What China’s plans to decarbonize its economy mean for Canada’s energy exports

Written by , Ryerson University. Photo credit: THE CANADIAN PRESS/Jonathan Hayward. Originally published in The Conversation.The Conversation

The ongoing construction of the Trans Mountain pipeline expansion project, near Kamloops, B.C. in September 2021. China’s clean energy plans could create problems for Canada.

One of the surprises to come out of COP26 was the U.S.-China joint declaration on enhancing climate action through the 2020s. Although the declaration lacked details, it offers a positive sign of progress toward curbing global greenhouse gas emissions, in part because China and the United States are the world’s two largest emitters of greenhouse gases.

The declaration also marks “a rare moment of co-operation between two superpowers locked in geopolitical rivalry” over trade tariffs and intellectual properties, among others, according to Bloomberg News.

For scholars who have been following China’s climate politics closely, this news reaffirms China’s resolution to rapidly decarbonize its economy. This resolution, however, has been largely neglected by Canadian policy-makers and investors in the oil and gas sector, in part because the Canadian mainstream media has underreported China’s evolving climate governance.

Regrettably, such neglect entails significant economic risks for Canada: China’s increased decarbonization efforts will cast shadows on the future of Canada’s fossil fuel exports.

China’s evolving climate governance

The joint declaration reaffirms both countries’ commitment of stepping up their carbon-cutting policies in order to meet the Paris Agreement’s goal of limiting global temperature rise to “well below 2 C” and keeping the 1.5 C target “within reach.”

China’s chief negotiator Xie Zhenhua, right, walks with John Kerry, United States Special Presidential Envoy for Climate at the COP26 U.N. Climate Summit in Glasgow, Scotland, on Nov. 12, 2021, shortly after the two countries had issued their joint declaration to accelerate action on climate. Photo credit: AP Photo/Alberto Pezzali.

To this end, the major areas for climate co-operation outlined in the declaration focus on both countries accelerating their energy transitions in this decade. In terms of decarbonizing electricity generation, for example, the U.S. aims to achieve 100 per cent carbon-free electricity by 2035. For its part, China promises to phase down coal consumption and make best efforts to accelerate the process. Both countries have also identified the reduction of methane emissions as a pivotal area for future collaborative efforts.

China’s commitments in the joint declaration are consistent with its evolving climate policy, which has undergone significant changes in recent years. As a recent Environmental Politics article points out, climate governance in China is characterized by the dynamics between climate change and the Chinese government’s quest for “performance legitimacy,” whereby the Chinese government maintains legitimacy by achieving concrete goals such as economic growth and social stability.

The Chinese public is becoming increasingly aware of the dire consequences that can come with extreme weather events, such as the July 2021 flood that killed more than 300 people in the central province of Henan. The importance of government policies that avoid and reduce emissions of greenhouse gases has risen substantially in the public eye.

Vegetables rot in water-logged fields months after torrential rain flooded parts of central China’s Henan province in July 2021. Photo credit: AP Photo/Ng Han Guan.

In response, the Chinese government’s quest of performance legitimacy — once solely based on its economic development — now gives more consideration to environmental issues. It also explains why China has increased the focus on the transition renewables and other sustainability measures in its 14th Five-Year Plan, as well as the country’s ambitious goal to become carbon neutral by 2060.

China’s accelerating eco-transformation

The Chinese government has communicated its sustainability efforts domestically via “ecological civilization” — a policy framework aimed at establishing a green economy that fits China’s developmental trajectory. But a general lack of international awareness about this concept’s centrality in guiding China’s environmental discourse remains.

My recent analysis of the international media’s coverage of ecological civilization suggests that many reports have equated the concept to misleading propaganda. Not only does this dismiss China’s recent environmental achievements in areas such as renewable energy developmentafforestation (the planting of new trees or seed in previously unforested areas) and ecological farming, but it may also result in significant miscalculations by foreign oil and gas producers about the future directions of China’s environmental and energy policies.

Admittedly, China still faces numerous obstacles to decarbonize its economy. For example, its low-carbon development agenda has led to recent power shortages, which left many worried that the government would have to slow downs its efforts to close coal power plants to restabilize its power supply.

China’s national carbon emissions trading program has many problems too. As highlighted in a comprehensive review of the program, factors like as market volatility and inaccurate emissions data at the facility level demonstrate the inherent complexity of establishing the world’s largest carbon market in a short period.

Wind turbines along the route between Beijing and Zhangjiakou. President Xi Jinping pledged in 2020 that China would go carbon neutral by 2060. Photo credit: AP Photo/Ng Han Guan.

Growing risks of investing in fossil fuels

Canada is currently developing two mega energy projects with China as a key customer: the Trans Mountain pipeline expansion project (TMX) to carry crude and refined oil from Alberta to British Columbia, and the LNG Canada facility (and its associated Coastal GasLink pipeline) to export natural gas to Asian markets.

Both projects initially promised long-term economic prosperity in exchange for public support. But their economic benefits must now be reassessed in light of how the COVID-19 pandemic has accelerated many countries’ transition to low-cost renewables, including China’s.

In October 2020, the Canadian Centre for Policy Alternatives published an updated assessment of the need for TMX, based on latest data. The reassessment found that the increase in bitumen production required by TMX runs counter to Canada’s emissions reduction target, and that Canadian heavy oil exported to Asia will “likely sell at a loss of $4-6 per barrel.”

Regarding B.C.‘s LNG exports, a July 2020 report by the Conference Board of Canada claims that a thriving Canadian LNG industry will generate more than $500 billion in investment between 2020 and 2064. However, a closer examination of the report’s methodology reveals two faulty assumptions underpinning its forecasts.

To begin with, the report’s data on natural gas demand in Asia-Pacific markets ends in 2018, prior to the macroeconomic shock caused by the COVID-19 pandemic. The International Energy Agency estimates that “the COVID-19 crisis will result in 75 billion cubic metres of lost annual demand by 2025.” This poses a significant challenge to future plans for Canadian LNG exports.

Second, the report’s economic projections are based on the development of LNG export capacity of 56 million tonnes of gas per year. For reference, Phase 1 of LNG Canada, with a planned in-service date in 2023, will only be able to export 14 million tonnes per year.

In other words, for B.C. to realize the proposed economic benefits, it must not only secure enough investment to quadruple its LNG production over the next few decades, but it must also find ways to sell its LNG at competitive prices to rapidly decarbonizing economies such as China. Such economic calculations are unlikely to work.

During COP26, Justin Trudeau announced Canada will cap emissions from the oil and gas sector. Yet, there is a more fundamental question that merits broader public conversations: do we want to spend more of Canada’s already limited carbon budget on the fossil fuel sector, which is declining and poses increasing economic risks?

The right to disconnect: Why legislation doesn’t address the real problems with work

Written by Ryerson University. Photo credit: Victoria Heath/Unsplash. Originally published in The Conversation.The Conversation

Legislation on the right to disconnect sounds promising. But does it really address why workers are putting in so many hours long after their work day should be done?

In 1998, an ambulance driver in France failed to answer his employer’s phone calls outside his working hours. He was dismissed, raising questions about the obligation of workers to be available around the clock.

Less than a decade later, France enacted the right to disconnect to protect workers from being penalized for ignoring after-hours work messages. ItalySpain and Ireland followed suit and now Ontario is considering enacting a similar law.

