Thank you to the committee for asking me to be here. I'm very glad to share my experience of the private sector partnering with local not-for-profit organizations. What you'll hear is that it's not only to reduce their environmental impact, but also to increase their profitability and at the same time grow the low-carbon economy.
Let me tell you a bit about it. I'll start in Waterloo region, with a company called VeriForm.
VeriForm has been around since 1996. They are a sheet metal fabricator. Essentially, that means they bend and cut steel. They have about 35 people or so. Their CEO is Paul Rak. They're based in Cambridge, Ontario.
Back in 2006 Paul and his wife had a daughter. She was their first. They watched a movie called An Inconvenient Truth. As a result of this, Paul went back to his workplace and said, “I'm going to change the way this place operates”—very altruistic—and he started to go about simple things.
He upgraded his lights to T5 from T12 bulbs. He improved the thermostat. He installed a disconnect on his bay door. When the sheets of steel would come in during the winter months, as the bay door would open, his guys would stop and have a smoke break, and the heat was just billowing out in the middle of the winter months. Paul installed the disconnect on the bay door so that when the bay door opened, the heat turned off. Now nobody is taking a smoke break while the bay door is open. They're rushing to get the steel off the truck and close the bay door. Then they can have their smoke break.
These 37 first projects that Paul implemented at his company cost him $46,000. The operational savings in energy costs in the first year alone were $89,000. The average payback period was 6.3 months. Paul expects to save, over the next 10 years, $1.42 million. This is a company of 35 people.
I met Paul as I was starting a not-for-profit in Waterloo region called Sustainable Waterloo Region. That was back in 2008. We ended up inviting Paul to speak at our launch event for this new entity that would convene networks of businesses, helping them to move from an interest in reducing their environmental impact to action.
Paul and VeriForm is one of our first three member organizations. Members that were part of a program we started there, called the regional carbon initiative, get support to set targets to reduce their carbon impact specifically. This means we offer them software to track their carbon footprint. We invite them out to events to meet and hear from people like Paul, from energy auditors, from consultants, to be part of the network of support they would need to reduce their environmental impact. We offer them tool kits, guides, and resources. Then, of course, we recognize the progress they make every year.
Fast forward to present day, that same company, VeriForm, with the support from Sustainable Waterloo Region has since reduced its carbon footprint by 80% and doubled its profit at the same time.
What else has happened in Waterloo region? Those three companies, Athena Software, a small high-tech company; VeriForm; and Enermodal Engineering, since bought by the MMM Group, have since grown to 65 organizations across Waterloo region. These are all organizations that have either intention to set a target to reduce their carbon impact or have already done so. Those targets amount to 55,000 tonnes—12,000 cars off the road every year—and those organizations employ 14% of the workforce.
Not only that, but these companies are paying fees to participate because they're getting value from the services they receive. Those fees in Waterloo region are a sufficient amount to have the program financially break even. This pays for two full-time staff, for the software, for the events, and for all the support they receive in Waterloo region.
Let me return to the low-carbon economy as another example. In 2013 there were five organizations among the 65 that set targets in that particular year. Those five organizations that set their targets had to first do energy audits. They spent $70,000 working with local energy auditors to identify projects that had a payback period of two years or less that were in their financial best interest to complete. They then completed the projects recommended, and spent an additional $90,000 locally on products and services in the low-carbon economy to achieve their targets.
Here are five companies reducing their environmental impact, increasing their profitability, and spending $160,000 in the local low-carbon economy in just that one year.
In fact, today in Waterloo region there's talk of what they are calling a centre for sustainability excellence. This would be a 120,000-square foot, net positive energy building that would be occupied by members of the regional carbon initiative, a transformational iconic space for the sustainability network in Waterloo region to be a hub for all the consultants, businesses, and students. They are even going to have a restaurant on the main floor that, of course, supplies local organic foods. This is the kind of transformational change that can happen in a community when the private sector partners with not-for-profits.
But this is not a Waterloo region story. That's not why you asked me to be here. So let me share with you that back in 2011 the first person who came to me and asked if they could have this same model was a professor from Niagara College. That person applied to the Trillium Foundation and received twice as much funding as we did in half the time. The first person Trillium called was me. Paul from VeriForm and I spoke at their launch event back in 2011. It was on the car ride home from that launch event that I realized this was not a Waterloo region challenge. This is a national challenge that needs a more national response, and perhaps we could be a part of that.
