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From left to right: TransAlta's John Kousinioris, Kerry O'Reilly Wilks, Aron Willis and Jane Fedoretz, chief talent and transformation officer.

Elyse Bouvier/The Globe and Mail

Back in 2015, Alberta’s recently elected New Democratic government announced its climate plan. As part of the ambitious agenda, the NDP ordered power utility companies to phase out coal-fired electricity by 2030 and transition to a greener grid.

The edict hit the century-old TransAlta Corp. with a thud.

Nearly half of the province’s electrical generation capacity came from nine coal-fired generating units operated by the firm. Share values dropped, and CEO Dawn Farrell huddled with her management team to find a solution. The new rules caught them “like deer in the headlights,” Farrell says in an interview at TransAlta’s Calgary headquarters. “We had to pull the company out of the ditch because we were flattened by that policy framework.”

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At the time, Farrell couldn’t imagine—not “in a million years”—a shutdown of the coal plants. Yet her team is now making it happen. “If you’ve got a group of people that are willing to put themselves out there on the line, talk straight with one another, and if you use the collective strengths of everybody’s brains, I think you can get there,” Farrell says. “You can get to places nobody thought they could get to.”

TransAlta is among the largest publicly traded independent power producers and renewable power generation companies in Canada.

“Where we’re taking the company now is really to provide low-cost electricity that also has a really low environmental footprint,” says Farrell, who speaks authoritatively about a sector in which she has been active for 35 years. Their plan calls for investments in technologies and assets that will lower its greenhouse gas footprint. This could include techniques such as blending hydrogen into TransAlta’s natural gas stream or projects like a pump storage initiative to hold wind-derived electricity in a hydro reservoir for later use. This year TransAlta will construct Alberta’s first utility-scale lithium-ion battery storage facility at its Summerview Wind Farm. These innovations—along with shifting up to seven of its coal generation units to natural gas—appears to be paying off. In 2019, TransAlta reported revenue of $2.3 billion, up 4.4% from 2018, and net earnings of $52 million, following two straight years of net losses. Share prices have recovered modestly. The battle plan has been bolstered by last year’s $750-million investment from Brookfield Renewable Partners LP and ongoing “off coal” payments from the Alberta government to ease the transition. “I would not wish this on any company in Canada, which is why I’m passionate about Canadians being smart about how they bring together the environment and economy,” she says, reflecting now on the coal surprise.

As they continue to work toward sustainability in many forms, the CEO also strives to ensure that collective contains more voices—and more women.

President and CEO of TransAlta Dawn Farrell in her corporate headquarters in Calgary, on April 5, 2019.

Todd Korol/The Globe and Mail

Calgary-born Farrell is the daughter of a beekeeper. The first in her family to attend university, she holds a bachelor of commerce degree and master’s in economics from the University of Calgary and attended the advanced management program at Harvard University.

She started with TransAlta after graduation in 1985, when she oversaw the company’s economic models for Alberta. Farrell left for a position at BC Hydro in 2003 but returned to TransAlta as executive vice-president of commercial operations and development in 2007. She became the firm’s first female CEO in 2012.

A mother of two, grandmother of four and wife of 38 years (her husband is a carpenter), the 60-year-old is described by others as passionate, smart, analytical, straightforward, fair and supportive.

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Not long after returning, she called her colleague Aron Willis in Australia, where he was managing director of a business she had set up years prior. She wanted to know what was happening there. “That conversation was the starting point that led to the development of a strategy, getting some support from the board and then eventually an investment during my last four years in Australia of almost a billion dollars in three different projects,” says Willis, now senior vice-president of growth for TransAlta. Farrell has high expectations but gives her teams space to deliver on their goals, he says. “You get really clear feedback from her on what she’s thinking, whether she agrees or disagrees with how you’re approaching it, and then at the same time, she lets you go and run the business,” Willis says, adding,“She’s not there looking over your shoulder at every turn.”

Farrell began working on the company’s greenhouse gas file in 1989. By the early 1990s, it had acquired its first wind farm and in 2013 launched majority-owned subsidiary TransAlta Renewables Inc. When the Alberta government announced its climate change plan, that side of the business was forced to exponentially speed up. In addition to giving the electricity producer roughly 15 years to wind down its coal operations, the policy included a carbon tax on greenhouse gas emissions and required 30% of the province’s electricity to come from renewable sources. “It actually created the impetus for the company to accelerate its push to being clean,” says John Kousinioris, TransAlta’s chief operating officer. He says elements of the plan range from implementing the coal-to-gas strategy to building out a renewables business in the United States.

TransAlta Renewables now has 44 renewable energy generation facilities, such as hydro, wind, gas and solar assets, in Canada, the U.S. and Australia. The company is also focused on developing on-site cogeneration plants, which allow companies ranging from industrial sites to food-processing plants to oil sands operations to have their own mini power plants.

There’s also the battery storage facility at the Summerview Wind Farm, which will have a capacity of 10 megawatts and a total storage of 20 megawatt hours. It’s small by commercial standards but a significant step in the sector. Electricity is notoriously difficult to store: Facilities powered by wind need to tap into established power grids when there is no wind to spin the turbines, while those that generate power from solar panels need another energy source when darkness sets in. The Summerview project will be Alberta’s first battery storage facility built at a scale that makes it useful to a utility.

Farrell says one lesson from her company’s transition is that the creation of a green economy will take time. And it’s better to let companies adjust gradually to new rules. “You don’t need to slam people into the wall,” she says. “It’s better to create the policy framework and let us transition.”

Creating a low-carbon economy will require access to capital markets for the companies making such significant shifts, she adds. “That was a tough thing for us, but I think we can be instrumental in shaping future policies.”