But the right to disconnect, which requires large organizations to formulate policies about digital communication outside work hours, applies to knowledge workers, who unlike the ambulance driver, may not have a physical separation between work and non-work spheres.

This blurring of boundaries reveals important complexities that affect the enforceability of right to disconnect legislation.

Work tools not tied to workplaces

Broadly, the right to disconnect grapples with the physical constraints of traditional work versus today’s digital workplaces. So legislation that makes sense for a factory worker who goes home for the night is applied on the 21st century knowledge worker.

While digital communication and the proliferation of mobile devices can allow workers to extend their work days, they are neither necessary nor sufficient to account for the problem of overwork among knowledge workers. The tools required to perform knowledge work, unlike the physical labour of a factory worker, are not restricted to a physical workspace.

In the absence of actual physical constraints, renegotiating the pace of work and its duration is now a largely cultural exercise. Digital communication and mobile device use can erode the ability to disconnect from work, but whether that actually happens depends on workplace cultures that vary among employers.

Individually, some employees try to regulate boundaries of work and personal life by using separate devices for their jobs, while others have resigned to having no work-life separation amid calls to find the good in work-life conflict.

There have even been suggestions that due to the failure of institutional structures to protect personal time, individual workers must manage their own work schedules to forestall overwork and its negative effects.

Is the work-life balance a thing of the past? Photo credit: Unsplash.

Asking workers to manage their own work schedules assumes that they have control. In fact, control over work varies by job type, seniority and employer policies among other factors. On one end of the spectrum are assembly workers, subject to the machine’s pace.

In contrast, knowledge workers can exert more control over their work pace and schedules. Openly or surreptitiously, they shop online, use social media, play games and check on their children, all during work hours. For knowledge workers, work and personal time are thus entangled in ways that eight-hour workday legislation did not anticipate.

As a result, disconnect laws will not necessarily result in a uniform restriction of work to an eight-hour window. Beyond the impracticality of such restrictions in several professions, knowledge workers have varying preferences for how they divide their work and personal time.

Integrating time on and off the clock

The COVID-19 pandemic forced many workers, especially parents, to integrate work with personal responsibilities. While some lamented the absence of boundariesothers enjoyed the benefits.

The right to disconnect also fails to anticipate what Arlie Hochschild, an American sociologist, describes as the “second shift” — household chores, which are often unpaid and performed by women.

Although eight-hour workday rights were designed to help workers enjoy leisure time, for many women, they’re merely a shift in gears to a different type of work from which there is no right to disconnect.

A mother tries to work from home as her two children do online schooling at the kitchen table in their home during the COVID-19 pandemic in Mississauga, Ont. Photo credit: THE CANADIAN PRESS/Nathan Denette.

Despite the dubious effectiveness of right to disconnect laws, they raise important questions about the organization of modern work alongside our collective expectations about the kind of work we value as a society and the time it ought to consume. The laws, and the resulting discussions about them, may contribute to a cultural shift away from workaholism, at least around paid work.

Some organizations like Volkswagen and Daimler already introduced restrictions around digital communication several years ago. The right to disconnect may encourage more businesses to take similar measures.

Expanded worker autonomy

But given the variation in worker preferences and implications for job satisfaction, treating the right to disconnect as an authorized refusal to answer emails after 5 p.m. hardly addresses the problem of overwork among knowledge workers. After all, tight deadlines may create the need to work long hours without necessarily communicating with colleagues.

Rather, employers should focus on being flexible and should offer knowledge workers more autonomy around their availability. This is a significant shift that asks employers to trust their knowledge workers to deliver on their tasks.

The right to disconnect can be the catalyst an organization needs to review its policies. However, a cultural shift that destigmatizes a less frenetic pace of work and allows employees more control over their work boundaries will more directly address the problem of overwork.

Canada’s marijuana legalization provides lessons to the world on selling cannabis

Written by , Ryerson University; , Ryerson University; , Ryerson University. Photo credit:  THE CANADIAN PRESS/Chris Young. Originally published in The Conversation.The Conversation

A woman marks the first day of legalization of cannabis across Canada as she lights a joint in a Toronto park in October 2018.

In October 2018, Canada became the first G20 country to legalize the recreational use of cannabis. Over the past three years, the province of Ontario — to name just one Canadian jurisdiction — has moved away from having a significantly under-serviced retail market to one that is heavily saturated.

The Cannabis Act (Bill C-45) provided the rules and regulations around the production, distribution, sale and possession of cannabis. However, there are significant differences in each province’s and territory’s retail framework — private, public or hybrid — and the legal age for consumption, purchasing options and personal possession limits.

Was the rollout a success or failure? When analyzing the evolution of an illegal-to-legal retail market, our recent study found considerable consumer discontent with at least one province’s cannabis retailing approach. Our research examines how consumers have reacted to cannabis retail in the province of Ontario.

Ontario market

The two-year period following the passing of Bill C-45 was largely defined by policy rollouts that impacted both cannabis users and emerging cannabis businesses. In 2017, Ontario’s Liberal government decided on a fully public model whereby the government-run Liquor Control Board of Ontario (LCBO) would operate 150 brick-and-mortar retail cannabis stores.

After the provincial election in 2018 that saw the Conservatives come to power after 15 years of Liberal rule, these policy developments were scrapped in favour of a dual retail model: public (online only) and pseudo-private sector (offline only).

By the first day of cannabis legalization on Oct. 17, 2018, the only legal method to purchase cannabis was through the online Ontario Cannabis Store.

Then, in December 2018, the Conservative government announced that a pseudo private-sector cannabis retail model would be implemented through a lottery system to provide licences for brick-and-mortar retail stores, capping the total number of licences at just 25 locations across the province.

Although the federal and provincial government introduced legislation to permit the legal operation of privately owned cannabis stores, municipalities in Ontario were able to opt out of the legislation and not allow cannabis stores to operate within their community boundaries.

Customers shop for cannabis in a licensed retail store in Toronto in 2019. Photo credit: THE CANADIAN PRESS/Chris Young.

The consumer response

In our study, we analyzed all of the tweets that mentioned the Ontario Cannabis Store on Twitter and found significant consumer discontent during the first year of legalization.

The rigid government policies and eligibility criteria for obtaining licences required to sell cannabis products created significant issues around ordering, delivery and product availability.

Strict licensing protocols resulted in an under-served market, forcing the Ontario Cannibis Store’s website to function beyond capacity. Higher-than-expected demand, coupled with limited brick-and-mortar stores, created significant issues with online sales and major delays in delivery.

The unprecedented demand for cannabis products created further supply issues. Twitter users demonstrated that the restrictive purchasing options (due to government policy) created a shortage of point-of-sale locations, leaving consumers unable to purchase their desired products.

In addition, the rigorous producer licensing application process in Canada that requires many steps to ensure health and safety standards created a significant barrier to entry for some potential producers.

As a result of these shortages, Ontario limited the number of retail outlets that were allowed to open. Furthermore, with 17.6 per cent of all municipalities in Ontario opting against establishing brick-and-mortar stores, many consumers were left with no choice but to purchase products online from the Ontario Cannabis Store or turn to the black market. These and other governance-related issues can be attributed to changes to the provincial policies, which occurred as a result of a shift to a Conservative government.