As a result, I left Sustainable Waterloo Region back in 2013 to start a new entity we now call Sustainability CoLab through which we're now supporting seven organizations and communities across Ontario to scale the same model. What I mean by that is having businesses pay fees to a not-for-a-profit to be connected to a network of support, to get access to software and events and those supports, and then to be recognized for the progress they make toward a target. It's not business as usual, but actually reporting on forward-looking goals and being recognized for the success they have.
In Niagara, for example, the Niagara Sustainability Initiative is now up to 23 organizations that have set targets to reduce their carbon by 6,000 tonnes. It includes companies like Quartek Group, Brock University, Niagara Health System, and Fallsview Casino. In Durham, Durham Sustain Ability has a program they call the Durham partners in project green. They have 18 organizations that participate there. They just relaunched six months ago. That includes General Motors, Deer Creek Golf Course, and Durham College. Here in Ottawa, EnviroCentre is going to launch carbon 613, and I am thrilled to invite you all to attend. It's on June 23 at the Kichesippi Brewery from 4 p.m. to 6 p.m. Sudbury, York Region, and Kingston will all follow suit.
To go a step further, this isn't really an Ontario story either. A similar group called Climate Smart in B.C. has been working there for several years, and we've received requests from communities in Alberta, Manitoba, Quebec, and New York state.
Why is this the case? The premise is that businesses measure what matters, and this is in the best interests of businesses right across the country. Yes, there is a federal cost of climate change inaction and the NRTEE estimated that to grow to $5 billion a year by 2020, but at the same time, at the company level there's a business case.
It's not only about saving money on their energy bills. It's about attracting employees who are making their employment decisions based on the environmental strategy of the companies with which they work. It's about improving their brand for those constituents they care most about—often that's their customers. Also it's about looking at trends in the supply chain as Walmart and others start to prioritize their supply chains based on the environmental records of companies they work with, and of course the policy they see coming out of federal and provincial governments.
As we look to see this happen more across the country, I would encourage the committee to look at more support from both federal and provincial governments for non-profits that are supporting businesses in this way. I can speak to a funding program like eco-action, which did support Sustainable Waterloo Region back in 2008. It provided $24,000 of the $200,000 required to get the program started. No other eco-action funding has been provided to Sustainability CoLab or any other member of the network since that time. However, in the last six months alone the Ontario Trillium Foundation has supported about $600,000 across the CoLab network in just the last six months.
I hope to have enlightened you on how the private sector can partner with local non-profits not only to reduce their environmental impact but also to increase their profitability and grow the low-carbon economy at the same time. I really appreciate the chance to share this with you.
I'm pleased to talk to you today about the importance of private sector support for our environmental initiatives at the Grand River watershed. The Grand River Conservation Authority is one of 36 in Ontario that manage water, land, and other natural resources. The Grand River is the largest in southern Ontario. It flows 300 kilometres through southwestern Ontario, from the Dufferin highlands to Lake Erie. The watershed is about 6,800 square kilometres in area, making it roughly the same size as Prince Edward Island. There are about one million residents. Most of them live in five fast-growing cities: Kitchener, Waterloo, Cambridge, Guelph, and Brantford. It is also a very productive farming region, with more than 70% of the land providing a wide variety of products.
In light of our discussion, it's probably worth discussing the origins of the GRCA. When this part of Ontario was opened up in the 1800s, the settlers dramatically reshaped the landscape. They cut down almost all the forests, emptied the wetlands, paved city streets, and installed tile drainage on farms. By the early 1900s, the Grand River faced significant environmental issues: devastating floods, inadequate water supplies, and a severely polluted river. The industrial and business leaders of the day realized the environmental problems threatened the health of their workers, their communities, and their businesses. When floods hit, their factories literally washed away.
The business leaders created an organization called the Grand Valley Boards of Trade, which asked the provincial government to create a new agency to manage the environmental challenges of the Grand River. The province created the Grand River Conservation Commission, a forerunner to today's GRCA. It was formed as a partnership of watershed municipalities and the province to address their shared problems. The commission built Shand Dam in 1942. It was the first dam in Canada designed to control both floods and augment river flows during dry summer periods. Over the next 30 years, six more dams were built on the river.
