Canada Faces “Ambition Deficit” to Fuel Economic Growth

Hydro-Québec CEO Urges Regulatory Overhaul, New Funding Models

Canada’s economic potential is hampered by a lack of bold vision and cumbersome regulations, according to a leading voice in the country’s energy sector. Calls for streamlined approvals and innovative financing are growing as the nation seeks to bolster its economic future.

Regulatory Barriers Stifle Investment

Michael Sabia, CEO of Hydro‑Québec, asserted that Canada is struggling with an “ambition deficit,” hindering its ability to launch large-scale national projects. He believes a significant impediment to economic transformation is the complex web of regulations that discourage both domestic and foreign investment.

Sabia described the current regulatory landscape as a “stack of pancakes,” where well-intentioned rules have accumulated over time, creating a difficult environment for businesses. He emphasized the need for simplification, stating, “We need to stand back and say, ‘There’s got to be a simpler, better way.’”

Prime Minister Mark Carney’s government is responding with the One Canadian Economy Act, aiming to expedite approvals for projects deemed to be of national importance. The legislation proposes a two-year approval timeline for “major projects,” a significant reduction from the current five years. Carney explained the shift in approach, “For too long, when federal agencies have examined a new project, their immediate question has been: Why? With this bill, we will instead ask ourselves: How?”

Indigenous Partnerships Demand Presence and Trust

Beyond regulatory reform, Sabia highlighted the critical importance of rebuilding trust and forging stronger partnerships with Indigenous communities. He stressed that genuine engagement requires leaders to be physically present and actively listen to concerns.

He noted that a history of mistrust has led to frequent legal challenges from First Nations, causing significant delays. “There is no substitute when working on these transactions for human presence,” he said, “Human presence leads to trust. And we don’t have a lot of that right now.” According to the Assembly of First Nations, unresolved land claims and treaty rights disputes contribute to approximately 15% of all major project delays in Canada. (Assembly of First Nations)

Rethinking Capital for Nation-Building

Sabia, who previously led the Caisse de dépôt et placement du Québec, cautioned against relying solely on large institutional investors like pension funds to finance early-stage infrastructure projects. He explained that these funds prioritize stable, long-term cash flows, which are not typical of projects in their initial phases.

He proposed a “bridge capital” model, where early-stage risk is absorbed by specialized investors, paving the way for larger institutions to participate once projects become more financially secure. “Asking that source of capital to take all sorts of risk? That’s a crazy question,” he stated, “It doesn’t work.”

Sabia concluded with a call to action, urging Canada to seize the moment and invest strategically to mitigate potential economic slowdowns. He believes that proactive investment at scale is essential for a resilient and prosperous future.

Scotiabank Tightens Return-to-Office Policy

Canadian Banks Push for More In-Person Work

Bank of Nova Scotia is now requiring some employees to be in the office four days a week, joining a growing trend among major Canadian financial institutions to increase mandatory in-person work arrangements. The shift reflects a broader effort to revitalize downtown cores and boost collaboration.

New Mandate Details

Scotiabank informed its staff last week that the new policy will be implemented by September. Teams with adequate office space will adhere to the four-day requirement, while others will gradually increase their in-office presence as more room becomes available. Certain roles may continue to operate remotely based on specific needs.

Clancy Zeifman, a spokesperson for Scotiabank, emphasized the benefits of in-person collaboration. “We know having our teams working together in-person has many benefits – greater collaboration, higher engagement, more career development opportunities, and a stronger culture and sense of belonging – and we are already seeing the positive impact this is having across the bank as we focus on executing on our strategy,” she stated.

Zeifman further added, “We will continue to build on this impact as we bring our teams onsite more often, with the goal of reaching four days onsite across the bank over time.”

This move follows a similar announcement from Royal Bank of Canada in late May, signaling a coordinated effort within the Canadian banking sector. According to a recent report by the Canadian Real Estate Association, office vacancy rates in major Canadian cities remain elevated, averaging 26.3% in the first quarter of 2024, highlighting the ongoing impact of remote work on commercial real estate. CREA Q1 2024 Report

Industry-Wide Trend

Royal Bank of Canada was the first of the major Canadian lenders to mandate a four-day in-office work week, also starting in September. Canada’s largest banks collectively employ hundreds of thousands of individuals, making these policies significant for the national workforce.