Cutting red tape

In order to combat these supply shortages, the provincial government removed much of the red tape associated with licensing protocols for brick-and-mortar stores. Since then, the cannabis market in Ontario has gone through a significant retail sprawl, growing from the 25 locations in the first year of legalization to more than 1,000 locations to date.

This growth is now creating major concerns with store cannibalization. With many cannabis retailers competing for the same market share, it is increasingly difficult for some of these retailers to remain profitable.

Since recreational cannabis legalization came into effect, Canadian provinces and territories have introduced a varied regulatory framework to manage the distribution and sale of recreational cannabis across the country.

While Canada is one of the first countries to legalize recreational cannabis at a national level, it will not be the last. As many as 33 American states and several European countries, including Italy, Portugal and the Czech Republic, are looking to legalize recreational cannabis. That means Canada’s experience serves as a lesson to other countries as this newly emerging retail sector takes flight.

British Uber driver win is promising, but gig workers still need basic rights

Written by , Ryerson University; , University of Toronto. Photo credit: AP Photo/Frank Augstein. Originally published in The Conversation.The Conversation

Uber drivers of the App Drivers & Couriers Union celebrate as they listen to a British Supreme Court decision that ruled Uber drivers should be classified as workers and not self-employed contractors.

In a landmark decision, the Supreme Court of the United Kingdom recently ruled that Uber drivers are employees of the company and not simply using its technology as self-employed contractors.

Nicholas Humblen, a Supreme Court justice, explained:

“Drivers are in a position of subordination and dependency to Uber, such that they have little to no ability to improve their economic position or professional or entrepreneurial skill.”

The ruling makes clear that platforms should be required to offer basic benefits for the people “collaborating” with them. This ruling can have an impact beyond those in the U.K.

But where does the decision leave migrant gig workers?

These implications were discussed in a study recently presented under the auspices of the CERC Migration program, focusing on newcomer migrants who work in the gig economy, notably on platforms like Uber, TaskRabbit or Amazon Flex, to name a few.

Lack of Canadian experience

In Canada, new migrants are over-represented in the gig economy compared to Canadian-born populations. The stories are familiar — a newcomer enters through Canada’s points-based immigration system, rich in education and experience. But without Canadian experience, it’s next to impossible to land a job that offers career opportunities in their area of expertise.

While studying for a Canadian diploma, completing professional qualifications’ exams or volunteering in their field to get local experience, many newcomers take jobs in the platform economy. Such jobs offer a necessary stepping stone and are seen as a better alternative to typical, low-income work in the service or manufacturing sectors.

The Uber app is seen on an iPhone near a driver’s vehicle in January 2020 in Vancouver. Photo credit: THE CANADIAN PRESS/Darryl Dyck.

The flexible nature of the work allows for a sense of control over one’s time and one’s finances — the more hours you work, the more you earn. But in time, they soon realize that there is no safety net for illness, income fluctuates unexpectedly with demand — you may drive for a whole day and earn just enough for your gas — and of course there are no career prospects. And yet newcomers feel platform work is worth it.

Why? Because the alternatives are even worse. Working for the low-skill service industry offers long hours, low pay, no flexibility, little security and no career prospects. The lack of meaningful alternatives facing newcomers can make platform work all the more attractive.

Not a lifelong job

Most newcomer workers who have spent a few years in the platform economy don’t believe the job is for life. To them, it’s only a means to an end. At the same time, the flexibility, freedom, and opportunity to generate extra cash can make platform work difficult to walk away from.

So where does the problem lie? From a short-term perspective, it’s the lack of a safety net for those who work in the platform economy. There are ongoing debates globally about whether platform workers should be treated as employees instead of independent contractors or even become unionized. None of these debates have yet resulted in a significant change, but there may be some hope on the horizon.

Changing the working conditions in platforms requires political will and regulations must apply to all platforms. It’s still a turbulent process – Foodora simply abandoned Canada when their workers made a move to unionize. And gig companies in California are taking advantage of the state’s Proposition 22 ruling to further exploit workers as contractors.

An Uber driver and member of the Mobile Workers Alliance outside Los Angeles City Hall in January 2021. Drivers for app-based ride-hailing and delivery services are suing to overturn Proposition 22. Photo credit: AP Photo/Damian Dovarganes.

Increasingly precarious

Migrants who face labour market barriers are stepping into platform work that is growing increasingly precarious. The aftermath of COVID-19 has the potential to create a flood of gig workers, as data from Statistics Canada show an influx of gig employees during periods of economic recession. There are dire implications if gig companies end up absorbing the migrant workforce.

The longer term solution in Canada is to restructure the labour market and look at how we are matching qualified migrants to work. The work available to highly skilled newcomers doesn’t match their education and experience. Canada has to do more to help newcomers find decent work.

One interesting initiative under consideration involves reassessing competencies so that previous professional experience is more easily recognized in the labour market.

Another avenue to explore is educating employers on the skills possessed by newcomers and how they can be applied to the Canadian labour market. This should be easy in a country like Canada, where more than 20 per cent of the population was born abroad. Organizations like the Immigrant Employment Council of BC and the Toronto Region Immigrant Employment Council are doing this work. Their efforts must be supported and boosted significantly.

COVID-19 is disrupting the migration of new talent to Canada

Written by Stein Monteiro, Ryerson University. Photo credit: ukblacktech.com. Originally published in The Conversation.

Canada’s tech sector, in particular, is in need of highly skilled tech workers if it’s to maintain momentum.

The major world economies of today are innovation-driven knowledge centres. To move innovation forward, an economy cannot operate from a limited pool of local knowledge and skills. It must be able to access the larger pool of global talent.

Foreign knowledge and skills bring new ideas, new perspectives and links to new markets that benefit Canadian employers enormously. A recent study by Statistics Canada shows that immigrant workers contribute significantly to business productivity over the long term. This impact is even stronger among firms in technology-intensive and knowledge-based industries.

Multinational corporations play a major role in the world economy by connecting knowledge resources through the placement of skilled people at branches around the world. Intra-company movement of skilled workers improves the overall productivity of the firm but also allows for countries to participate in the exchange of knowledge and ideas.

Canada’s tech sector, in particular, is in need of highly skilled tech workers if it’s to maintain momentum. Photo credit: Unsplash.

On a similar note, international students in Canada alone contribute to $21.6 billion in tuition, accommodation and other expenses, and also contribute in non-monetary terms by connecting Canada to the world economy through cultural exchange. International students and study-abroad programs introduce new perspectives into the classroom and create future global citizens.

Leadership required

Sustaining knowledge exchange requires stability and leadership. COVID-19 makes stability very difficult to achieve at the moment, but the right leadership can keep the innovation economy on a steady growth path.

In 2017, the federal government launched the Global Skills Strategy to expedite work permit applications by highly skilled foreign workers within a two-week processing window. In addition, foreign researchers and highly skilled workers on short-term work assignments don’t require a work permit.

Today, this two-week window has remained mostly closed during the pandemic to non-essential and non-support workers, leaving many employers at a competitive disadvantage in terms of attracting talent.

Similarly, international students who come to Canada to earn a Canadian credential and work experience are well-placed to obtain permanent residency. About 27 per cent of international students will become permanent residents. However, things can change quickly.

Many Indian international students initially bound for the United States and Canada have enrolled in universities in Europe instead, predominantly due to early entry restrictions in the U.S., Canada and Australia. Canadian universities are largely hosting classes online for first-year courses. For some international students, this doesn’t justify the tuition fees — about five times higher than what domestic students pay.

