Good morning. Oversight failures in the late ’90s put boards under the microscope. Since then, expectations have widened to include climate risks, workplace culture and, most recently, a backlash to those measures. Directors are now navigating all of it in a more unpredictable world. The new chaos confronting the boards of Canada is in focus today.
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In the news
Travel: A tentative agreement reached hours before a strike deadline averted a work stoppage by Air Transat’s 750 pilots on Tuesday night.
Trade: Kirsten Hillman, Canada’s ambassador to the United States and the country’s chief negotiator on U.S. trade, plans to leave the job in the new year ahead of a renegotiation of the continental free-trade deal. She is expected to be replaced by Canadian financier Mark Wiseman.
Mining: Anglo American PLC shareholders have approved the British miner’s US$20-billion acquisition of Canada’s Teck Resources Ltd.
Telecommunications: Are your children writing letters to Santa? Share a photo with our North Pole bureau by Sunday evening and they could end up in a very special holiday story.
A Bre-X employee at the company's headquarters in Calgary, circa 1997.Patrick Price/Reuters
In focus
The past, present and future of boardroom peril
We might as well start with Bre-X.
In 1997, one of Canada’s fastest-rising stocks collapsed almost overnight. Bre-X Minerals Ltd. had risen from pennies a share a few years earlier to a valuation of more than $6-billion on the promise of a massive gold find in Indonesia. When independent testing confirmed the deposit was a fraud – after the company’s chief geologist died in a fall from a helicopter en route to the mine site – billions in investor wealth disappeared and confidence in board oversight fractured.
The fall of Bre-X was followed by a string of Canadian failures in the late 1990s and early 2000s. Livent Inc. crumbled in 1998 amid allegations of a $100-million accounting scheme. YBM Magnex International Ltd. was halted the same year when regulators uncovered links to Russian organized crime. Cinar Corp. faced scrutiny around 2000 for offshore investments and ineligible tax credit claims. VisuaLabs Inc. unravelled in 2001 when its touted display technology proved to be a modified commercial screen.
In the United States, Enron Corp.’s collapse in 2001 exposed years of concealed debt and fabricated profits and set off a wave of governance reform that raised the bar for board oversight across North America.
Over the years, scrutiny of oversight and transparency expanded to include diversity and environmental reporting – a shift from boards operating with limited disclosure to working in view of investors who expect detailed information.
Starting from scratch
All those demands have been captured – and, in many cases, created – by Board Games, a Globe series launched in 2002 to evaluate governance across the S&P/TSX Composite Index.
Using transparent criteria on oversight, disclosure and board structure, the first wave of stories in the series revealed a tight network of directors who sat on multiple boards of large companies and often relied on informal norms rather than documented accountability. Gaps in disclosure were common. Diversity of experiences, skills and people were thin. And executive compensation was calculated by mysterious means.
The boards behind Bre-X, Livent, YBM, Cinar and VisuaLabs would have ranked among the weakest performers under the standards introduced that year, the series found.
The annual review, co-developed by Janet McFarland – now a senior editor overseeing financial services coverage for the Report on Business – brought governance into the public domain, giving investors a valuable benchmark for success. Companies have objected over the years to low scores in certain categories, McFarland says – even if they failed to disclose information or failed in those areas outright. But that pushback is another sign of its influence.
“There are companies that have not cared about Board Games at all, until they fall into a state of crisis – and then, suddenly, they actually try to improve things,” McFarland said.
As governance matured over the years, she said, the series expanded into new areas that define long-term risk, including diversity and climate reporting. “Disclosure used to be minimal. … The expectation today is that boards explain what they do and why they do it.”
And today, directors are grappling with geopolitical and economic pressures that can emerge suddenly and escalate quickly: cyberthreats, trade disruptions, legal exposure and politicized debates over corporate values.
In a word: chaos.
Trump throws pens used to sign executive orders to a crowd on Inauguration Day.Matt Rourke/The Associated Press
Into the unknown
Jeffrey Jones, who covers environmental, social and governance issues and wrote this year’s instalment of the series, said companies remain accountable for climate risk and inclusion while navigating pressure on how those efforts are communicated. “Companies are still doing this work,” he said. “They’re just not being loud about it. They need to keep investors happy – and not all investors are going to be on board with DEI or ESG measures.”
Directors are expected to respond with faster decision-making and wider fields of view. They’re adding expertise in cybersecurity, trade and geopolitics; running scenario exercises that simulate multiple crises at once; setting guidance on generative AI use in board materials to reduce errors and reliance on incomplete information. They’re facing new threats from those same tools.
“Everybody I spoke to said the biggest challenge is the ability to think quickly and change course when needed and deal with a world that has changed precipitously since even last year,” Jones said. Working through the chaos was a common theme.
Last year, boards were wrestling with backlash to DEI and other measures often described as “woke” by right-wing influencers. This year’s theme – outright chaos on top of those issues – marks a natural evolution.
So, what battles will directors be faced with this time next year?
“We’ve had nothing to deal with but the unexpected since Jan. 20, 2025,” Jones said, referring to the inauguration of Donald Trump as U.S. President. “I could predict what the feature is going to be about next year, but a bigger prediction is that I would be wrong.”
McFarland, who has worked at The Globe for more than 30 years, has watched the shift from basic disclosure to heightened scrutiny – and now, in the thick of multiple shocks, as boards struggle through a period with no clear playbook.
“It is, of course, imperfect to try to quantify governance,” she said. “But it’s all we can really do from the outside, to at least hope that good structures and good practices equal better governance.”
Strong oversight doesn’t remove uncertainty, she said. But it gives boards a better chance to survive it.
Charted
Taxpayers push back
The number of objections submitted by taxpayers to the Canada Revenue Agency has spiked, reaching a volume that, in the last fiscal year, was nearly double what it was immediately before the pandemic.
Quoted
Physical AI is the next big frontier. It’s going to change the world dramatically. Five to 10 years from now, you’re going to see robots everywhere.
— Waabi CEO and founder Raquel Urtasun
Toronto startup Waabi Innovation Inc. is closing in on a US$750-million financing, valuing the driverless truck company at US$3-billion.
Up next
More files we’re following
On borrowing: Bank of Canada Governor Tiff Macklem is widely expected to hold the benchmark rate at 2.25 per cent. In the U.S., markets are betting heavily on a cut – even as concerns swirl over a lack of data.
After the bell: Tech giants Oracle and Adobe report quarterly results, but Nvidia might capture more market attention after Trump announced he would allow the company to sell advanced AI chips to China.
Morning update
Global markets were mixed as crunch time neared for a divided Federal Reserve policy board and earnings results that could test sky-high valuations in the AI sector.
Wall Street futures turned lower and TSX futures edged down ahead of central bank rate announcements later today.
Overseas, the pan-European STOXX 600 was down 0.18 per cent in morning trading. Britain’s FTSE 100 rose 0.23 per cent, Germany’s DAX gave back 0.57 per cent and France’s CAC 40 retreated 0.46 per cent.
In Asia, Japan’s Nikkei closed 0.1 per cent lower, while Hong Kong’s Hang Seng climbed 0.48 per cent.
The Canadian dollar traded at 72.19 U.S. cents.