Haskayne researcher explores relationship between environmental performance and financial impact

Sustainability. Energy transition. Corporate Social Responsibility. ESG. All critical buzzwords that have captured the attention of Canadians and Albertans alike and are shaping some of the most pressing issues facing our province and country today.

In 2021, UCalgary received a $500,000 gift from BMO to establish a new professorship in energy transition and finance — a position Haskayne’s Dr. Yrjo Koskinen, PhD, has held since its inception. While in this role, Koskinen has drawn on his expertise in corporate finance, governance and sustainability to contribute further academic research in these realms. Koskinen’s most recent research explored the relationship between environmental performance and financial impact — comparing how U.S. and Canadian firms performed respectively.

And the results were quite surprising to say the least. While U.S. firms can increase profits and especially valuations through good environmental performance, Canadian firms do not experience any financial impact.

So, what does this mean for Canadian businesses trying to increase shareholder value, while also improving environmental performance?

This question and many others were raised amongst Calgary’s business community at Haskayne’s most recent Enbridge Research in Action Seminar Series event.

Pairing academic research with industry expertise to tackle real-world problems

Earlier this year, Enbridge announced its three-year investment commitment in the Enbridge Research in Action Seminar Series. The event series brings together influential researchers, practitioners and industry experts to discuss leading-edge sustainability topics and research.

After hosting a dynamic in-person event in February on the role collaboration plays in the energy transition, Haskayne was thrilled to bring close to 100 members of the business community together on June 14 to discuss the relationship between environmental performance and financial impact.

The engaging event welcomed Janet Annesley, chief sustainability officer at Kiwetinohk Energy, in addition to Koskinen as panellists. Moderated by Niels Versfeld, senior director of environment at MBC Group and current Haskayne DBA student, the conversation was gripping as the panel discussed the distinct nuances between the American and Canadian energy industries, what drives stakeholders to invest capital and the critical need for Canadian firms to differentiate themselves to gain a meaningful advantage.

When discussing his research, Koskinen attributes the blatant discrepancy between American and Canadian firms’ financial results from their environmental performance efforts to the differences between the countries’ corporate governance systems.

“In the United States, environmental initiatives are really business decisions — they want to create financial value with these initiatives,” says Koskinen. “Whereas in Canada, the motivation is that we want to do good for society. The obvious next step is to look at how Canadian firms can better differentiate their business strategies using environmental initiatives.”

Problem solving by applying a research-based lens

While Annesley admits it was really frustrating to learn about Koskinen’s research results, it does serve as a wake-up call that Canada should be heeding, specifically looking at “how we can use environmental performance not only to manage risk, but to create opportunities.”

Despite the surprising results, Annesley is quick to communicate the message is not for companies to think that there’s no value in environmental performance, emphasizing “to even get the opportunity to play and to be in the game, you need to do it.”

When asked if Koskinen’s research will change her approach to problems day to day, Annesley is resolute in her response.

“Absolutely — it gives me some more resolve to really think about how to differentiate strategically. I’ll say this simplistically, but it comes back to investor relations, communication — it even comes back to talking to government to say, ‘If you want this energy transition to happen, here’s how you need to be thinking to create the right incentives and to create the value.’

“In Canada, we’re so afraid that if somebody makes a profit off the energy transition that somehow, it’s a bad thing. Instead, we need to start to think big and systematically.”

The fruitful discussions and audience questions that arose from the event prove the immense value that comes when post-secondary institutions and the business community collaborate. Creating space for these conversations to take place and better learning how to bridge the academic and practitioner worlds will continue to be of benefit to all members of the business community — especially as Calgary looks to carve out its position as a leader in the energy transition space. 

Learn more about the biannual event series, listen to the event audio recording and stay up to date with future offerings.