This will severely disrupt the momentum that has been built over the last few years in building Canada’s innovation economy.

Some Indian students opted to study at European universities this year. Photo credit: Wes Hicks/Unsplash.

Artificial intelligence

Cloud computing, the internet of things, 3D printing and artificial intelligence (AI) are major areas of modern-day technological advances, all of them part of what’s called the Fourth Industrial Revolution.

Each of these technologies are developing rapidly and being used in a wide array of industries. But AI is expected to have the biggest impact on the labour market.

AI discussions are focused predominantly on its potential to displace workers. But AI can also work alongside existing employees to make them more productive without decreasing the total number of jobs available. That is, AI complements high-skilled workers.

The Fourth Industrial Revolution demands a large technical skill base. Local labour markets are in short supply of highly skilled workers given the current pace of growth in the technology industry. For this reason, highly skilled migration is an important source of sustained growth in Canada’s innovation economy.

Using data from LinkedIn and the World Bank, I can see the types of skills that employers have imported from abroad. LinkedIn’s membership mostly consists of white-collar workers in knowledge-intensive sectors. The figures below are not meant to represent the entire migration landscape of Canada, but only how foreign workers contribute their skills to the tech sector.

In 2015, less than one per cent of foreign workers contributed skills in artificial intelligence. By 2019, this figure increased to five per cent. Similarly, there’s been increasing demand for foreign workers with specialized skills in development tools, computer graphics, data storage technologies and web development over the past five years leading up to the COVID-19 pandemic:

A graph showing the top five skills held by foreign workers in Canada in the past five years.
The top five skills held by foreign workers in Canada. Net migration (inflow minus outflow) figures are based on the number of LinkedIn members multiplied by 10,000.

Tech sector shows some resilience

A report by Brookfield Institute in 2015 finds that Canada’s tech sector represented $117 billion in economic output.

The sector has been consistently larger than the finance and insurance industry since 2007, and even outpaced annual growth of the mining, quarrying and oil and gas extraction sectors. The tech sector is the largest contributor to research and development, product innovation and organizational innovation, and is the second-largest contributor to process innovations in Canada.

The tech sector has shown some resilience dealing with the economic effects of the pandemic. Many existing tech workers in Canada were able to make the move to remote work more easily than those employed in other sectors. While employment levels decreased by 15 per cent between February and April 2020, tech employment decreased by only 4.2 per cent. But this doesn’t remove the need for new foreign workers in the tech industry to build on the momentum created over the last few years.

Despite the health of Canada’s tech sector, tech workers from abroad are still in urgent need. Photo credit: Unsplash.

Canada recently showed leadership in reopening its borders to international students while ensuring that post-secondary institutions do their part to keep students and the community safe.

The Canadian government understands that students’ and community safety are of prime importance, but also that students want to complete their studies in a timely manner.

The federal government should extend this leadership to foreign workers. To ensure that foreign workers continue to view Canada as a place to live, work and contribute to the innovation economy, the government must keep Canada’s borders open not just to foreign workers in essential services but to all workers essential to the post-pandemic economic recovery.

The business of sports resumes amid COVID-19, but at what cost?

Written by Cheri Bradish, Ryerson University. Photo credit: AP Photo/Seth Wong. Originally published in The Conversation.

A New York Mets employee places cutouts of fans in the seats before the team’s first game of the year on July 24.

Professional sports are a multi-billion-dollar business, including the revenues generated by sports advertising and sports media organizations.

One Canadian example of the size and scope of pro sports is the $5.2-billion deal Rogers Communications signed in 2013 for the rights to broadcast NHL games across the country until 2025.

But the current COVID-19 climate has posed serious challenges to the business of sports. Professional sports teams are resuming play in the midst of the pandemic, largely at odds with the rest of society as lockdowns continue, businesses remain shuttered and millions of people work from home.

The start of the Major League Baseball season is an indication of the chaos that comes with these unprecedented times. Less than a week into the season, half of the members of the Miami Marlins tested positive for COVID-19. MLB subsequently suspended the Marlins’ season, and the positive tests have postponed other teams’ games too.

With other professional sports leagues like the NBA and the NHL preparing to resume, there are concerns about the ethics of prioritized access to coronavirus-related health care for professional athletes, the relationship between sports and politics and renewed athlete activism, particularly in the midst of the resurgent Black Lives Matter movement.

Members of the Washington Nationals baseball team kneel and hold a piece of black fabric in honour of the Black Lives Matter movement before an opening day baseball game against the New York Yankees at Nationals Park on July 23. Photo credit: AP Photo/Alex Brandon.

And what about the athletes? What do they want from both a social justice and mental health perspective?

As Nick Kypreos, a former NHL player, recently said:

“Players aren’t playing because they want to … they’re playing because they have to.”

Sports typically reflect society

Sports is typically a reflection of society, not an exception to it. COVID-19 seems to have turned the model of professional sport inside out. Never before in the modern era of North American professional sports have fans been so displaced from the game.

Historically, sport in North America developed into an industry with the advent of industrialization and urbanization more than a century ago.

As workers were gaining both increased leisure time and discretionary income, early sport organizers were adopting the elite British model of “leisurely pursuits” for the well-heeled in a more democratic way for society at large — and it worked.

Sport as entertainment, to play and watch, was born, and sports leagues and teams became organizational and commercial success stories.

But yesterday’s athletes were regular citizens compared with the highly paid superstars of today, living in step with their fellow fans, which made them relatable.

Communities and cities embraced sport as a driver of commercial and economic activity, which required significant infrastructure support (including the public financing of stadiums and arenas) over the years.

This era also began to benefit from technology, including transportation advances that made for faster and easier team and fan travel. Sporting goods companies like Spalding emerged, making better equipment. New methods of promoting and selling professional sports quickly followed, heralding the birth of sports marketing.

This introduced new stakeholders into the sport business mix, in particular advertising and media partners, who also began to recognize the value of sports fans — an engaged and captive audience — who would buy their merchandise and read their newspapers for sports commentary. Eventually, those eyeballs began to be tracked and measured.

Fans were central to sport success

The citizens who engaged in this growing sport and entertainment model — sports fans — were fundamentally central to its success. The symbiotic relationship between fans and the professional sports industry grew and thrived, in particular from the 1950s, when creative, fan-centric strategies became popular for many leagues and teams.

Contemporary sport professionals routinely discuss the importance of what’s known as fan avidity, a key metric of success because research shows passionate fans have “been found to spend considerably more money, time, and effort for sports-related activities and goods than their non-avid fan counterparts.”

Fans react in Jurassic Park as the Toronto Raptors defeat the Golden State Warriors during Game 6 of the NBA Finals to win the NBA championship in Toronto on June 13, 2019. Photo credit: THE CANADIAN PRESS/Nathan Denette.

The fan experience and related consumer activities have traditionally been central to key management decisions of professional sports organizations — unlike now, when fans are at a distance, participating at arm’s length via large video-game like screens, cardboard cutouts and canned crowd noise.

Professional sports is back for a number of reasons, but none have much to do with why it was fundamentally established: For the fans, for the contributions sports teams made to social cohesiveness and for the communities that have traditionally supported pro sports, both financially and emotionally.

