Director Spotlight - Karen Clarke-Whistler

Director Spotlight is a regular feature that provides an opportunity for a prominent director to discuss practical insights and critical developments on climate governance important for boardrooms. Chapter Zero Canada recently spoke with Karen Clarke-Whistler, Director, and Chair of the Governance Committee, of Altius Renewable Royalties, and recently retired from the board of Enerplus Corporation. Here are the highlights of our recent discussion with Karen about her climate governance work, her thoughts on trends in the space, as well as advice to fellow directors.

Your board (and management) experiences are very broad and span a range of sectors and industries (energy/renewables, consulting, finance, etc.). Are there any commonalities that you’re seeing between boards’ approaches to climate governance?

Generally, I’ve seen a huge change in the level of directors’ awareness, understanding and curiosity regarding climate change over the last 5-7 years. I remember when I was starting on one particular board—during one of the first meetings, a director said to me “just so you know, I’m a climate denier” and I responded to him, “you’re welcome to your own position, but just so you know, your investors believe climate change is happening, so as a director you need to be aware of that.“ And anecdotally, that person now heads the ESG/climate committee of one of their other boards! So that understanding and awareness has definitely increased.

I mainly deal with boards of medium sized public companies, which are quite different from non-public boards, and often don’t have the large environment teams of larger public companies. Most of these boards that I’m aware of have taken steps to understand how climate change impacts their organizations—starting with risks, but also looking at opportunities. That, of course, is a win-win- if you can be progressive on climate change and it also increases revenue or market share, attraction of talent, etc. Directors like to ask questions, and there are a million questions you can ask about climate change, so regulatory requirements and standards have helped to focus directors to ask “how are we preparing for these requirements? What does it mean for us?”

As companies gain a better understanding of their material climate and ESG factors, they feel more confident in really owning their climate/ESG strategies. So, when approached by an investor with a fifteen-point checklist management and directors can say “we know you’ve asked about these fifteen things, but these three areas are what are really important to us” and they are able to make the case and engage more effectively.

Can you please share a particular example of an organization whose board you’re either on or have worked with, that is approaching climate change in an exemplary way?

I’ve worked with a royalties company, which as you know, derives its revenue by investing in a portfolio of companies and generating royalties from them in return for the capital they put in up front. Also, royalty companies generally look for long life, dependable revenue streams. The company I’m thinking of was originally positioned in coal royalties. About five or so years ago, it had the foresight to recognize that it was going to have to diversify its revenues—and has done so by creating royalty stream in areas that support energy transition including commodities that support transport electrification and battery storage, and also into greener agriculture. That was a company that saw where the world was going and thought about how it could leverage its business expertise. I just thought that was so innovative and proactive.

We are in a regulatory and political environment currently in which there seem to be developments that are simultaneously pushing forward and backward on the progress of effective climate action at the corporate level. What do you think are going to be the biggest trends in climate governance in Canada over the coming year? And what advice do you have for directors who want to continue to make an impact on climate change?

I think the biggest trend in climate governance is preparing to meet increasing regulatory and disclosure obligations. Many public companies are well down the path. But there is something of a backlash against ESG in general, and some of that is pushback against climate goals that many see as aspirational. Political polarization domestically, especially here in North America, is feeding that. My advice is already a reality in many companies- I believe directors should be looking more carefully at balancing pragmatism and aspiration when it comes to climate. It’s easy, especially because directors are paid to ask questions, to do some reading, and push a company aggressively before there is an understand of what its biggest exposures and opportunities are, how significant they are relative to other risks and opportunities, and where it should be positioned in the market on climate.

Management and directors are treating some of the more progressive elements of climate with more care and not just rushing, for example, to make a net zero commitment or commitment. Similarly we need to be thoughtful about just charging in on scope 3 emissions. We want to understand what these are—e.g. when talking about scope 3 for oil and gas we are looking downstream, but for renewables, we are looking upstream, where manufacturing is dominated by China. In my personal view figuring out the fundamentals of where a company should be positioned on climate change and putting thoughtful goals together is important, especially in the face of legislation like Bill C-59 that has very broad application. While this may slow down aggressive goal making, I think it will be on a more solid foundation.

I believe we have to face the reality of energy supply and demand. Energy underpins every segment of the economy, and it is wishful thinking to believe that fossil fuel demand will disappear any day soon. I’d prefer to call it “energy diversification”, rather than “energy transition”. The global reality is that we need every form of energy and what we should be focused on is using energy efficiently and reducing emissions as opposed to eliminating energy - I feel pretty passionately about that.

Full Biography

Karen served as Chief Environment Officer, TD Bank Group (2008-2018) where she was responsible for developing and implementing a bank-wide Environment Strategy that included due diligence in financing, development of a carbon neutral strategy and definition of criteria for TD’s original $100B commitment to support the transition to a lower carbon economy.

Karen currently serves on the Board of Directors of Altius Renewable Royalties (TSX:ARR), on which she Chairs the Corporate Governance Committee. Until earlier this year, she also served on the board of Enerplus Corporation (TSX:NYSE:ERF). She is currently on the ESG Advisory Board of Expert Development Canada. She was also a Director of not-for profit Plug ‘N Drive (2017-2023), dedicated to enabling the use of electric vehicles.

Karen served as a Principal at ESG Global Advisors, (2019-2023) a boutique firm dedicated to realizing corporate value through strong ESG and climate strategies with a client base comprised predominantly of medium-sized public and private companies.

She served as an advisor to Alberta’s ESG Committee and the Energy Future Labs. She is a former advisor to Canada’s Ecofiscal Commission, Canada’s Environmental Commissioner, and served on the Private Sector Advisory Board (PSAB) of NSERC. Karen’s early career as an environmental consultant, based out of Europe, provided exposure to a range of global companies.

Karen has twice been recognized as one of Canada's Clean 16 for her leadership in clean capitalism (2014, 2016). She possesses a B.Sc. in Biology from University of Toronto and an M.Sc. (distinguished) in Land Resource Science from the University of Guelph. She received the ICD.D designation in 2016.