Box 1: The majority of firms see climate change as relevant to their business operations
As part of the Bank of Canada’s broader efforts to understand the macroeconomic impacts of climate change, firms participating in the autumn and winter Business Outlook Surveys were asked to what extent climate change affects or is taken into consideration in their business operations. The majority of firms, especially those in the goods sector and large and exporting firms, reported that climate change is a relevant or very relevant topic for their business.
More than half of the affected respondents noted negative impacts of climate change for their businesses, mainly for two reasons. First, several have suffered the consequences of extreme weather, including financial losses or damage related to floods, wildfires and hurricanes. Changing seasonal patterns and generally more unpredictable weather also disrupted firms’ operations or sales in agriculture and fishing, as well as industries tied to transportation and construction. Second, many respondents referred to increased costs related to complying with climate-related policy and regulation (e.g., pollution charges, environmental standards and disclosure policies), as well as higher insurance costs for some.
Conversely, one-third of affected firms noted positive impacts of climate change for their firm, often related to new business opportunities. These include firms selling products or services that are energy-efficient or environmentally friendly to customers looking for lower-carbon alternatives. They often pointed to growing demand for green products (including clean technology) and a strong demand for green financial products; some noted that they had benefited from adopting new offerings ahead of competitors. A few businesses also reported that warmer weather helps their sales (e.g., in tourism). Finally, some firms also said that the adoption of energy-efficient technologies helped reduce their operating costs (e.g., due to lower energy consumption).
Over one-third of businesses said they are already taking concrete steps in response to climate change. This is often an important consideration for corporate image and is relevant to both customers and employees (i.e., corporate social responsibility). Several firms describe their move as necessary to attract young or more environmentally conscious workers, to fulfill clients’ or investors’ requirements, or to enhance their marketing. Some firms noted they are focusing on sustainability, investing in green energy such as solar power and low- or zero-emission fleet vehicles. Others said they are prioritizing waste management as a way to reduce their footprint or offering green incentives for their employees. A few reported planning to become or having already become carbon neutral.
Worse than 2008? B.C. forest industry facing unprecedented struggle – CTV News
The crisis facing British Columbia’s forest industry is intensifying as markets decline, mills shut and a strike involving 3,000 forestry workers enters its seventh month.
The multiple threats are deeper than the global meltdown of 2008 and may rival the damage wrought by B.C.’s 1980s recession, setting off massive industry restructuring, says an insider who is hearing from many people on the brink of financial collapse.
“There’s a whole bunch of things swirling around that’s causing a whole world of hurt for people working in this industry,” said David Elstone, executive director for the B.C. Truck Loggers Association.
“Many people are saying this is worse than 2008. Back in 2008, the industry was in rough shape but so was the rest of the world in tough shape with the global financial crisis.”
Other factors hitting B.C.’s forest industry now include low timber prices, less demand from Asian markets, U.S. tariffs, high cost structures, government fees or stumpage rates, timber supply shortages, mill closures in B.C.’s Interior and the strike on Vancouver Island, he said.
“Time will hopefully end the strike,” said Elstone. “Time will hopefully help us recover markets.”
Late last year, Finance Ministry budget numbers revealed forest revenues were down 11 per cent and projected harvest volumes of 46 million cubic metres were the lowest in years.
Among the mill closures was Mosaic Forest Management on Vancouver Island, which announced an early winter shutdown of timber harvesting operations, putting 2,000 people out of work indefinitely.
About 175 workers at a mill owned by Tolko Industries in Kelowna lost their jobs with the operation’s permanent closure on Jan. 8. Last year Canfor’s permanent closure of its mill in Vavenby, north of Kamloops, resulted in the loss of 172 jobs in the community of about 700 people.
Elstone said he heard from many forest industry contractors at the recent Truck Loggers Association annual convention who are struggling to make ends meet, especially from those on Vancouver Island where the strike has hit hard.
“It goes well beyond the 3,000 workers being affected,” he said. “My membership, the contractors, employ the majority of the workers. It goes to the tire shops, the dealerships, the grocery stores.”
Premier John Horgan spoke at the convention Thursday, saying the government will make $5 million available for loans to help contractors in danger of losing their equipment due to the strike.
He said he was aware many of the contractors have not been able to work since last July when the strike between Western Forest Products and members of the Steelworkers union started.
Horgan mentioned the challenges facing B.C.’s forest industry, including U.S. duties on B.C. softwood exports, mill closures in the Interior, two consecutive wildfire seasons and ongoing structural changes in the industry. But he said the strike remains deeply concerning.
“The elephant in the room is abundantly clear to everyone here,” said Horgan. “A labour disruption of seven months is unprecedented in B.C. history. If you haven’t made a dollar since July, there’s not much I can say to you that’s going to give you comfort other than we are indeed in this together.”