Instead, pro sports is back primarily to staunch the significant COVID-19 financial losses on behalf of ownership groups and to satisfy media and corporate partners.

Orlando bubble is costly

The resumption of professional sports, however, is also hugely costly to pro sports leagues. The NBA recently noted that the price of its Orlando bubble will exceed US$150 million. There’s also a personal and health cost: Professional athletes are still testing positive for the virus.

Miami Heat forward Derrick Jones Jr. tested positive for COVID-19 in June after the Heat and other NBA teams began mandatory testing in preparation for the resumption of the season. Photo credit: AP Photo/Lynne Sladky.

So the important question here is: Will resuming professional sports work, can it thrive without fans and is it safe for players?

In the current COVID-19 environment, the preferences and priorities of fans are complicated at best, with some suggesting that they may never fully return to professional sport.

Public opinion surveys are varied and inconsistent — as many as 60 per cent and as few as 30 per cent of sports fans have told various pollsters that they’re eager for pro sports to return. Information from actual sport teams, however, on the topic of what their fans want is conspicuously lacking.

There’s little consensus on how enthusiastically fans will return to professional sport, specifically when it comes to congregating in stadiums or arenas. That’s due to a host of potential post-pandemic realities, including unappealing levels of security and strict legal requirements in terms of liability waivers.

A recent New York Times study reported that of 511 epidemiologists who ranked “everyday activities to do again” in a year, “attend a sporting event” came in last, well behind the No. 1 pick of attending a wedding or funeral.

Now what?

So how can professional sports organizations get their fans back?

First off, they should keep fans at the core of their business strategy, customizing and tailoring messaging and engagements with fans via brand partnerships as much as possible.

They should make broad commitments to re-engage their diverse community and work to restore their position of social unifiers in society. They must break down the extreme barriers currently in place between athletes and fans while supporting and celebrating their athletes whenever possible.

And, as they did when the professional sports industry was born, they should continue to embrace innovation to drive enhanced fan engagement. They should extend the spirit of these efforts to their dealings with their key stakeholders, including corporate and media partners.

While the COVID-19 pause has created huge challenges for professional sports, organizations can use this opportunity to rethink and reshape the fan-centred experience for the next era of the industry throughout North America.

The coronavirus pandemic requires us to understand food’s murky supply chains

Written by Cory Searcy, Ryerson University & Pavel Castka, University of Canterbury. Photo credit: AP Photo/Tsvangirayi Mukwazhi. Originally published in The Conversation.

Do you know where your coffee comes from? The COVID-19 pandemic has highlighted the importance of knowing about our supply chains. Here, a woman carries harvested coffee beans in a coffee plantation in Mount Gorongosa, Mozambique, in August 2019.

Six months ago, you may not have thought much about where your groceries were produced. But chances are you’re thinking about it now.

The COVID-19 crisis has put food supply chains under incredible stress, and stories on shortages of everything from meat to baking ingredients have been plentiful.

But even with the increased recent attention, most supply chains remain murky. Consumers can play a key role in lifting that cloud.

Supply chain transparency has sporadically received widespread attention before. In the 1990s, Nike was famously the target of global consumer boycotts due to concerns about working conditions in its manufacturing plants.

This consumer activism forced the company to make major changes, such as establishing minimum working ages, conducting regular factory audits and publishing where Nike products are made.

Despite progress, calls for consumer action on dangerous working conditions in supply chains for a range of products continue.

An array of claims to decipher

The COVID-19 crisis highlights the prospect of greater consumer engagement in the food supply chain. Browsing the shelves at your grocery store, you may come across a bewildering array of claims related to a product’s characteristics or origins.

There are, for example, nearly 150 different eco-labels on food that certify claims about a product’s environmental and social characteristics. Seafood, beef, coffee and bananas are just some of the many products covered by eco-labels.

Many claims of where products come from or other characteristics, however, rest on weak foundations. But consumers can push companies for continued innovation to illuminate the invisible parts of the supply chain and strengthen the credibility, transparency and veracity of their claims.

In many cases, this can be done with existing technology. Blockchain, chemical footprinting and drones are becoming more reliable as they become cheaper. They are also increasingly being used in supply chain auditing and eco-labelling, and there’s scope to do much more.

Consider the example of the Marine Stewardship Council that provides fishery and seafood traceability certification programs. The council’s eco-label is “only applied to wild fish or seafood from fisheries that have been certified to (the MSC’s) standard.”

A man casts a fishing net onto a flooded land following rain to catch fish on the outskirts of Phnom Penh, Cambodia, in June 2020. Photo credit: AP Photo/Heng Sinith.

It uses state-of-the-art DNA testing to ensure the traceability of certified seafood, resulting in mislabelling rates of under one per cent, an impressive statistic since mislabelling of seafood can average 30 per cent.

DNA testing is not applicable to all foods, but it is rarely used despite its potential in improving supply chain integrity.

In-person audits are ineffective

Most supply chain certifications draw only sparingly on the latest technologies. Instead, they rely heavily on in-person audits, which can be ineffective.

Our recent research has shown that technology-enhanced auditing can improve the timeliness and veracity of audit data collection and analysis, which can in turn strengthen the credibility of supply chain certifications advertised to consumers. In another study, we’ve further found that the COVID-19 crisis can help accelerate the use of technology in supply chain audits.

Technology can also increase the resilience of supply chains, so they are better able to respond to shocks like a global pandemic.

For example, technologies such as sensors, satellite imaging and cloud computing can improve visibility deep into the supply chain and improve co-ordination between suppliers and buyers. Real-time supplier monitoring can provide early warnings of potential problems such as working conditions, inventory shortages or production breakdowns.

These technologies cannot, of course, eliminate the possibility of future shortages, but they can make supply chains less likely to break.

Consumers can play a more active role in driving improvements throughout supply chains. Purchasing decisions are one key lever.

Consumer engagement is key

For example, consumers have indicated a willingness to pay a premium for products made under good working conditions, but the lack of trustworthy information on those conditions is a barrier. Consumers can also actively push for the sharing of more and better quality information to reduce mislabelling and other undesirable activities, such as the trade of endangered species.

Consumers can push for better quality food labelling. Photo credit: Piqsels.

Going further, consumers can get more directly involved in supply chain monitoring. For example, in addition to satellite imaging, Global Forest Watch has used crowd-sourcing to monitor forest change. Unilever, which makes dozens of products you’ll find at your local grocery store, has used Global Forest Watch to better understand deforestation in its supply chain.

Portable technologies on the rise

And in the near future, consumers might even be able to validate the content of food labels by using simple portable technologies. No matter how they engage, consumers need to take a more active role in promoting and demanding greater supply chain transparency.

The pandemic has more people thinking about supply chains than ever before.

This increased awareness presents a chance for consumers to become more engaged in where and how products they buy are produced.

Consumers need to push for more transparency and higher veracity information on where products come from, but they also need to take greater responsibility for what they buy and to participate wherever they can in supply chain monitoring.

Companies are increasingly turning to social media to screen potential employees

Written by Anatoliy Gruzd, Ryerson University, Elizabeth Dubois, University of Ottawa, & Jenna Jacobson, Ryerson University. Photo credit Shutterstock. Originally published in The Conversation.

Users’ online activities can be reviewed by potential employers as a way to pre-screen job candidates.

