Month: June 2018

IF THERE IS ONE THING we have all learned through the remarkable events of the past several months, it’s the importance of social lenses. Inevitably, different people look at the same social situation and understand it in different ways.

This has created an environment where the threat of moral jeopardy hangs over individuals and organizations in every sector. The shift in values and expectations is playing out in everything from a heightened focus on sexual politics in the workplace to social media and privacy to corporate governance and reporting.

The nature of our work as communicators puts Navigator in the front lines when it comes to the adjustment required to cope with rapid societal change. To underscore the power of the social lens, we’ve attached a pair of 3D glasses to this edition of Perspectives. On every page, you will find an image or an icon that reinforces our editorial focus on the rise of moral jeopardy and
its growing impact.

That concept – and the overall design of Perspectives—showcases the creativity and talent
of Navigator’s in-house digital and design squad, Pinpoint.

We created Pinpoint to ensure Navigator’s clients have access to some of the best and brightest in the business when it comes to the all-important craft of multi-platform message delivery. In an age of social media and short attention spans, it’s essential to use powerful images—on everything from website to campaign collateral—to drive home the message.

We believe this edition Perspectives does just that. And
we hope you enjoy it.

“The one and only social responsibility of business is to increase profits.”
That assertion by American economist and Nobel laureate Milton Friedman framed decision-making for generations of CEOs. Fifty years later, as profitability and social responsibility have converged, Professor Friedman’s vintage theory is the height of corporate fashion—for a whole new set of reasons.

In 2018, social responsibility has become one of the cornerstones of business profitability. The once-narrow focus on shareholder returns has expanded to a broader community of stakeholders. Fairly or not, that stakeholder mindset comes with the full expectation of corporate access, accountability and consultation, as well as with a new frontier of acute corporate risk—moral jeopardy.

Articulating company values and ensuring they are reflected in policies and actions has become integral to long-term business strategy. After all, in an age of social media, misalignment with stakeholders can cause immediate—and lasting—public backlash.

That reality is reinforced by other external pressures.

As political fragmentation continues to compromise the authority of traditional government, private-sector leaders have increasingly been thrust into the breach. While most are motivated by the knowledge that uncertainty is bad for business, they are also responding to public demand for parity between financial and social capital.

That is why the CEOs of bluechip companies, as well as asset and pension fund managers, have recently taken public stands on everything from the environment and the sale of guns to racist violence and LGBTQ rights. Not only that, many have taken steps that would have horrified Milton Friedman at the urging of the investors who own corporate profits.

Larry Fink of BlackRock is a prime example of the new, morally attuned CEO.

The U.S. asset management firm, the world’s largest holder of global equities with a portfolio valued at $6.3 trillion (U.S.), is all about the pure purpose of bottom-line returns. But Fink is among those who understand that without the transparency derived from moral integrity, accountability and shared values, corporations are vulnerable.

So, in an open letter to international CEOs earlier this year, Fink served notice. He observed, “Many governments fail to prepare for the future, on issues ranging from retirement and infrastructure to automation and worker retraining. As a result, society increasingly is turning to the private sector and asking that companies respond to broader societal challenges.”

That same impetus is blurring the traditional definition of “activist investor.” Once derided for their singular focus on short-term returns, activists are also demanding that corporate management reflect broader social values with a view to safeguarding market share and avoiding nasty surprises. Such positions are all the more important at a time when widespread use of robots, pre-programmed algorithms and exchange traded funds (ETFs) have replaced votes with a new degree of investor passivity.

Prior to the emergence of moral jeopardy, corporate life was much simpler.

CEOs had a clear idea of success. In exchange for their reserved parking spots and stock options, they were expected to. deliver steady growth, share price appreciation, compliance with the law and other regulatory requirements.

As business became more global and more competitive, however, managing corporate reputation moved from the public relations department to the board room. To build business brand and foreign market share, it was deemed essential to be widely seen as trustworthy and reliable.

That new layer of scrutiny meant legal and reputational jeopardy started to run along two separate but parallel tracks. Legal and compliance issues were dealt with first, then came the assessment and remediation of the company’s reputation.

The internet, social media and a 24-hour news cycle abruptly changed all of that.

Suddenly, the urgency of containing reputational damage made it equal to legal jeopardy. As the community of self-identified stakeholders grew, so did the risk attached to any failure to respond quickly and decisively.

Just as legal and reputational risks achieved balance, moral jeopardy emerged as an urgent and complex issue in the board room and on stock exchanges. At a time of relative economic growth and historically high stock market valuations, the cost of clean corporate conscience is the cost of doing business. But as we’ve so often seen, recessions and market corrections, much like hangings, have a way of focusing the mind.