From the earliest days, there has been a recognition in the Grand River watershed that a healthy economy and a healthy environment go hand in hand. There's a role for both the public sector and the private sector in environmental protection and restoration. Throughout its early decades, the GRCA was financed largely by municipal and provincial governments, which paid about 80% of capital and operating costs. Of course, that changed in the 1990s as governments at all levels went through restraint.
By the end of the 1990s, government was providing less than 40% of the GRCA's income. This reduction in government forced some changes. We had to become more entrepreneurial when it came to managing our own revenue-producing operations, such as campgrounds, hydro generation, property rentals, and others. It also led us to explore new and innovative ways to get work done by finding new sources of funding in both public and private sectors.
In the 1960s the GRCA had created a foundation to carry out limited fundraising. In the 1990s the foundation expanded its efforts, soliciting millions of dollars from private donors for trail development, outdoor education, environmental restoration, and other projects. The GRCA worked with traditional partners and government to find new ways to finance environmental projects. To make up for the loss of general operating grants, the GRCA began to deliver projects and programs on behalf of municipal and provincial governments, funded on a case-by-case basis.
A good example is the rural water quality program. Municipal governments provide the money that goes to farmers for projects to protect water quality on farmland. We manage the program on behalf of those municipalities, but we connect with farmers, manage the grants and the applications all the way through to the approval process, and look after those farmers. This approach works because we can demonstrate to our partners, the municipalities and the farmers, that we can deliver these programs effectively and efficiently to meet their needs on private land.
However, not all municipalities in the watershed participate in the rural water quality program. Smaller municipalities just don't have the large tax base to contribute. To fill those gaps, the GRCA and our foundation have found private sector partners. We have received grants from various organizations that have an environmental mission, such as the RBC Blue Water fund, TD Friends of the Environment, and the Monsanto fund. One reason we think we've been able to tap into these grants is that the rural water quality program has a long record of accomplishment of putting money into the ground with minimal expense and overhead. That's one example of the relationships we have established with the private sector.
A second is our connection with Toyota Motor Manufacturing of Canada. The company has a plant in Cambridge not too far from our office. It also has a second plant in Woodstock, which is just a few hundred metres outside our watershed. Over the years, Toyota has been a strong supporter of our environmental education program, including money for the construction of the environmental education centre in Cambridge. Over the years they've contributed additional money for the education program and trail development.
In that respect the relationship is much like the one we have with other foundations, but there is an interesting development in our ties to Toyota, which is indicative of a growing trend in philanthropy. These days donors want more than just to write a cheque and show up at a ribbon cutting. They want to literally get their hands dirty.
For several years Toyota and GRCA have held work days together. We identify projects that their employees can dig into like building trails, painting walls, or restoring boardwalks. Their employees are paid by Toyota and work under their own supervisors. They manage the health and safety issues. Doing this requires more planning on our part and we're addressing that by developing a new volunteer management program at the GRCA.
Corporate volunteerism pays off in many interesting ways. We get work done that benefits the environment and the larger community. The employees get to contribute in a meaningful way to environmental sustainability in their community and they learn first-hand about the GRCA and its roles and responsibilities. Significantly, we build a tighter bond between our agency and their company that will benefit us both in the future. This type of relationship works because there is a convergence of our corporate goals and theirs. Toyota has an environmental record and sees us as a good partner to enhance it.
We have similar connections with S.C. Johnson and Son of Brantford. The company advertises itself as a family company and has demonstrated that in many ways over the decades. They've supported a wide range of GRCA programs that have family and community at their core. They've supported construction of an education centre and have been steady supporters of that program. They have contributed to our fisheries management program and restoration of natural areas, all things that add to the quality of life in Brantford and the watershed.
I'd like to highlight one new and innovative relationship we have with the aggregate industry. The GRCA is looking to develop a hydroelectric plant at a dam in Cambridge. This is a commercial venture for us, so we know we will have to borrow money for the capital costs. The payoff for the GRCA is a consistent revenue stream long into the future that will fund other environmental projects while also supplying sustainable energy.