As businesses around the world slowly start to reopen after being forced to shut down operations due to the COVID-19 pandemic, the graduates of the class of 2020 are sharpening their presentation skills and updating their resumes to look for employment opportunities. But will their polished resumes make them more competitive relative to their peers?

The answer may surprise you. In today’s digitally mediated world, well-prepared resumes may not be enough to make you stand out among hundreds of candidates.

Due to the increasing use of social media around the globe (especially now during #socialdistancing), many recruiters and hiring managers find social media attractive as a readily available source of real-time data to find and vet candidates.

Social media is used by potential employers to check job applicants’ qualifications, assess their professionalism and trustworthiness, reveal negative attributes, determine whether they post any problematic content and even assess “fit.”

Employers review potential employees’ online activities to pre-screen candidates. Photo credit Shutterstock.

Screening applicants

We examined social media users’ attitudes towards employers using social media to screen job applicants, a process known as cybervetting. We conducted an online survey of 454 participants, primarily from the United States and India, with a followup study surveying 482 young adults in Canada.

Examples of personal information derived from social media. Photo credit: Gruzd, Jacobson, Dubois.

In these studies, we compared people’s comfort level with cybervetting in relation to different types of information that could be gathered from publicly accessible social media platforms. These were readily available information in the form of raw data and metadata, meaning what they had posted, when and how; analytics information that would require processing, for example, results of sentiment analysis or topic modelling of an applicants’ posts; and information related to users’ online social network that is often used for social network analysis, for example who follows whom on social media.

Expectations of privacy

The results revealed the nuanced nature of social media users’ privacy expectations in the context of hiring practices. Individuals have context-specific and data-specific privacy expectations. People who are already concerned about social media platforms collecting their personal information and possibly sharing it without their consent are less comfortable with third parties using social media data to screen job applicants — even if it’s publicly available.

On the other hand, individuals who are more comfortable with this practice are also more concerned that social media platforms might be storing inaccurate information about them. This may be a sign of “digital resignation,” a phenomenon in which people are worried about privacy but recognize that companies still engage in this practice. Social media users may want to ensure that information collected about them from online sources is accurate, since erroneous representations may negatively impact their success on the job market.

Comfort levels

We also found that being a job-seeker does not necessarily make one more or less comfortable with cybervetting. And there is no significant relationship between one’s gender and the comfort level with this practice. Regardless of one’s employment status or gender, our findings point to the presence of expectations and concerns with social media screening.

Our results highlight the need for employers and recruiters who rely on social media to screen job applicants to be aware of the types of information that may be perceived to be more sensitive by applicants, such as social network-related information (like friends’ lists and connections among friends).

Our research stresses the importance of employers aligning their hiring practices with people’s expectations. If job applicants are aware of and not comfortable with cybervetting, companies may lose the opportunity to recruit high-quality applicants.

Alternatively, employees may lose trust in the company if they later learn about the company’s social media screening practices. Despite the lack of regulations about cybervetting in most countries, employers should proactively state if they engage in cybervetting, outline what social media will be examined and describe how the information will be used.

Ethical hiring practices matter, and this type of transparency is a first step towards giving the next generation of graduates and employees a fair chance of landing their dream job.

Customer experience will help retailers overcome the financial hit from coronavirus

Written by Frederic Dimanche, Ryerson University. Photo credit The Canadian Press/Paul Chiasson. Originally published in The Conversation.

Shoppers line up in front of a Zara clothing store waiting for the opening after being closed for nearly two months in Montréal on May 25, 2020.

Retail was in trouble long before COVID-19 hit. The past five years saw daily reports of store closures and retailer bankruptcies.

The growth of online commerce eroded many retailers’ top-line revenues, forcing them into an ongoing cycle of discounts and promotions just to keep up.

But even amid this debacle, direct-to-consumer brands increasingly expanded their physical presence. Warby Parker, the online eyewear provider, currently operates 65 outlets and Away, the luggage company, recently raised US$100 million to open 50 stores.

But when COVID-19 brutally put a stop to physical retail, many strained small- and medium-sized businesses quickly moved their business online, as shown by Shopify’s 47 per cent revenue growth in this year’s first quarter.

Customers previously reluctant to shop online placed their first orders, boosting e-commerce numbers proportionately.

Typically, it takes an average of two months before a new behaviour becomes a habit, adding more pressure on struggling brick-and-mortar retailers that don’t have good online offerings if they can’t get customers back in stores promptly to satisfy them. Some worry they might never recover.

Not all bleak

Nevertheless, all is not gloom and doom. After months of confinement and a surprisingly flawed online experience, people yearn to return to normal. The COVID-19 restrictions have exacerbated our natural need for social connection.

Despite being digitally connected, people crave face-to-face human contact. That’s evident in the retail activity in recently reopened countries.

At its Guangzhou, China, flagship store, Hermès registered US$2.7 million in sales on its first day.

In Paris, long lines stretched in front of the Champs-Élysées H&M store.

People wait outside the Louis Vuitton shop on Champs-Élysées Avenue in Paris on June 3, 2020. Photo credit AP Photo/Thibault Camus.

And in Montréal recently, dozens stood patiently outside a downtown Zara, eager to buy summer clothes. The urge to get out and socialize prevailed over safety concerns.

Some employees are similarly impatient to leave the house to resume work. While most office staff transitioned easily to remote work, some suggest COVID-19 has exacerbated the loneliness and lack of social interactions, despite companies’ claims of sustained productivity.

For retail staff who thrive on human contact, the situation has been difficult. Most are itching to return to their stores.

Personal human connection versus digital

Beyond the craving for social contact, the human touch is also what many retailers rely upon, especially in the beauty and luxury sectors, where sensory experiences are critical.

A recent PwC Consumer Intelligence Survey of 15,000 global consumers confirms what has been observed in countless shopper-retailer interactions: The human touch still matters, with 75 per cent stating they want more in the future, not less. Furthermore, most shoppers consider customer experience more important than price and product quality.

Similarly, in the hospitality and travel sectors, human contact prevails. When COVID-19 hit, personal connections with travel advisers helped hundreds of travellers return home after their flights were cancelled. Customers with e-platform reservations, meantime, struggled.

A traveller arrives on an international flight at Toronto’s Pearson Airport in March 2020 after the COVID-19 pandemic was declared. Photo credit THE CANADIAN PRESS/Chris Young.

In the COVID-19 recovery period, physical stores are uniquely poised to offer this crucial human interaction. A 2015 study led by Marshall Fisher, professor of operations, information and decisions at the Wharton School of Business, clearly shows the importance of human interaction in retail, and its impact on revenues.

Yet in 2020, as retailers slowly reopen, they’re focusing on safety and hygiene protocols but continuing to fail to invest in their own human capital. Instead of recognizing the long-term benefits of devoting attention to their employees, they obsess over minimizing labour costs, leading to increased employee turnover and poorly managed stores.

With less traffic coming into stores, expectations from those brave enough to venture out are significantly higher, and retailers must invest in their teams if they want to stay relevant.

They could borrow from a Toronto bike store’s playbook that saw revenues double during COVID-19, the owners recently told me. Open less than 18 months, the Dismount Bike Shop team built a reputation for cutting-edge merchandise selection, precise product and industry knowledge and outstanding customer experience.

When the crisis hit, the company’s seamless pivot to online bookings with well-organized physical appointments helped achieve 100 per cent conversion rates.

