Canadian Firms Quietly Advance Energy-Transition Strategies
More large Canadian companies are making plans to operate in a low-carbon economy, but their zeal for trumpeting green accomplishments has waned against the backdrop of regulatory worry, a coalition of domestic and international institutional investors says.
In its annual benchmarking study, Climate Engagement Canada said nearly two-thirds of the 40 companies on its focus list of big emitters now discloseenergy-transition plans that show how they will meet their emissions targets, up from just over half last year.
Six of those link decarbonization plans directly to how they will abate their main emissions sources – double the number in the 2024 study.
CEC’s members collectively manage $14.5-trillion in assets. Its focus list includes companies in oil and gas, utilities, mining, transport and consumer goods, as well as food, agriculture and other industrials, in which the members have investments.
The companies are graded on 10 indicators – including target-setting, capital allocation, governance, just transition and financial disclosure, among others. This year, the study includes assessments of accounting and audits, providing independent evaluations of how these functions incorporate climate science and transition scenarios.
Six of the companies say they will align their capital expenditure plans with emission-reduction targets – an indicator of their commitment to proceed with energy-transition plans. That is up from three last year and none in the first report in 2023.
Those companies include Barrick Gold Corp. ABX-T , Emera Inc. EMA-T , Enbridge Inc. ENB-T , Loblaw Cos. Ltd. L-T, Tourmaline Oil Corp. TOU-T and West Fraser Timber Co. Ltd. WFG-T , though all get partial marks. Two that met the grade last year, Canadian Pacific Kansas City Ltd. CP-T and TransAlta Corp. TA-T , no longer do, according to the study.
Fewer large emitters are publishing short- and medium-term emission-reduction targets, and though none gets high marks for lobbying activities being aligned with climate science and the goals of the Paris Agreement, more have received a partial score.
Seventeen companies disclosed a net-zero goal, down from 20 in 2024.
The results of this year’s study run counter to a common narrative that Canadian industry is retreating from climate-related initiatives, even though the focus on setting and reporting new targets has declined, said Kevin Thomas, chief executive officer of Shareholder Association for Research & Education, known as SHARE.
“What we are seeing now is more detail on the transition plans themselves and how the companies are actually going to change their emissions profile, how they’re costing those plans and trying to make those targets real, and that’s the thing that we’ve always been focused on,” said Mr. Thomas, who is CEC joint secretariat co-lead.
Progress is not happening as quickly as needed, he said. “But I think the focus on business strategy that actually changes the pattern year-over-year is the right focus and not just on what gets said in the public sphere.”
Companies, notably those in natural resource extraction, have pulled environment-related materials from their public communications, saying they fear legal repercussions under federal anti-greenwashing regulations. Some investors have complained that has resulted in reduced transparency.
In last week’s federal budget, the government said it would claw back two provisions within its legislation, saying they were having “the opposite of the desired effect with some parties slowing or reversing efforts to protect the environment.”
CEC has 43 Canadian members and 18 international participants. The investors meet with boards and management teams of Canada’s largest industrial emitters to press home the need to reduce climate-related financial risks and accelerate the shift to a low-carbon economy.
Its membership includes such institutions as AGF Management, TD Asset Management, RBC Global Asset Management, Alberta Investment Management Corp. and Manulife Investment Management. Last month, it announced Amundi SA, Europe’s biggest asset manager, had joined a growing list of international participants.
The study revealed that all of the focus-list companies got full or partial marks for disclosing climate oversight at the board-of-directors level. That has prompted the CEC to deepen its research into governance and seek more details, said Maia Becker, senior director, responsible investment, at RBC Global Asset Management, and CEC technical committee chair.
“An area that we would like to see additional progress is companies disclosing, really, how they’re assessing competencies for climate oversight,” she said.
This article was first reported by The Globe and Mail