The Ontario Stone, Sand and Gravel Association has signed on as a partner. They are raising money in a variety of ways. The money will be turned over to the GRCA to help with capital costs and this will reduce the amount that GRCA will need to borrow. The result is that our future profits will be much higher. The enhanced long-term revenue stream means we will be able to do much more restoration in the future.
Before I wrap up, I would like to make one more important point. As useful and valuable as the private sector support has been, it is not a substitute or a replacement for reliable adequate core funding from our government supporters. The projects supported by our private sector partners are important and valuable and add to our watershed to make it a healthier and better place. However, in our work there are a lot of day-to-day expenses that aren't and quite frankly shouldn't be funded by the private sector. Our basic responsibilities such as flood protection, watershed planning, protecting water quality, and ensuring adequate water supplies are societal goods and need to be funded by society.
With that said, I'd like to offer some of the lessons we've learned through our work with private sector partners. One is to identify programs and projects to which private sector support would bring the biggest benefits, so we have a shopping list that we can discuss with our donors. We are willing to invest resources in building long-term relationships. We understand the goals and needs of our private sector partners to discover areas of mutual interest. We are open to new and innovative relationships. We want to give our partners maximum bang for their buck by being effective and efficient in our programming and project delivery. We are developing a recognition program to ensure that our partners get the attention they deserve for the support they've provided.
Again I thank you for the opportunity to appear before the committee today. We really appreciate it.
Absolutely, I would be glad to.
When Sustainable Waterloo Region, or Niagara Sustainability Initiative, or EnviroCentre approaches a business, their conversation is twofold.
The first side is the business case for sustainability broadly. To be clear, that business case differs depending on the sector. For manufacturing, for example, it's often very much about cost savings. For a professional services firm, mind you, it might be more about employee attraction. I'll give you the case of Ernst and Young in Waterloo region, for example. If you spoke to their managing partner, he would tell you that the reason why they've set a target to reduce their carbon footprint is so that when they get a question from a generation-Y superstar accountant coming out of university, they want to be able to differentiate across their peers. This gives them a way to do so, to say, “Yes, we have an environmental strategy. Let me tell you about our 20% target and the third party group who is keeping us accountable to achieve that.”
Another side of it is on the retail, and I mentioned very briefly those that are manufacturing consumer goods around the supply chain risk. Walmart, for example, has now begun to prioritize their supply chain based on the environmental records of companies that they work with, and it's also about improving their brand.
The first conversation is about understanding the business case for any particular organization that might be looking at reducing their environmental impact. Secondly, for those that participate in a program like the regional carbon initiative, it's to say, “Yes, there's a fee to participate, and here's the support you will receive.” Those fees in Waterloo region, for example, are between $500 to $5,000 a year per company based on size. Sun Life Financial and Wilfrid Laurier University pay $5,000 a year. Athena Software pays $500.
For that, as a social enterprise, they receive access to the software to track their carbon footprint. They get access to the events throughout the year. They get access to the guides, resources, and supports. They also get recognized for the progress they make so that when Sustainable Waterloo Region comes back, and there are 400 people in the room, and the media are there, they can say, “Yes, here are those who have done particularly well. It's not just that they're green, but let me tell you about the actual target they've set, the progress they've made, and the more profitable they are as a result.”
To the question asked, the conversation is, again, both about the business case around saving money, attracting employees, and improving their public image, and it's about there being a fee and a value proposition to the services they get from the not-for-profit.
The software is critical because you can't manage what you don't measure, so it is critical to your ability to set goals. If sustainability is in a business' best interest, then why would they not set goals on this too?
The software that is provided is from a company called Hara. Sustainability CoLab has a relationship with that company. We then provide it to Sustainable Waterloo Region and the Niagara Sustainability Initiative, for example, and that software allows a business to put in their kilowatt hours of electricity, their metres cubed of natural gas, perhaps their employees who commute to and from work.
On the other side, it then translates that data into what's known as the greenhouse gas protocol, separates emissions into three different scopes, and allows them to sort through by buildings or fleet or by different scopes what their emissions are and then also report data back to the third party group to be recognized for the progress that they make.