Horgan said he has contacted both the company and the union and firmly suggested they negotiate a settlement. He said he expected some movement next week but did not elaborate.
The company said in a statement Friday it is waiting for contact from the mediators in the dispute.
“Western is doing everything we can to reach a mutually beneficial settlement with the USW,” said the statement. “We continue to take our lead from mediators, Vince Ready and Amanda Rogers, and we are awaiting word on next steps.”
Elstone said the Truck Loggers Association appreciated Horgan’s appearance at the convention.
“By being there he did demonstrate he is concerned himself,” said Elstone. “He did say what’s been going on with the length of the strike is unacceptable. I will give the premier credit for showing some strong emotion and trying to reach out and show some empathy for people who are suffering right now with their livelihoods in question with the strike and the forest industry crisis in general.”
Opposition Liberals forestry critic John Rustad also attended the convention and said the premier’s speech did not provide much relief to contractors facing financial hard times.
“They’re frustrated. They’re angry,” he said. “They want to be working and they aren’t working. They’re financially stressed. It was probably the most sombre truck loggers convention I’ve attended in all the years I’ve been going to them.”
This report by The Canadian Press was first published Jan. 19, 2019.
Ticket sold in Prairies wins $7-million Lotto 649 jackpot – CTV News
A single ticket purchased in the Prairies won Saturday night’s $7-million Lotto 649 jackpot.
And the draw’s guaranteed $1-million prize went to a ticket holder in Quebec.
The jackpot for the next Lotto 649 draw on Jan. 22 will be approximately $5 million.
Major Canadian pot companies facing proposed class-action lawsuits in the U.S. – CBC.ca
Some of Canada’s biggest cannabis producers are facing proposed class-action lawsuits in the United States after investors were hit with steep financial losses in the stock market.
At least nine U.S. law firms are pursuing cases against Canopy Growth, Aurora Cannabis and Hexo Corp. in American courts.
Although the allegations vary, each pot producer is accused of misleading investors or failing to disclose certain problems with their businesses. When those problems became publicly known, the lawsuits claim, share prices plunged and investors were stuck with losses.
“[Investors] are mad; they were taken by surprise,” said Reed Kathrein, a lawyer at Hagens Berman Sobol Shapiro LLP, which is pursuing claims against all three producers.
None of the allegations have been proven in court.
Each of the companies declined to be interviewed for this story. Canopy and Aurora denied the allegations in brief statements, while Hexo said only its lawyers are reviewing the claims.
Producers ride green crush
These companies were among several Canadian cannabis firms that listed on U.S. stock exchanges, riding a wave of investor enthusiasm surrounding the industry before and after Canada legalized pot.
“But when they hit obstacles, the share prices declined,” said Kevin LaCroix, a Cleveland-based lawyer who is not involved in any of the proposed class actions, but has followed the industry.
“It’s pretty common in the United States, when a company experiences a significant decline in its share price, opportunistic plaintiff lawyers will try and seize on that as an opportunity to try and make some money.”
Lawsuits could create uncertainty
Even if the lawsuits aren’t successful, they could still pose challenges to companies that are trying to win over investors, said Brad Poulos, a lecturer at Ryerson University’s Ted Rogers School of Management.
“Anytime there’s uncertainty about the future of a company, that’s going to create uncertainty in the minds of shareholders,” Poulos said.
“As the market determines the likelihood of a suit being successful, that will start to get priced into the stock,” he said.
The cases against these three companies have attracted the attention of at least nine legal firms because of a feature of U.S. law, Kathrein said. After an investor’s lawyer files an initial securities lawsuit, they publish a notice, which gives other investors 60 days to apply to the court to become lead plaintiff in the case.
‘A beauty contest’
Law firms then issue press releases seeking investors in the hopes that they can attract a client who becomes the lead plaintiff. One of the qualifications to become lead plaintiff is they suffered the greatest amount of alleged losses.
“It’s a beauty contest,” Kathrein said. “These press releases are basically saying, ‘Hey, I’m part of the beauty contest; select me.'”
Hexo, based in Gatineau, Que., is accused of failing to tell investors that it was inflating its revenue figures through a process called channel-stuffing, which involves sending retailers more products than they are able to sell. A court filing alleges Hexo didn’t tell investors its reported cannabis inventory was misstated and that it was growing pot in an Ontario facility not properly licensed by Health Canada.
A class-action complaint filed with a New York court says when Hexo announced in March 2019 it was buying rival Newstrike Brands, the company said it was acquiring Newstrike’s four production facilities. It also said it was “committing to achieving over $400 million in net revenue in 2020.”
But by October, the company withdrew that commitment after projecting its net revenue for 2019 would hit between $46.5 million and $48.5 million. It blamed a slow rollout of retail stores across Canada, a delay in government approvals for edibles and vapes and early signs of falling prices. Two weeks later, Hexo announced 200 layoffs.
