Industry Update Technology, Media and Telecom 22 July 2020 Canaccord Genuity Corp. (Canada) Technology ESG themes Robert Young, MBA| Analyst - 1.416.869.7341 [email protected] Doug Taylor, CFA| Analyst - 1.416.867.6101 Key themes impacting the sector [email protected] As technology, particularly cloud software, emerges from the global pandemic thus Christian Sgro, CPA, CA, CFA| Associate - 1.416.869.7364 far relatively unscathed, we expect to see more of a focus on ESG issues. Technology [email protected] companies have played a key role in the response to the global pandemic, and Neil Bakshi| Associate - 1.416.867.2366 while technology companies have a relatively strong reputation for equal access to [email protected] information and tools, diversity/inclusiveness and the environment, there have been missteps. Although technology companies do not have a reputation for overconsumption of resources, we see a growing concern related to energy usage in some corners. For example, the cryptocurrency boom focused attention on the inefficient use of energy Company Rating Price Target in the mining process. We have also seen some concern about the amount of energy Enterprise Software consumed in data centres, where AI model development and training is performed. ABT-TSX Buy C$15.43 C$13.50 Data security and privacy is another key dimension, as regulators assess the control REAL-TSX Buy C$29.03 C$25.00 that large technology companies have over our digital lives, irrespective of the value Enterprise Software - Software as a Service aggregation provides. As users surrender biometric data, which can identify us by voice, DCBO-TSX Buy C$38.97 C$32.00 fingerprint, optical scan, gait and face, we become easier to track and trace. Technology DSGX- Buy US$53.94 US$50.00 NASDAQ companies are amassing comprehensive data on how their users browse and search KXS-TSX Buy C$199.16 C$190.00 online, and even on how they behave when they are offline. This has temporarily taken SHOP-NYSE Hold US$1,009.39 US$700.00 a back seat through the global pandemic; however, we believe there is still appropriate Priced as of close of business 20 July 2020 concern over how the data is stored and used. *Shopify (SHOP-NYSE) is co-covered with David Hynes Jr. | How do we measure company performance? Canaccord Genuity LLC (US) A critical measure of a data centre’s environmental impact is the source of energy. Large data centre operators track energy usage and renewable energy purchases, and we have seen increasing investment in clean energy projects and internal carbon taxes that incentivize decisionmakers to minimize their climate impact. These companies are best measured by their commitment to, and usage of, renewable energy, as data and security performance is often more difficult to measure. As we often see in the media, missteps will often come under close regulatory and public scrutiny. Which companies are doing it best? Within our coverage, we highlight Kinaxis as a protagonist due to its efforts to help customers cut carbon emissions. The company aims to identify the most efficient route with real-time scenario planning, helping customers to reduce their environmental footprint. Outside of our coverage, many companies that operate in the cloud computing space publish detailed sustainability reports. Most of these large North American players have announced long-term commitments aiming to improve usage of renewable energy and to reach net zero carbon emissions. Within data and privacy, our Canadian coverage universe has largely operated without fault. Most Canadian, data-rich software companies (Kinaxis, Docebo, Descartes, Shopify, Real Matters, Absolute Software) handle enterprise data, and several rely on the larger cloud providers for storage and security. Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX) The recommendations and opinions expressed in this research report accurately reflect the research analyst's personal, independent and objective views about any and all the companies and securities that are the subject of this report discussed herein. 22 July 2020 12