The Weinstein Company declared bankruptcy. Fox News reported a special $50-million line item in its financial statements for settlement of claims. Fortune 500 companies are spending an average of $14 million a year on harassment-related costs. Many other businesses across North America are facing the steep cost of looming litigation and settlements for those who have been sexually harassed in the workplace.

For those who doubt the risks and hard costs attached to moral jeopardy, company balance sheets—and the impact of potential settlements on share price—tell a stark story. That said, it’s a story that does not begin to quantify the soft costs, such as brand and reputational damage, high rates of absenteeism and turnover, productivity loss and the long-term impact that employee mistrust has on morale.

More than ever before, there is public scrutiny of and pressure on management to ensure that the right policies and processes are in place to prevent sexual harassment and, where it does occur, to deal with it in a swift, transparent and decisive way. Business leaders must not only do the right thing, they must be seen doing it.

No such measures will be effective, however, unless they are based on research and as much information as can be gathered. To that end, Navigator has conducted a national online survey to establish baseline data for Canadian decision-makers.

Here are the key findings to this survey report:

1. When asked to assess their own understanding of sexual harassment in the workplace, 66 per cent of Canadians describe themselves as having a good understanding; only seven per cent describe themselves as having a poor understanding.
2. When asked, 82 per cent of Canadians describe the issue as a serious or very serious issue, with only 18 per cent believing it is not serious.
3. Notably, more women (88 per cent) than men (74 per cent) feel it is a serious or very serious issue.
4. A surprisingly high proportion of employed Canadians—two in five—feel that sexual harassment is a serious problem in their own workplace.
5. Approximately 24 per cent of Canadians report that they have experienced sexual harassment in the workplace.
6. Problematically, of those who report that they have been sexually harassed in the workplace, nearly two in five report that the sexual harassment stemmed from a person who had direct influence over their career.
7. Seventy-one per cent of Canadians feel that it has taken far too long for the problem of sexual harassment in the workplace to be taken seriously. When asked if they believe the pendulum had swung too far, 54 per cent agree, and only 18 per cent disagree.

Cryptocurrencies have been making headlines for a couple of years, but many people remain confused. Navigator asked Don Tapscott, founder of the Blockchain Research Institute (BRI) and best-selling author, with Alex Tapscott, of The Blockchain Revolution, to explain what’s going on and what it all means.

IN APRIL, Navigator became the first public affairs firm to join the Blockchain Research Institute (BRI), an organization conducting ground-breaking research on the impact of blockchain technology on business, government and society. To celebrate this landmark occasion, we sat down with its visionary co-founder Don Tapscott to talk about this emerging industry and how Canada is poised to become a global leader in this space.

In the simplest terms, how would you describe blockchain technology?

Blockchain is the technology behind cryptocurrencies like bitcoin or ether. Whereas the current internet is limited to a network of information, blockchain represents a network for things with value—money, stocks, votes, data, intellectual property and more. Right now, we depend on big intermediaries like banks, governments or big social media companies to verify trust within digital transactions. Blockchain enables us to bypass those intermediaries and transact peer to peer.

It works by incentivizing thousands of different computers to verify transactions on a global, distributed ledger. That ledger is decentralized and public, meaning it can’t be hacked. It’s also far more efficient, allowing us to clear and settle transactions around the world in minutes where it once could take days or even weeks.

How does digital currency differ from traditional currency?

Traditional fiat currencies like the loonie or U.S. dollar are printed by a central bank and their value is backed by a particular government. Digital currencies like bitcoin don’t require a central bank or a government. They are created using blockchain, and the number of coins increases as a reward for those helping verify transactions on the ledger.

Can digital currencies and fiat currencies co-exist in the future?

Absolutely! A number of central banks are already looking at the ways this can happen. The Bank of Canada even released a report recently exploring the possibility of a digital fiat currency.

Right now, the currency we use is really determined by our jurisdiction—where we transact. The digital currencies we use can determine how we transact, what we transact or even with whom we transact. There’s still a role for fiat currencies in that world.

What are some uses for blockchain technology outside digital currencies?

Every industry you can think of will be radically altered by blockchain technology—from shipping to marketing to music. If you can think of a process requiring an intermediary that does not add value beyond establishing trust between parties, you have found a use-case for blockchain.

Why are digital currencies so volatile?

Probably because they’re so new! Regulators are only now beginning to consider how they should approach this new technology, and larger markets have not yet fully engaged in digital currencies. I think that volatility will settle down once the market matures and regulations are put in place.

How would you address concerns about money laundering and criminal activities associated with digital currencies?

Criminals tend to be the first adapters for any disruptive new technology. In the coming years the criminal element will occupy an increasingly small role in the digital currency market, particularly as the technology matures and regulators catch up. Some law enforcement officials are even finding the public, transparent nature of these blockchains quite helpful in tracking the activities of particular criminal organizations.

Do you believe there is a role for the regulator in this emerging space?