Analysts are mixed on TransAlta overall. RBC Capital Markets recently raised its rating to outperform. In a February note, the bank cited a growth in investor interest as TransAlta converts coal generation to natural gas.

“We do think there is potential upside value in TransAlta,” says Mark Jarvi, equity research analyst for CIBC, which has it at a neutral rating. “Of the things they can control, I think they’re making good decisions. On the renewables side, I would say it’s going to be slow and steady.”

The transition to renewable energy could be viewed favourably by the markets. Setting environmental, social and governance (ESG) standards has been increasingly important as many investors view them not just as an ethical business practice but also a driver of value.

A growing number of investors look for companies that are sustainable on multiple levels, meaning that companies with strong ESGs are increasingly attractive for investment money. And TransAlta has been compiling its own ESG standards since the early 1990s.

BlackRock, the world’s biggest asset manager, showed the investment world just how significant ESG targets have become. In a 2018 statement, BlackRock said it is committed to integrating the standards into its investment processes for all of its assets under management and advisory.

Gender diversity is a component of ESG, alongside environmental considerations. For its part, TransAlta’s board of directors has an impressive roster of women holding four out of 12 seats. Five of the company’s 13 corporate officers and senior managers are women. The company has deemed gender balance so important that it plans to raise the number of women on its board to 50% by 2030. By that point, it also aims to have women account for 40% of its entire workforce, up from 20% today. Last year, TransAlta became a signatory of the Electricity Human Resource Canada’s Leadership Accord on Gender Diversity, and in early 2020 it was added to the Bloomberg Gender Equality Index. “Where men and women really lead together, you create strong families. You create strong communities. You create strong businesses, strong governments. It’s not one or the other—it’s both,” Farrell says. “Kind of like environment and economy. It’s not one or the other—it’s both.”

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Farrell feels like it’s important to have women and men lead side by side, rather than have one dominant gender. “I think we have all the requisite skills to bring out the best in one another and find the way forward... My vision is, ‘They lead here,’ and it’s the combination of the two, because I think that’s where our strength is, and you see that in so many walks of life,” she says.

A balanced mix can be beneficial, given men and women are often socialized to communicate, collaborate and make decisions in different ways. “I think the listening is better. I think the conversations are better. I think the respect that emerges out of the group creates a better condition for decision-making,” Farrell says. “It’s more what I’ve experienced than what I can prove. Some scientist can go away and prove it. I’ve just experienced it.”

Kousinioris was hired by Farrell in 2012 and has seen her evolve as a leader who focuses on the collective and empowering individuals to make decisions within their roles. She’s also capable of giving teams space to work together when required, he says. “We probably do better collectively than if we were a homogeneous group of individuals that had a singular view.”

For Kerry O’Reilly Wilks, TransAlta’s chief officer of legal, regulatory and external affairs, it was Farrell’s reputation as a leader that spurred her to move from Toronto to join the company in Calgary. “Although I love TransAlta and everything it has to offer, the reason I moved my family across the country was to work for Dawn Farrell, because she’s one of the most amazing—legendary, in my view—female leaders,” she says.

O’Reilly Wilks praises the CEO’s ability to nurture up-and-coming female executives. “In terms of the investment she makes to grow women, everything with Dawn is about how she can help raise you up to the next level, help you think in a different way, that you’ll almost become so much better without even trying or without even knowing.”

Some women struggle with how best to present themselves as leaders, sometimes adopting stereotypically male behaviours as a result. “That is just the antithesis of Dawn. One of the first things you’ll hear is about her grandkids and about how extremely active she is in their lives,” O’Reilly Wilks says. “When it comes to female empowerment or encouragement at all levels, she will be right there.”

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During O’Reilly Wilks’s first year at TransAlta, Farrell’s quick response to a situation provided her with a valuable lesson. O’Reilly Wilks had invited groups of service providers into the office to discuss gender diversity. One of the firms arrived with a delegation solely comprised of men. Given the topic, O’Reilly Wilks had hoped the company would send at least one woman. She kept the meeting and didn’t mention the elephant in the room. Then, she told her boss about the experience. Farrell said her response would have been: “This meeting is over. You can come back and try again,” O’Reilly Wilks recalls. “It went a long way for me to go, ‘That’s right, I should have done that. If I’m just silent and passive, things don’t change.”

TransAlta’s ambitious goal to have 40% of its workforce comprised of women in 10 years will be no small feat. Given the nature of the power industry, it will require changes in many occupations that are male-dominated, such as electricians and welders, which women tend to steer clear of. “Where you’re going to have a little bit of trouble is when you try to achieve 40% at the front lines—at our processing plants, our hydro facilities, in our thermal facilities,” O’Reilly Wilks says. “So that means we need to integrate ourselves with educational institutions that teach the trades, that we become involved with how they’re recruiting and attracting young women into their programs, because that’s the base we need to hire from.”

For now, TransAlta is ahead of schedule on its coal reduction strategy and on track to eliminate coal from its electrical resources by 2025—five years early. The company’s electricity production from Canadian coal was cut nearly in half in 2019 compared with 2015 levels, while generation from wind, solar and hydro have inched higher.

Its annual greenhouse gas emissions have been halved from 2005 levels to 21 million tonnes, and the company aims to slash them again to 10 million tonnes by the end of 2025, Farrell says. “We’re just thinking about the investment strategy that could get us to net zero by 2050.”

Farrell says she will often ask what her team knows and what it doesn’t know, what individuals on her team see and do not see. “The job of leadership is to show people how they’re leading and just kind of add energy when people get tired,” she says, adding, “I never get tired.”

Then she offers a caveat: “Sometimes I do, but I don’t tell anybody. To me, it’s, How do I add energy to the system so that everybody brings their best?”

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