The trend extends beyond Canada, with U.S. banks like JPMorgan Chase already requiring a full five-day in-office schedule. JPMorgan Chase initiated this full return to the office earlier this year.

RBC initially began increasing mandatory office days in the spring of 2023, requiring employees to return at least three days a week. An internal memo at the time cited concerns about the bank’s long-term competitiveness without increased in-person interaction.

Impact on Commercial Real Estate

The widespread adoption of remote work during the COVID-19 pandemic led to a decline in commercial real estate valuations as office spaces remained largely unoccupied. While activity in Toronto’s financial district has shown some improvement, overall office occupancy rates have yet to fully recover.

These return-to-office policies represent a significant shift in workplace dynamics, as companies attempt to balance employee preferences with perceived benefits of in-person collaboration and the need to revitalize urban centers.

Oak + Fort Seeks Creditor Protection Amid Tariff Troubles

Vancouver Retailer Cites Expansion Costs and Trade Disputes

Canadian fashion retailer Oak and Fort Corp. has initiated court proceedings to shield itself from creditors, citing a rapid expansion strategy and escalating U.S. tariffs as key factors in its financial difficulties. The move impacts 42 stores across the U.S. and Canada.

Financial Strain and Missed Payments

The Vancouver-based company received an initial order under the Companies’ Creditors Arrangement Act (CCAA) on Friday and is simultaneously preparing a Chapter 15 bankruptcy filing in the United States. Problems intensified when Oak and Fort failed to meet rent obligations at the end of May, prompting landlords—particularly in the U.S.—to threaten eviction and seizure of merchandise.

Currently, the company owes over $25 million to its creditors. This includes $3.19 million in secured debt to the Business Development Bank of Canada, Royal Bank of Canada RY-T, Shopify Inc. SHOP-T, and more than $7 million in outstanding rent payments.

Aggressive Expansion Backfires

Founded in 2010 as an online retailer, Oak and Fort expanded into brick-and-mortar locations, which now generate the majority of its revenue. According to an affidavit sworn by chief executive officer Min Gyoung Kang, the company significantly accelerated its store openings in recent years. Following pandemic lockdowns, Oak and Fort secured leases for 26 new stores in both countries, capitalizing on available spaces. However, revenue growth from these locations did not meet expectations.

The retailer reported a net loss of $1.1 million in the fiscal year ending March 26, 2023, which widened to $10.6 million the following year. Most recently, Oak and Fort recorded $93.8 million in revenue with a net loss of $5.1 million for the fiscal year ending March 24, 2024, as detailed in documents filed with the Supreme Court of British Columbia.

Tariffs and Economic Uncertainty

Recent months have presented challenges for retailers due to the evolving U.S. trade landscape and increased tariffs. According to the National Retail Federation, tariffs cost American consumers an estimated $8.3 billion in 2023. National Retail Federation

“The recent change in the U.S. trade landscape with tariffs have directly caused an increase in supply chain and import costs,”

—Min Gyoung Kang, CEO

Kang’s affidavit further explains that these tariffs have squeezed profit margins, especially for retailers like Oak and Fort that source 68 percent of their clothing from China. The resulting uncertainty has also made lenders more cautious, tightening loan terms and, in some cases, denying Oak and Fort refinancing options.

Cost-Cutting Measures and Restructuring

Oak and Fort has implemented cost-reduction strategies, including reducing in-store inventory, which negatively impacted sales. The company is also negotiating with suppliers for extended payment terms and seeking more favorable lease agreements with landlords, but has yet to secure significant rent relief.

The company employs 601 individuals, with 434 based in Canada. Oak and Fort intends to continue operating its stores and online platform while pursuing financing and developing a business restructuring plan. Reflect Advisors LLC and KSV Restructuring Inc. have been engaged to manage the restructuring process.

According to the affidavit, “The financial difficulties currently facing the business have arisen only in the past year and, in Senior Management’s view, can be overcome with additional time to realign operations to focus on select profitable retail locations and e-commerce, and secure long-term funding to support the realigned business.”