Training is key

Product and industry expertise are not negotiable. Fisher’s study found that retailers who train their front-line employees sell 125 per cent more than those that offer no training. To overcome the current COVID-19 sanitation requirements and foster an authentic human experience, retail workers must also demonstrate specific interpersonal soft skills.

To do so within a no-touch situation means capitalizing on other senses to engage. From that initial eye contact and open body language to a warm welcome, empathetic and friendly communication is key. Companies that commit to training sales advisers to expertly sell products while demonstrating high levels of relationship-building skills won’t just attract and retain the best employees. They will also drive in-store sales and customer retention.

It’s time to stop considering employees as a cost and stores as showrooms. Instead, retailers should invest in their in-store teams and train them to become revenue generators. The human touch will define who the winners will be post-coronavirus.

A plea to businesses: Don’t take away our paper bills!

Written by Joanne E. McNeish, Ryerson University. Photo credit Shutterstock. Originally published in The Conversation.

In an era of data breaches and privacy intrusions, the majority of Canadians want paper bills. So why aren’t organizations listening to them?

Once again a telecommunications company is telling its customers that they will no longer receive a paper bill. This time it’s Rogers.

What seems to some to be a non-issue evokes a strong reaction in others. When Telus eliminated paper bills, customers who prefer paper bills were shamed online. Others expressed solidarity with digitally disadvantaged groups or listed reasons why some consumers need paper bills.

But why do banks and billing organizations feel it necessary to stop sending paper bills and statements?

One reason is the cost to print and mail paper. Strangely, most of these organizations are highly profitable, generating healthy returns to shareholders.

The cost to send paper bills is negligible as a percentage of the service cost and the advertising and promotional budgets of banks and most billing organizations. Telecoms are not only profitable, but since they provide Canadians with internet services, they earn revenue from consumers using the web to access, pay their bills and download their billing information.

People like paper bills

Paper bills and statements have value to most consumers, especially those who bank and pay online. Research that I have been conducting since 2010 indicates that almost 90 per cent of online Canadians aged 18 to 90 continue to receive paper bills.

When I ask why, they indicate wanting control over their own behaviour, and some semblance of control over the organization.

They also want the paper bill as a reminder to pay. They say that e-reminders get lost in their digital in-boxes because they are busy people. This is also due to the lack of any clear indication on e-bills that differentiates them from other email correspondence or spam.

They worry that if the bill is only in digital form, they won’t review it, or they won’t notice errors. This could cost them due to mistakes made by organizations, overcharging for services that the consumers did not understand, charges for products or services they didn’t authorize, inappropriately high interest charges for late payment and other billing charges.

Memory is better with paper

Consumers also worry about their ability to understand complex financial information in digital form. Research studies done by financial and consumer lobby groups show that comprehension and memory are better when reading information on paper than digitally.

The levels of bankruptcy, household debt and outstanding credit card balances have never been higher in Canada.

The increase of online and mobile banking adoption by Canadians, and the pressure by billing organizations and banks to discontinue paper bills and statements, seems to me an important element of increasingly poor financial management by Canadians. In 2015, the Canadian government was so concerned that they introduced a financial literacy strategy.

Paper bills could assist financial literacy efforts. Photo credit Shutterstock.

Finally, and regardless of whether they are pro-paper bills or not, my research indicates that 57 per cent of Canadians who pay their bills online worry about their increasing dependence on large organizations if their information is only in digital form.

The Cambridge Analytica scandal, along with the increasing number of hacks, digital fraud and ransomware events, has taught consumers that no one is entirely safe online.

No proof?

Could one of the reasons be that banks and billing organizations don’t want external proof of transactions so they can reduce the ability of their customers to demand action from them?

Some of their service agreements make clear that customer information produced by the bank is the only authentic evidence of a transaction. Unlike the paper bill, which is produced by the bank, a digital bill on a consumer’s computer or phone, or printed from a PDF file, is not considered proof unless the bank or billing organization decides it is.

Paper bills and statements can also be shared openly and easily. Those who share a household and have responsibility for its financial well-being, and who receive paper bills and statements, can all share access to the information.

The information isn’t hidden away in the digital account of one person; it’s not restricted to the account holder. Sharing access by using paper also helps avoid the risk of being accused of participating in a fraudulent transaction that could ensue if someone shares the password to an online account.

Paper bill shamers say that it is easy to review financial information online, but they overlook the time and effort it takes to access online accounts, in part because consumers must remember various usernames and passwords. Two-factor authentication that some organizations are beginning to push offers another level of security against fraud, but also, more complexity for those accessing online accounts.

Trees at risk?

The virtual digital world is firmly planted in the real world of servers that require a tremendous amount of energy consumed in terms of running and cooling these machines. Paper producers plant more trees than they harvest. If the end game is no more paper documents, then the land used to grow trees could conceivably be sold off for use to create more and more server farms. In a time when solving the climate crisis is critical, this is not a satisfactory trade-off for me.

The war on paper bills and statements could be thought of as a war on personal financial identity.

Just as Facebook disrupted social interactions, consumers are realizing that their financial identity is at risk. Their identity is being subsumed in a world of software and algorithms.

If governments wish to protect their citizens financially, they should enshrine in law a requirement for companies and banks to send paper bills and statements. I encourage the CRTC to stop listening to the big voices of telecoms and starting listening to Canadians.

Sustainable start-ups should consider corporate venture capital first

Written by Deborah de Lange & Dave Valliere, Ryerson University. Photo credit Shutterstock. Originally published in The Conversation.

Sustainable ventures can markedly contribute to Canada’s economy and employment with the right investor strategies to help them grow to medium and large size.

Urgent issues like the climate crisis, environmental degradation threatening millions of species, social inequality and other challenges mean that the global economy needs to immediately transform itself to become sustainable.

Sustainable start-ups are showing us the way with smart business models having economic, social and environmental value.

Toronto’s Ripple Farms is an example demonstrating the power of aquaponics to sustainably produce organic greens and seafood throughout the year. To connect urbanites with the land, the company’s business model combines product offerings with education on urban agriculture.

Similarly, Waterloo Energy Products sells a full range of residential and commercial renewable energy designs including geothermal, solar, LED lighting equipment, water treatment solutions and much more. By offering a one-stop shop at its Sustainable Living Centre, they have made renewable energy choices much easier for consumers.

Both firms bundle products and services in different ways with a potential to expand internationally.

Many companies in Canada’s sustainable sector have similar potential to export Canadian products and expertise around the world.

Finding the right investor

But Canada needs these firms to grow rapidly and substantially so they can create jobs that other unsustainable businesses are shedding as they become obsolete. Investors are key to accelerating this urgently needed start-up growth in Canada’s sustainable sector.

According to the United Nations’ seminal Brundtland Report, sustainable development should meet the needs of current generations without compromising the capacity of future generations, ensuring a balance between economic growth, care for the environment and social well-being.

These three main components of sustainable development are considered together, not as separate goals. Good governance is required to ensure and oversee all three of them.

In this complex business environment, finding investors to scale up new companies and, even more importantly, finding the right investors, is challenging. Start-up ventures burn through cash rapidly as they aim for a sale of the company — usually to other larger firms or on the stock market through an initial public offering.

Raising funds to grow start-up companies is an ongoing challenge that pulls management away from running the business. By finding knowledgeable, committed investors who understand the business, a firm can ease the constant stress of raising capital while legitimizing the company to consumers, clients and stock markets.

