’t remained stagnant in their revival, with bartenders trying to rework and put a more modern take on older recipes, MacDonald says. They’re trying to refine the over-the-top nature of the cocktails in the ’90s, since modern cocktail fans embrace balance and craft in their drinks.

Certainly, a lot of innovation has happened in cocktails in the past 30 years and current bartenders have also moved onto modern classics such as the paper plane, featuring bourbon, or Sazerac, a cognac or whisky-based cocktail. “Generally, I think of drinks from the 1910s and the 2010s as better than anything that came out in the ‘90s,” Lindley says. “I hope that people, by nature, are willing to let go of the same old, same old things they are comfortable with and trust that present-day bartenders might have insights as to what makes a proper drink that they will love.”

But the pull of nostalgia is really powerful as our current obsession with everything ’80s and ’90s shows. “The ’90s cocktails have always had some sense of belonging as inspiration for cocktail lists for me personally.” MacDonald says. “This genre of drinks has always been around and will continue to be whether that is as an undertone or a continued obsession.” FPM

By Arthur Salzer

With a 40-year record core inflation print of 6.6 per cent in the United States and even higher rates in Europe, many investors are finally beginning to take the inflation threat seriously. Because of the age of most tenured investors and portfolio managers, the only reference point they can gravitate toward is the 1970s. This was a period of stagflation: no economic growth, high unemployment and double-digit inflation. It wasn’t until the now-famous Paul Volker, as U.S. Federal Reserve chair, increased short-term interest rates to 15.8 per cent that inflation was broken.

However, students of economic history have been finding the period after the Second World War is more analogous to our current situation. Gross domestic product (GDP) growth isn’t negative, but growing slowly at around two per cent. Unemployment is low as many workers are now part of the service sector, which does not have the same large fluctuations the manufacturing sector does. However, debt-to-GDP ratios for the developed world are at all-time highs.

The Fed and other central banks have been increasing interest rates (which has the effect of reducing borrowing and, therefore, the money supply), and it typically takes interest rates to be at or above the current inflation rate to tame inflation. We are nowhere close to that yet.

If interest rates were to be directed or allowed to climb to current inflation rates, most governments would not be able to service their interest payments over time and would, in effect, become either insolvent or need to “print more money” to make these payments. Total debt would continue to climb, especially as a ratio of GDP.

The 1945-to-1960 period is especially relevant to investors. Countries had incredible levels of debt due to the costs of paying for the war and the destruction the war created. If interest rates had been allowed to be set at the level the free markets determined, it would have been impossible for countries to service their debts. Countries would have become insolvent.

Interest-rate ceilings were created by central banks entering the market to buy government bonds to keep interest rates lower than natural market conditions. This causes an issue because there isn’t enough incentive for investors to hold sovereign debt if the current yield does not sufficiently compensate for the inflation risk.

Tightness in oil supplies

To overcome this challenge, governments mandate that pension funds and banks within the country have a certain proportion of their portfolios or balance sheets invested in that country’s bonds. The argument is that this mandate is for their own protection as government bonds are “risk free.”

As the interest rates on these bonds are below GDP growth plus inflation, the debt-to-GDP ratio declines over time. This is a form of financial repression and has been successfully used in the past. The result is that investors in government bonds will lose money (slowly) after accounting for inflation and taxes.

In the meantime, it’s worth examining the cause of this inflation. Much of it is due to governments’ response to the COVID-19 lockdowns. Substantial amounts of cash were directly sent to people and companies by the government after their economies were locked down. The lockdowns also devastated supply chains and global trade, which rely very much on just-in-time production. Shipping and manufacturing have been trending back to the pre-lockdown normal, but there is one sector that still stands out.

The energy sector, especially oil and gas, has not had sufficient capital investment for the past decade. This is due to myriad factors, including low prices as investors are not drawn to that area to invest in new exploration and development, nor has there been a new refinery built in the U.S. since the 1970s due to NIMBY (not in my backyard) issues. In addition, the environmental, social and corporate governance (ESG) crowd has not encouraged investment in carbon-intensive projects, opting instead for power generation from solar and wind.

The challenge is that fertilizer (urea and ammonia) production comes from the oil-and-gas sector; tractors that plant and harvest crops operate on diesel; and shipping to the end consumer relies on diesel. Reduced fertilizer usage means lower crop yields and, therefore, higher food prices. Higher diesel prices for planting, harvesting and shipping due to a lack of supply and refining capacity also result in higher food prices. This, of course, has little correlation with interest rates.

The war on Ukraine has only highlighted the reliance of Europeans on Russia for their natural gas and other hydrocarbon needs. Even if the war should end, higher oil and gas prices are a certainty until sufficient capital and development enters the sector.

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Lastly, due to the 2022 midterm elections, the U.S. has been flooding the market with oil by selling vast amounts from its Strategic Petroleum Reserve over the past year to keep oil prices down. The selling has been so significant that the reserve is back to 1980 levels. Prices of oil will soar higher when this selling ceases or, worse, the reserve needs to be replenished.

As a result, the tightness of oil supplies and refined products will likely continue (with ebbs and flows) for the next three to seven years. In the meantime, this translates to higher energy and food prices and, therefore, inflationary pressures that can’t be solved by merely increasing interest rates.

From an investor standpoint, what are some options? It’s possible to buy a diversified basket of oil- and gas-producing companies that have solid (and increasing) dividends via an exchange-traded fund and hold this through this period of increasing prices. A commodity trading adviser may be something to consider if you’re looking for a more diversified approach and buy/short a basket of commodities that include oil, gas and food.

As part of a balanced portfolio, these two options may form part of the inflation hedge that will be required for this decade.

Arthur Salzer is CEO and chief investment officer at Northland Wealth Management. FPM

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