Event Highlights – Canadian Fixed Income Conference – Session 4

Event Highlights
Canadian Fixed Income Conference
September 28-29, 2021

Session 4

By Bloomberg Live

The 9th annual Bloomberg Canadian Fixed Income Conference convenes the biggest names in Canadian bonds, credit, commodities, and more, in a two-day virtual event on September 28-29, 2021.

As world economies seek to rebuild after the Covid-19 pandemic, these conversations have seldom been more relevant and timely. We gathered top investors, analysts, CEOs, CFOs, government officials, and bankers to discuss everything from insurance to real estate to mining to ESG to economics and more.

The afternoon session of Day Two focused on methods for creating a sustainable economy and various approaches to ESG. 

Click here to view video of today’s event.

Speakers included:

 

• Kathy Bardswick, Chairperson, Sustainable Finance Action Council of Canada
• Max Chan, Vice President, Treasury and Enterprise Risk, Enbridge
• Julian Deschâtelets, Managing Director, Renewable Power, Brookfield
• Allen Gransch, Chief Operating Officer, Secure Energy Services
• Arthur Kacprzak, Chief Financial Officer, Algonquin Power & Utilities Corp
• Mathieu LePage, Chief Financial Officer, Énergir
• Andrée-Lise Méthot, Chief Executive Officer, Cycle Capital Management
• Guillaume Pichard, Managing Director, Capital Markets and Treasury, Quebec Ministry of Finance
• Esohe Denise Odaro, Head of Investor Relations, International Finance Corporation
• Todd Stack, Chief Financial Officer, TransAlta
• Jason Taylor, Managing Director, Sustainability Advisory & Finance, National Bank of Canada
• Elizabeth Wallace, Senior Manager, Funding & Foreign Exchange, Capital Markets Division, Ontario Financing Authority

 

 

Bloomberg Moderators:

• James Crombie, Senior Editor
• Lynn Doan, Managing Editor, Energy and Commodities Americas,
• Lauren Kiel, General Manager, Bloomberg Green
• Amanda Lang, Anchor, BNN Bloomberg
• Alastair Marsh, ESG & Climate Change Reporter
• Thomas Rowlands-Rees, Bloomberg NEF
• Yayoi Sekine, Head of Decentralized Energy, Bloomberg NEF

 

Event Highlights:

Transitioning Canadian Energy
Max Chan, Vice President, Treasury and Enterprise Risk, Enbridge, and Allen Gransch, Chief Operating Officer, Secure Energy Services discussed new developments in energy with Bloomberg’s Lynn Doan. Allen Gransch spoke on Canada’s unique positioning in the shift to clean energy: “Canada is one of the most highly regulated jurisdictions when it comes to oil and gas production, we’ve been doing it for a number of years. And when we think about the regulatory environment here, we’re stewards of it. One area we’re working specifically with our customers on is reducing GHG emissions on pipelines. And we’re looking at production water pipelines, and oil pipelines, because we want to take trucks off the road. These diesel trucks create a lot of emissions today and our producers know that if they put volumes on a pipe, it’s the most efficient way to transport oil and water. Ultimately we have the expertise and the means to be able to reduce emissions.”

Max Chan spoke on the role of the Canadian government to support the energy transition without risking an energy crisis. He explained that it shouldn’t end up as a “binary,”– “for or against fossil fuels.” “Governments need to think about it as a shifting portfolio over time. So as time goes on, the portfolio mix of energy sources changes from less fossil fuels to more renewables, more clean options. There’s scenarios around the world playing out real time here as to what happens when you try to cut off, you know, low cost, proven reliable sources without proven reliable and cost-effective alternatives that, you know, you do set yourselves up for these crises. It does take a little bit of everything.”

Decarbonizing the Grid
Julian Deschâtelets, Managing Director, Renewable Power, Brookfield and Mathieu LePage, Chief Financial Officer, Énergir spoke with BloombergNEF’s Yayoi Sekine on new developments in sustainable energy. Mathieu LePage discussed Énergir’s new project involving electric and natural gas: “We believe the cleanest form of energy is the energy that is not consumed. We’re aiming to reduce by 30% the GHG emissions from buildings we serve today by 2030, and we’re aiming to be carbon neutral in this sector by 2050 with greater complementarity with electricity. A portion of certain usage of natural gas can be electrified economically today. Natural gas could be used during peak periods, such as the cold snaps in Quebec. It’s reducing the footprint of the building, but using natural gas when it’s economic for the customer to do so. We think that by switching the heating of those buildings to electricity, we can reduce the usage of natural gas by 70%, but save an enormous amount of money for customers by using natural gas in peak periods. We actually announced last July a partnership with Hydro-Quebec to do so. It’s currently in front of our regulators and we hope this is gonna be approved and put in service within the next year.”