It provides the base line and the credibility to understand the overarching progress being made and allows me to come back to you with the information that in all, in Waterloo region it's 55,000 tonnes and in Niagara it's 6,000 tonnes. I can tell you that because it's reported through that software.
That's a great question. Thank you.
To be clear, the businesses set their own goals. For each community a framework is provided, and by that I mean the rules by which they can set a target. In Waterloo region, for example, the targets are between 20% and 100% over 10 years. A group such as Sustainable Waterloo Region presents its rules and asks what target the company would like to set.
Typically, when a business joins the program, the payback periods they're looking at are one year or less. Ideally, as they see results in projects of that kind that are smaller in scale, such as lighting and thermostats, with the savings they receive they are enlightened to consider projects with a longer payback. Here we see companies looking at solar and other renewables, LEED building retrofits, larger changes to their fleet.
We have had projects by companies within the programs whose completion is 10 to 12 years out, but by no means is that the norm. It's not a mandate from a group like Sustainable Waterloo Region. The targets are voluntary, and the programs and the projects that are completed are set by the companies. Our hope is that over time, as the companies learn from each other and the “business as usual” shifts, businesses will be more open to projects with longer paybacks.
That's a very good question, and one that I think we've been working with for decades.
The rural water quality program is voluntary. We have found it's really successful from that point of view, in that adequate incentives—to mention your previous question—will get agricultural producers to take action. We always find there are those who won't of course, or that we need to wait for farms to change hands, those sorts of things. It's very difficult on an extensive land-based production system like agriculture to get people to give up a great deal of land when you're talking about the thousands of dollars per acre that they are worth.
What we're finding is that providing adequate incentives with realistic expectations around things like buffers and practices has made a difference. We've seen a lot of uptake. Measuring that is really difficult because with things like phosphorus, we're finding we have legacy phosphorus existing, and we don't know how long it's taking to move through the system. It's the same with nitrogen and groundwater. In measuring the impacts of those best management practices, we just have to go back to the field-based or the actual plot-based science and then extrapolate beyond.
We find that farmers, just like the general public, probably respond better to incentives than to regulation on many issues. Often when we're dealing with farm groups and speaking to soil and crop improvement associations, or something along that line, we start talking about voluntary versus regulatory. It's like the speed limit. We know that most people will probably break the speed limit on certain days.
If we set a three-metre buffer as a regulation, we know there will be people who will try to get away with a two-metre buffer. On a voluntary side, when we incent it—and it's not a very big incentive—we often see them putting more than three metres as their field buffer. They understand where it makes sense and they're controlling it, as opposed to being controlled. It almost comes down to human nature in some cases.
It is a balance between appropriate regulation and appropriate incentives.
I think one important divide would be those that are publicly traded versus those that are private firms. For those that are publicly traded, they are required to meet a profitability objective. Still, that means engaging employees and their employees may have a real altruistic interest, so that does return to their bottom line when they can increase employee retention. Ultimately, though, for a publicly traded private company, profitability is the bottom line.
For the private firms, like a VeriForm, as I mentioned in that example, Paul had a very altruistic perspective. Certainly, we see that amongst some of the smaller firms in the Waterloo region that participate. That altruistic interest is then supported as they start to see profitability alongside it. That would vary, depending on the firm and on their interests. I would say it's a mix of both but that the success of the program overall depends heavily on being able to translate it back for those in the firm, whether it's the ultimate decision-maker or not, that you can come back to underscore the profitability interest. I think this returns to the previous question about incentives and about what government can do to increase the profitability and to make it more attractive, so that you support any altruism and any kind of personal-value interest from a private firm.
Sir, if I may say one more thing on the public sector, there's obviously more latitude there, too.
I will respond in English, if that pleases the committee.
The current role of the federal government is almost nil. That is to say that locally MPs in each of the communities have been very supportive. Certainly that's been the case in Waterloo region, and that's actually part of our assessment of communities across the province. We look at the municipality. We look at the political support at the federal and provincial level, and certainly we have MPs who are supporting strongly. Where that translates into federal programs for funding, for example, as I mentioned in my opening remarks, there is no current federal funding I am aware of that is going to any seven of the programs in which this currently operates. That's certainly a challenge.