Absolutely! I think there’s widespread agreement that some regulation would be welcome in the space to provide guidance and protection for consumers, investors and innovators. That being said, we have to be careful that this regulation doesn’t stifle innovation and growth in this sector. In the modern era, these companies and entrepreneurs will just pick up and go to a friendlier jurisdiction if the regulations are inadequate here.

How do we ensure Canadian blockchain innovators stay here and don’t leave for other blockchain-friendly jurisdictions?

We can start by establishing a more nuanced taxonomy regarding the various digital tokens in circulation right now. Describing them all as “securities” doesn’t accurately reflect the diverse range of applications they might have. We also need to signal that our governments are open to innovation in this field.

We also need to have governments actively engaging in blockchain innovation, which I think we’re seeing. The City of Toronto, the Province of Ontario and the Government of Canada are all founding members of the BRI. There are some fantastic pilot projects using blockchain to improve efficiency and transparency within Canadian government. That creates an attractive market for innovators and shows we’re serious about this technology.

Want to hear more from Don Tapscott and other blockchain experts? Navigator has launched a new podcast, Banking on Blockchain, to mark our membership with the BRI. Each week, we sit down with top experts in the field who will help guide listeners to a deeper understanding of the technology and how it’s changing the way we do business in Canada. Visit www.bankingonblockchain.fm to listen to the latest episodes.

As government-licensed cannabis growers scramble to build brand and market share, provincial retailers across the country are preparing to stock their shelves.

British Columbia

British Columbians are already purchasing cannabis in public-facing storefronts. Unlike Ontario dispensaries, these storefronts are widely ignored by law enforcement and, in many cases, hold municipal business licences.

Premier John Horgan’s NDP government is acting to legalize many of these businesses, with a framework that will include both public and private retailers. B.C. will not cap the number of retail licences but will only issue them with the explicit support of local governments. This approach gives neighbourhood opponents a way to stall the development of legal cannabis markets, presenting a concern for retailers.

Alberta

Alberta’s NDP government presented its private-sector cannabis retail model to voters in 2017. In its first year of legalization, the Alberta Gaming and Liquor Commission is expected to grant licences to 250 retailers while online sales will continue to be operated directly by the government agency. This is more than six times the number of storefronts expected in Ontario, which has approximately three times the population.

Saskatchewan

When former Premier Brad Wall stepped down, several Saskatchewan Party leadership candidates expressed skepticism and even hostility towards legalization. One suggested that the legal cannabis age should be 25.

Premier Scott Moe’s government ultimately moved forward with a retail framework where the private sector would be responsible for both retail and sales distribution—an approach favoured by many other industry leaders. Much to the relief of industry leadership and recreational consumers, the legal age will be 19.

Manitoba

In Manitoba, access to legal cannabis stores will be dictated by postal codes, as individual municipalities were given the ability to prohibit retail sales. As of January 2018, 18 municipalities indicated that they would not accept cannabis retailing, with 22 remaining undecided.

Canopy Growth, Delta 9 Cannabis, National Access Cannabis, Tokyo Smoke and a consortium of other retailers are licensed to sell product to consumers,  while the Manitoba Liquor and Lotteries Corp. will secure and track supply.

Ontario

The Liberal government has approached legalization with an abundance of caution. Former health minister Dr. Eric Hoskins placed a strong emphasis on harm reduction. As a result, Ontarians will only see 40 storefronts, run by the Ontario Cannabis Retail Corporation (OCRC). The stores will provide product information and guidelines via iPad screens as part of a state-of-the-art Shopify system. The legal age for cannabis consumption will be 19.

Quebec

Quebec’s proposed cannabis laws are the most restrictive in Canada, with only 15 government-run dispensaries. Government will also control online sales. This stance is a far cry from the Quebec government’s comparatively  liberal approach to alcohol sales, which are permitted in corner stores.

Quebec’s current legal drinking age of 18 will apply, so expect some young Ontarians to hop the provincial border.

New Brunswick

Premier Brian Gallant’s Liberal government has eagerly embraced cannabis as an economic engine. CannabisNB, a Crown agency, will work with various tenders in the private sector for retail sales. To date, licensed suppliers are Canopy, Zenabis and Nuuvera.

Prince Edward Island

Prince Edward Island is expected to have four stand-alone, government-run cannabis stores. Supply deals have been signed with Organigram, Canopy and Canada’s Island Garden.

Nova Scotia

Nova Scotians will have nine government-run cannabis stores to choose from. Unlike their counterparts across Canada, these stores will be located within provincial liquor stores.

Newfoundland & Labrador

Newfoundland & Labrador will have 41 private-sector stores in the first year of legal cannabis. Ontario-based Canopy Growth has agreed to an 8,000-kilogram supplier deal with the province, and its subsidiary, Tweed Inc., is expected to operate four retail locations.