Julian Deschâtelets discussed Brookfield’s strategy around diversifying business: “You don’t want to be beholden to one technology or one geography. So now we have the flexibility to pursue what we would call the best risk adjusted returns; opportunities regardless of geography, asset, or revenue profile. Right now, our business is 85% contracted, 15% merchant. When you look at our geographies, 70% is across North America and Europe. There’s still 30% in Latin America, Brazil, Colombia, China, and India, as an example. We also have a deep portfolio of clients and credit worthy customers we’re selling to not only utilities, governments, but corporations. In our business we’re seeing an increased amount of interaction and activity with large corporations that have embarked on this decarbonization journey, yet, they don’t necessarily have the skill set and the experience and the know-how to get to net zero.”

Decarbonizing the Grid Part II
Arthur Kacprzak, Chief Financial Officer, Algonquin Power & Utilities Corp, Andrée-Lise Méthot, Chief Executive Officer, Cycle Capital Management, and Todd Stack, Chief Financial Officer, TransAlta, discuss discussed decarbonizing the grid with BloombergNEF’s Thomas Rowlands-Rees.

Arthur Kacprzak explored thinking beyond the carbon vacuum: “One opportunity is investments into R&G: using agricultural or other biological waste that you can use to produce natural gas and inject into your distribution system. With water, for instance–there’s so much electricity that goes into doing something with water. There are opportunities to “green” the processing of water by pairing it with renewables. There’s a lot more we can do besides just calling it ‘decarbonizing.’”

To ensure proper execution in the decarbonizing process, Todd Stack stated: “It’s important to work with government entities that are involved in the decarbonization transition, whether that’s Federal, provincial or state. You need to make sure that there’s a common understanding of power grids and power supply. It sounds simple when you talk about wind farms and other things, but the actual operation on a second-by-second basis is incredibly complex because of the interrelationships and flows and the regulatory parties involved in making all of that happen. So I think a good education is needed across the board on the environmental and economic level.”

Elaborating on process challenges, Andrée-Lise Méthot added: “Don’t underestimate the complexity of upscaling.” “How much it will cost to upscale properly. Failure in the industry is a really high cost. Our role is to manage and take the right route, with the right people, who have deep enough pockets around the table. In my point of view, the technology is there, we need the right route.”

Approaches to ESG Part I
Jason Taylor, Managing Director, Sustainability Advisory & Finance, National Bank of Canada and Elizabeth Wallace, Senior Manager, Funding & Foreign Exchange, Capital Markets Division, Ontario Financing Authority discuss their approaches to ESG with Bloomberg’s James Crombie. Jason Taylor offered insights on the best way to communicate with buyside: “Be very transparent in what the bond is designed to achieve, and what it’s not designed to achieve. A lot of this is going to quickly become mathematical, and over time an infrastructure that’s building in place, but like all things that takes time, and the market’s improving incrementally on standards and guidelines. So, I only see this becoming less and less of a challenge for people.”

Elizabeth Wallace offered insights on mitigating the risks of “greenwashing”: “Having a third party certify our framework, having the auditor general come in and audit our use of proceeds annually, hopefully help to indicate our honest effort to do the right thing, the right way, in this particular space. No one gets it exactly right all the time, but if you are having external parties come in and look at what you’re doing and opine on that, that should help mitigate the greenwashing. Investors appreciate that kind of effort, and sincerity in the effort.”

Approaches to ESG Part II
Esohe Denise Odaro, Head of Investor Relations, International Finance Corporation and Guillaume Pichard, Managing Director, Capital Markets and Treasury, Quebec Ministry of Finance spoke with Bloomberg’s Alastair Marsh on their approaches to ESG. Guillaume Pichard offered advice to investors who want to retain the integrity of their ESG investments: “If you see an issuer, ask: Is this going to be a one off? Yes, you’ve set up a program, you’ve set off a framework, but what’s your end goal on this? If the issuer doesn’t have clear answers, ask some more questions.” Esohe Denise Odaro elaborated on the growing role of ESG in the debt market: “Better ESG performance means better performance in the long run. By and large, that’s what studies are showing. We are seeing these conversations go past the debt market desk and through the entire institution.”

The Work of the Sustainable Finance Action Council of Canada
Kathy Bardswick, Chairperson, Sustainable Finance Action Council of Canada, discussed the council’s objectives and initiatives with Bloomberg’s Lauren Kiel. The Council spends lots of its focus on “disclosure, with better data requirements, with taxonomies that serve the country and yet align with global ecosystems.” Yet uncovering climate data and analysis, Kathy Bardswick reminded us, are vulnerable to a “rabbit-hole” like process. “So, first and foremost, what we want to do as a council is really understand what it is we are trying to solve? What are the problems that we’re trying to address when it comes to enhancing our data capacity as a country? Who are our audiences? What exists currently? What doesn’t exist? Where are the significant deficiencies? And quite frankly, the work that’s coming out of the other two areas of focus, the disclosure, the mandatory disclosure area of focus and the taxonomy, particularly related to transition, is going to contribute significantly to a better understanding of where the data requirements are in this third area of focus.”

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