In terms of the ideal state, I point to some of the support that's being provided provincially through funding agencies like the Ontario Trillium Foundation. Through the provincial government we just recently announced that the Ministry of the Environment and Climate Change has provided an initial $100,000 to the CoLab network, which allows us, as CoLab, to then incentivize our members to be able to provide them with support that they can leverage and build more support from. It's a one-off. It's certainly not our end game. We would like to be in a position to have a fund so that with that fund we could then say, yes, EnviroCentre has a business plan, let us write you a cheque, and again as you launch your program, as you get your first three members, your next 20 members.
That incentivizing we can't currently do, and we would be thrilled to have provincial and federal support to be doing work of that kind.
Thank you, Mr. Chair, and thank you very much to both of you for being here today with very interesting presentations.
I'd like to start, if I might, with the business case you mentioned, Mr. Morrice, and that you emphasized, which I appreciated. It brought me back in time because.... I like the fact you pointed out there. You both pointed out there's a business case for being more environmentally friendly and for taking these items into consideration when a company is doing its business plan and trying to increase its profits.
In fact, when I started working with my father in his small company back in the late 1970s and early 1980s, I remember very clearly he refused to buy preprinted notepads with the nice carbon paper and the pink and the yellow sheets underneath. He refused because he said there was nothing wrong with taking a piece of paper where the back side isn't used, and is blank, and cutting that into fours. That was one of my jobs when I was 12, to go through the garbage and make sure there was no unused paper.
That was, of course, before the days of recycling where you would get your paper, your cartons, your glass, and your plastic all picked up. I think older generations often do these things much more naturally than younger people. We've become accustomed to the services being available.
I guess my question is about the level of sophistication. When you go into an office like Ernst and Young, you find they don't have heating problems. They're not losing heat or whatever. What kinds of things are they doing that businesses could do, big or small, to reduce their carbon footprint?
Thanks to both of you. This has been very interesting. I appreciate your testimony.
Mr. Morrice, I'd like to start with you. You and I have chatted about energy efficiency in the past, and I think I might have mentioned that I was part of the working group that established Efficiency Nova Scotia, which is an arm's-length energy efficiency utility. It's not a not-for-profit. It's not a government agency. It's actually a utility, like a power company, only they reduce the power we're using.
When I was doing that, my role was with the Affordable Energy Coalition. I was there on behalf of low-income Nova Scotians. If you are on welfare in Nova Scotia, you live on about six dollars a day, so if the choice is a $6 CFL light bulb—where you'll save the money eventually—or eating that day, the choice is clear. You're going to eat. With low-income folks there are very particular barriers, but with companies, it's different. There aren't really the same barriers, yet still they're not doing energy efficiency. Ms. Ambler asked if these companies were going to keep doing this. That's valid.
You talked about how they get the taste for it and then off they go. My question to you is: why haven't they done it already? Why do they actually need you? What role do you serve? If it affects the bottom line, why aren't these businesses already knee-deep or neck-deep in energy efficiency?
Thank you, Mr. Albrecht.
Michael and Tracey, I haven't had the benefit of your presentations. I'm only picking up on some of the questions that have been asked, but Michael, I'm going to start with you.
We've all experienced our own engagement in reducing greenhouse gas emissions in our footprint. I have 41 panels on a building in a FIT program and the return is great. I argue with those around me from time to time who think that I'm getting a real deal, but I remind them that I paid for the infrastructure. That's what taxpayers don't understand, that the people who put panels on their houses pay for the infrastructure and that relieves the taxpayer of the cost for that infrastructure and the maintenance of it. But my own personal experience is fantastic.
There's a company in Guelph called Skyline, a real estate investment trust, which owns well over $1 billion in property across Canada. When they buy an apartment building they immediately change the light bulbs, the toilets, the appliances. They drive the cost of utilities down. When you have a greater net income that's capitalized, of course the value of your buildings goes up tremendously. The value of their buildings has gone up by millions of dollars just by the application of what you spoke of, the business model.
I'm asking you specifically. You're near Guelph, and you've probably heard of the community energy plan, which morphed into the district energy plan. I don't know if you talked about that today, but could you tell us about the district energy plan, rather than having me tell us about it, and what it's accomplishing?