Director Spotlight - Peter Bowie

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 Peter Bowie, Director, DMZ Venture Fund, and recently retired from the board of Magna International. Here are the highlights of our recent discussion with Peter about his climate governance work, his thoughts on trends in the space, as well as advice to fellow directors.

You have served on the boards of organizations representing a range of industries and sectors—e.g. you are currently on the board of the DMZ Venture Fund, and very recently sat on the board of Magna International in the manufacturing industry.  How have discussions on climate change in the boardrooms varied based on sector/industry?

Yes, there are differences in terms of the size and complexity of the organisations, and their ability to attract knowledgeable people to the boards. For example, in manufacturing, they're really focused on the sustainability of their operations- their manufacturing processes, supply chains, etc. Interestingly, in the auto industry, a collaborative effort between the Suppliers Partnership for the Environment, Manufacture 2030, and several of the leading automakers and suppliers, including Ford, GM, Honda, Denso, Magna, of course, and others, are engaging nearly 20,000 supplier sites globally and their intent is to figure out how to improve consistency in reducing carbon emissions in the supply chains and reporting of scope three emissions when it's necessary, and also to share best practices. So it might not be known to many, but the auto industry is doing quite a bit- obviously there’s room to enhance, which they are actively trying to do.

If you look at tech businesses, they're really focused more on the nature of their products and the impacts of their products. Because of AI, there's a growing demand for data centres which are going to be significant consumers of electricity and water. There’s a place in Arizona that I’ve read a little bit about that has 100,000 semiconductors from NVIDIA and needs 50 megawatts of electricity and 1.3 million gallons of water every day. So those are going to be challenges that have to be faced.

Professional services firms have a very different issue around how they can deal with climate change and most of them are doing a lot around that area. It's an important part of their strategies these days, which is good, partly because they understand the need to do it and partly because they can also provide the services to their clients and it's better to have some credibility if and when you do that.

So there is a big difference between the industries in terms of their focus.

How does the size of the organisation play a part?

We need to look at the Canadian context and the mix of businesses here, which is something like 97-98% of businesses in Canada have fewer than 100 employees and 74% have fewer than 10. So there's a real focus on the larger ones, that total about 2500 to 3000 businesses. But it would be good for us to figure out how to help those smaller businesses with information that they can use to more readily understand what they need to do around climate disclosure and strategy.

What do you think Canadian organizations and boards need to start doing and thinking about in the short and medium term? 

Well, I think the climate situation is getting worse, not better. Look at the fires and droughts and storms, particularly over the last couple of years in Canada. It's not getting any better. Over the summer in Toronto, we had something like a month’s worth of rain in two hours. The best line I read was “it's the third ‘once in a century storm’ we've had in the last eight years.” Also, I just read that wildfire smoke increases the risk of dementia. So if you're living in, for example, BC or northern parts of Manitoba you’re at a higher risk. It’s quite distressing. I think these types of impacts on human health and safety are going to drive a lot of action on the part of organisations to really start to address climate change, quickly.

Also organisations and boards need to really understand what's happening beyond where they are. And I'll give you an example: Taiwan, as you probably know, is a major supplier of semiconductors globally, through TSMC. A couple of years ago, in 2021, I think it was, there was a severe drought that impacted Taiwan. Semiconductor processes require a lot of water.  So TSMC had to reduce the number of semiconductors they produce because they just couldn't get access to sufficient amounts of water. They used something like 150,000 metric tonnes a day. So companies that didn't step back and think, “what happens if there's a drought out in Taiwan?” were caught short. Some major companies like Ford, Nissan and VW had to scale back their production. Estimated losses were $60 billion. One company that anticipated a problem was Toyota- they had the foresight to think ahead. 

So how are boards thinking about those types of risks they run? Because there's smoke somewhere, or there's a drought somewhere and there's fire somewhere, there's an earthquake somewhere. I'm sceptical that a lot of boards have even started to address these types of risks- they’re going to need to adopt scenario planning to make sure the assessments are comprehensive in nature. They’ve got to go upstream and downstream on their own supply chain and somehow think through the suppliers of their suppliers.