In November, the company revealed one of the facilities it acquired from Newstrike was growing cannabis without the proper federal approvals. A press release said the firm learned about the problem in July, shut down production and notified Health Canada.
“All told, Hexo has lost hundreds of millions of dollars in market capitalization as a result of these disclosures,” the complaint says. “As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiff and other class members have suffered significant losses and damages.”
According to the filing, anyone who bought Hexo shares on U.S. stock exchanges between Jan. 25 and Nov. 15, 2019 can join the proposed class action. During that period, Hexo’s shares plunged by 65 per cent on the New York Stock Exchange.
In a brief email to CBC News, Hexo said it does not comment on litigation issues, but that its legal team is actively handling the matter.
A high bar for lawsuits
LaCroix, the Cleveland lawyer not involved in any of these claims, says law firms pursuing the cannabis class actions have to meet a high bar. It’s not enough to argue that investors lost money. Their lawyers have to prove the defendant companies and executives intended to mislead shareholders when they made the allegedly false or misleading statements, a concept called scienter, he said.
“Scienter is meant to encompass not only actual intent to deceive but reckless indifference or just total indifference to whether or not investors are misled,” LaCroix said.
“That’s often where shareholder claimants fall short, is they don’t sufficiently plead scienter.”
Kathrein, one of the lawyers pursuing the class actions, said he wouldn’t be involved in the cases unless he was convinced he could meet the scienter test.
“We don’t just rely on public facts,” he said. “We have investigators that get out there and try and find witnesses who can tie the information that was allegedly known to them, tie that information to the senior executives.”
Edmonton-based Aurora Cannabis is facing claims the company exaggerated or over-estimated the demand for its pot and produced too much, leading to oversupply. In November, Aurora said it was halting or deferring construction at production facilities in Denmark and Medicine Hat, Alta. It also reported disappointing financial results, including a 24 per cent drop in quarterly net revenues.
A couple of months later, the company told media it was selling a greenhouse in Exeter, Ont.
Another allegation is that Aurora was not up front with investors that it didn’t secure necessary approvals from German authorities to use a certain growing method in that country. After a Marijuana Business Daily report revealed German pharmacists were ordered to stop selling Aurora’s medical pot until there was a review, the lawsuit says, the company’s share price dropped.
“As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, plaintiffs and other class members have suffered significant losses and damages,” states the complaint, filed a week ago in a New York court.
Aurora shares plunge
The filing says anyone who bought Aurora shares on U.S. stock exchanges between Oct. 23, 2018 and Jan 6, 2020 can join the proposed class action. During that period, Aurora’s shares plunged by 75 per cent on the New York Stock Exchange, from $7.51 per share to $1.90.
Aurora denies the allegations.
“The company believes it has conducted itself in accordance with all relevant securities laws, and refutes these claims,” it said in a brief statement. “The company intends to pursue a full defence against these suits.”
Canopy shares were ‘artificially inflated,’ suit claims
Canopy Growth, Canada’s largest pot producer, is facing allegations it exaggerated or overestimated the potential market for its products in Canadian retail stores, leading to inventory writeoffs and restructuring charges.
One class-action complaint says the Smiths Falls, Ont.-based company issued press releases leading up to legalization that it was expanding its production capacity to meet projections of growing demand for cannabis in Canada and around the world.
“As a result of the dissemination of the aforementioned false and misleading reports, releases and public statements, the market price of Canopy securities was artificially inflated,” the complaint states.
In November 2019, the company reported lower-than-expected revenues and a $374.6-million loss.
Then-CEO Mark Zekulin told analysts at the time the disappointing results were the result in part of a slow rollout of retail stores in Ontario, which cut its potential Canadian market in half. He said some provinces had slowed their purchases of cannabis because of high inventories, though Canopy’s shipments were up in its most recent quarter.
Canopy’s stock fell on the news.
Between Sept. 8, 2017 and Nov. 13, 2019 — the period that the proposed class action covers — Canopy’s share price on the New York exchange fell by more than a third, from $28.26 per share to $18.50.
When asked for comment on the allegations, Canopy referred to a November 2019 press release, in which the company said it believes it has acted “in accordance with all relevant securities laws, and that the claims are without merit.
“The company intends to vigorously defend itself against any such suits.”
Lawsuits could drag on
Kathrein, whose law firm is seeking the class actions, said the cases will start to move ahead after deadlines to select lead plaintiffs elapse, starting Monday. Ultimately, he believes the cases will likely be collapsed into one proposed class action for each of the three companies.
The defendant companies will likely file motions to dismiss the cases against them, Kathrein said. It could take months to debate those motions, which means they may not be resolved until the end of the year, if not later, he said.
If the lawsuits survive that stage, it could take years to reach a resolution through the courts, though both sides could negotiate a settlement.
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