Unfortunately, sustainable ventures face additional challenges when it comes to investors compared to purely for-profit firms because they appear to have multiple competing goals.

Stiff competition

Sustainable firms often face powerful well-established competitors — renewable energy firms, for example, must overcome obstacles in a world entrenched in oil and gas.

People are hesitant about new technology even if it improves their lives. The choice between fossil fuels and renewables is not unlike trading a typewriter in for a laptop. This fear of uncertainty gives traditional firms market advantages that new companies must overcome.

Renewable energy firms must often overcome obstacles in an oil-and-gas world. Photo credit Thomas Richter/Unsplash.

Many sustainable industries still in technological development stages are also capital-intensive, meaning that they need a lot of capital upfront before they can demonstrate viability.

In addition to their unfamiliarity to potential stakeholders, some have experienced highly publicized failures, such as Solyndra, along the way to technological maturity. This can scare off investors.

Advice for sustainable companies

My colleague Dave Valliere and I recently tested a quantitative model using data on 184 entrepreneurial ventures. The analysis found that sustainable start-ups are better off choosing a different type of investor, one with aligned interests who can lend it legitimacy so that others will have confidence in it.

Perhaps surprisingly, it’s not so much angel investors as corporate venture capital that can help these firms grow. In this model, the corporation usually sets up a separate division that looks for investments of interest to it.

The problem for most investors is that the quality of a new venture is uncertain until after it has grown to a point where it is steadily increasing revenues and generating healthy profits.

A new venture needs to be novel enough to have a competitive advantage while familiar enough to be understood and accepted. As a result, many investors look for signs of the hidden potential of a venture. An example could be the quality of existing stakeholders in the venture, such as successful, high-profile members on the board of directors or the presence of professional investors.

Our study indicates that angel investors, venture capitalists and investment banks do not create confidence in sustainable ventures. It found that investment banks can even have adverse consequences for businesses in the sustainable sector that are seeking legitimacy.

Try a different strategy

A lack of confidence in bankers since the 2008 financial crisis could be playing a part. Usually, new ventures begin with angel investors and move on to venture capital and other types of more sophisticated financiers who can further develop and market the firm. Instead, we advise sustainable firms to use a different strategy and seek out corporate venture capital as it is uniquely more helpful to sustainable ventures.

The usual investment life cycle progression of a new venture — moving from angels to venture capital and then to more sophisticated types of investors — may not always hold.

A venture attracts additional capital by meeting an investor’s screening criteria, but the most recent investors matter too. Current investors can lend legitimacy to attract other investors. According to our findings, the sustainable sector gains that legitimacy with corporate venture capital over other types of investors.

This result suggests that the credibility of corporate venture capital plays an important role in the development of sustainable businesses.

A corporate venture capital firm may choose to invest in a venture with promising technology, even if the company has weak management or an unlikely strategy; sometimes, they just want to learn from another’s technology to help them make strategic choices about future technological options.

Positive reputation

If they’re interested in the venture as a whole, a corporate venture capital firm can replace the management and/or the strategy of the new venture after acquisition. While the corporation offers its target more resources and strategic guidance, it also gains due to the positive reputation of the new venture.

Acquiring a startup can energize an otherwise stagnant, bureaucratic company. Photo credit Shutterstock.

Overall, a corporate venture capital endorsement of a new venture and its potential acquisition suggests to the market that the company is poised to be a disruptive winner in the industry. Corporate venture capital cuts through the noise that often accompanies sustainability goals. Change is in the wind for an industry, and others want to jump on the upward trajectory.

Sustainable ventures can markedly contribute to Canada’s economy and employment with the right investor strategies to help them grow to medium and large size. Some of these startups are exciting in many ways. Most significantly, they will improve Canadians’ lives and ensure we have a healthier environment.

Working differently in an era of disruption

Written by Dr. Steven N. Liss, Vice-President Research and Innovation, Ryerson University. Originally published in Research Infosource Inc.

Knowledge creation and the headwaters of innovation are deeply embedded in the tradition of university research, scholarship and creative activities. Our students, research trainees and faculty increasingly bring new knowledge, ideas and innovations to the forefront of the most pressing issues facing our planet and our communities – creating opportunities to advance economic prosperity and quality of life.

In an innovation economy, the ability to collaborate, to compete, and to address complex challenges is key. By their nature, complex challenges transcend borders and require a willingness to work differently, to establish new combinations and types of relationships. This includes coopetition, breaking down silos to look horizontally, intensifying international partnerships in the face of geopolitical challenges, and recognizing the value of the intersections where innovation occurs.

Tackling challenging issues, such as climate change, immigration, advancing sustainable and innovative cities, and industry 4.0, requires us to look ahead while keeping in mind the fundamentals of knowledge upon which sound decision- and policy-making is created. Research provides the critical insights that can be leveraged to shape future directions and encourage aspirational and visionary thinking. We need the space to ask fundamental questions that address the grand challenges, formulate and test hypotheses, and determine who is in the best position to act on the outcomes of this work to advance ideas that can have impact. In many instances, there will be a time lag between efforts in deep technology and their results, which could conceivably have profound impacts on our lives.

Ryerson’s place at the centre of one of the world’s most diverse cities provides a unique lens through which to view and address societal challenges Ryerson is a leader in the transdisciplinary exploration of international migration, integration, and diaspora and refugee studies through the Ryerson Centre for Immigration and Settlement (RCIS). Ryerson also has Canada’s only graduate program devoted to the advanced study of immigration policy. Building on this foundation, in August 2019, we welcomed Dr. Anna Triandafyllidou as the Canada Excellence Research Chair in Migration and Integration where she leads a multi-faceted program to fundamentally transform approaches in migration studies, foster global collaborations, and impact policy and practice.

Our strategic partnerships are at the core of leading hubs for research and innovation. This has been key to the success of the Institute for Biomedical Engineering, Science and Technology (iBEST) and the Biomedical Zone (BMZ), in partnership with St. Michael’s Hospital.

The MedTech Talent Accelerator is an innovative training program co-designed with industry and supported by a Collaborative Research and Training Experience (CREATE) grant. The accelerator is led by Dr. Stephen Waldman of both Ryerson’s Department of Chemical Engineering and iBEST.

Dr. Kathryn Underwood’s partnerships, and support from SSHRC and CIHR, are addressing human rights and education practice, particularly with regard to disability rights and inclusive education. Her research in the School of Early Childhood Studies examines how constructions of disability in education and early childhood program contexts are used to organize children.

Dr. Ebrahim Bagheri is building technology that enables machines to understand social content the way humans do. As the NSERC/Warranty Life Industrial Research Chair (IRC) in Social Media Analytics and as a Tier II Canada Research Chair (CRC) in Software and Semantic Computing, his laboratory works in collaboration with partners to analyze large-scale digital “breadcrumbs” from user-generated data.

We are at the precipice looking beyond the horizon to chart pathways and directions for the future in a digital world at the Rogers Cybersecure Catalyst, pivoting in an innovation economy at the Brookfield Institute, and preparing for disruptions in the nature of work at the Future Skills Centre.

By encouraging brain circulation, setting a bold course and focusing on connections, collaborations and excellence, we can create evidence-based solutions and activate real-world transformation that will enhance Canada’s competitiveness and prosperity.