For SMEs, it will be a challenge to resource that kind of work. I think their industry associations would be good places to turn to for resources and information that they can provide to all members, irrespective of size. The larger ones also should be very, very in tune with what's going on.

We’ve heard from some of our members that they are challenged with making progress on climate, by what they perceive as a tension between their duty of foresight and pressures on the organization to maximize short term profits. Any advice for them?

I think from a leadership perspective, that's just a false choice. We’ve talked about how events that happen elsewhere can impact what we do, such as the semi conductor case-- if you're just focused on maximising short-term profitability, you're missing that, and that's a significant risk. It's absolutely essential that boards balance short, medium and long term. Funnily enough, they connect- who would have thought? I appreciate that there are organisations and people out there who think of it as an “either or” situation, but they’re making a serious mistake.

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?

As discussed, there's going to have to be a lot of activity around anticipating, reacting to, mitigating and adapting to climate issues that haven’t existed before. That’s going to be critical. On top of that, is the demand and requirement for enhanced reporting and disclosure. A lot of investors really want to understand the risks they are facing from an investment perspective and how you as an organisation are developing your transition plan. They want to know how broad your understanding is of the risks.

I read an article recently that stated of the Fortune 500 companies in the US and Europe, only 2% of the boards exhibited high levels of sustainability expertise. That shouldn’t be acceptable. Also, Spencer Stewart did an analysis of large US companies and found only 20% of board members had some sort of ESG experience. That's not particularly good. How can you make informed decisions without being informed? Boards are going to have to start ramping up their climate competence.

I also think each director must have a baseline of knowledge. And that can come from education such as the ICD Board Oversight of Climate Change course, which is broad and intensive enough- it doesn’t mean you have to go back to university for six months. They'll have at least a basis to appreciate a lot of the challenges that need to be addressed, and when the new ones arise, they'll have some context to put it in. Also, climate should not be shuffled off to a committee— for example, scope 3 emissions is an issue that should be considered by the board. Climate action also impacts a company’s reputation and the way its perceived by stakeholders, such as employees. A recent survey by the Society for HR Management showed that 86% of employees of companies that had ESG related goals said they were proud to work there. It made their work more interesting and made them want to stay there. So attraction and retention is a part of the discussion, particularly in areas where it’s hard to find and retain talent.

Peter’s Full Biography

About Peter Bowie

Peter is currently an Independent Director of the DMZ Venture Fund. Previously he was a board member of Magna International (Audit Committee), China Overseas Shipping Co. Ltd. (Cosco) (Strategic Development and Risk Committees), Cederberg Capital LLC (Chair). Uranium One (Compensation Committee Chair and Audit Committee); Deloitte China (CEO and Senior Partner); the Asian Corporate Governance Association; Deloitte LLP Global Governance Committee and Board; Deloitte Canada (Chair).

Peter was also a member of the Canadian Advanced Technology Association – CATA Innovation Leadership Council; the Dean’s Advisory Committee, Telfer School of Business, University of Ottawa; Chair, of the Advisory Committee; School of Accounting, School of Business, Tsinghua University, Beijing and an Advisor, China Development Research Foundation.

Formerly, he was a board member of the Asian Corporate Governance Association Council, and the Princess Margaret Hospital Foundation Board as well as co-chair, University of Ottawa National Campaign; Chairman Ottawa-Carleton Economic Development Corporation and Institute of Chartered Accountants of Ontario Council Member and president of the National Capital Region.

Peter is an investor and advisor in early-stage startup companies. He is a former CEO and senior partner Deloitte China and Chairman of Deloitte Canada. His other career experiences included Platform Computing (enterprise software) 2000 – 2003, where he was the chief corporate officer; Microsystems International Limited (Semiconductor design and manufacturing; Integrated Lighting Canada Limited (Manufacturing) and Nortel (Telecom manufacturing).

His awards and recognition include an honorary doctorate from University of Ottawa, a Fellow Institute of Chartered Accountants and Certified Public Accountant from the Institute of Chartered Accountants of Ontario, and Fellow Australian Institute of Corporate Directors. Peter also holds a CCB.D from Competent Boards and was selected as a top 10 Financial Talents in China (2008).