TransAlta Corp. wind turbines are shown at a wind farm near Pincher Creek, Alta. The energy producer is one of three Alberta-based businesses under the eye of the CEC that have started aligning capital spending plans with their stated emission-reduction targets.Jeff McIntosh/The Canadian Press
Canada’s largest industrial emitters are making gradual progress on decarbonization targets, but they need to take more aggressive action to align with global efforts aimed at limiting the rise in temperatures, a coalition of institutional investors said on Thursday.
Companies have made gains over the past year setting and improving emission-reduction plans, analyzing their targets and bolstering transparency in climate-related lobbying, Climate Engagement Canada (CEC) said. Its 51 investor members manage a total of nearly $7-trillion in assets.
In a first for the corporations under the CEC microscope, three Alberta-based businesses – Canadian Pacific Kansas City Ltd. CP-T, Enbridge Inc. ENB-T and TransAlta Corp. TA-T– have started aligning capital spending plans with their stated emission-reduction targets. That is a key step that assigns costs associated with advancing their transition to lower-carbon operations, the investor group said.
“This is where the rubber hits the road,” said Kevin Thomas, chief executive officer of Shareholder Association for Research & Education, known as SHARE.
“We’ve got decarbonization strategies laid out to meet targets that are not as ambitious as they need to be to hit that 1.5 and they are not linked, in most cases, to actual capex decisions. That’s where the investor focus has got to go next,” said Mr. Thomas, who is CEC joint secretariat co-lead.
The 1.5 mark, which refers to 1.5 degrees C above preindustrial levels, is the most ambitious goal for limiting global temperature rise under the Paris agreement. It is aimed at avoiding the worst effects of climate change.
CEC compared the new data for 41 focus companies in numerous sectors with its initial assessments last year, and said it tracked progress in all areas but two.
Its data shows nine corporations have disclosed detailed transition plans for the first time, seven conducted scenario analysis and the boards of all 41 now employ some measure of climate oversight.
However, in the just-transition category, decarbonization plans fail to consider social impact, risk and opportunities, and there was little improvement in disclosure of climate risks using the Task Force on Climate-related Financial Disclosures (TCFD) framework, which is the global standard for reporting.
CEC formed in 2022 to push the largest emitters for tougher emissions targets and accelerate the shift to a low-carbon economy. 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 its members have investments.
AGF Management, TD Asset Management, RBC Global Asset Management, Alberta Investment Management Corp., University Pension Plan Ontario and Manulife Investment Management are among the members. Foundations and shareholder groups such as the Responsible Investment Association and SHARE are also involved.
Auto parts supplier Magna International Inc. MG-T made gains from last year in several categories, including setting net-zero ambitions, emissions reduction targets, overall decarbonization plans and in public-policy engagement.
Loblaw Cos. Ltd. L-T bettered its previous showings in net-zero plans, long-term target setting, decarbonization and public policy. AltaGas Ltd. ALA-T, Kinross Gold Corp. K-T and Capital Power CPX-T were among those that also scored multiple improvements.
Not all companies made significant strides. Alimentation Couche-Tard Inc. ATD-T received only partial scores for two of the 10 indicators – climate governance and TCFD disclosure. Stelco Holdings Inc. STLC-T gained partial marks for climate governance in 2024, after receiving no marks in any category last year.
The data was gathered before June 1, so none of the companies had yet responded to the federal government’s newly enacted anti-greenwashing legislation by removing environment-related disclosure from public communications. Several did so in the summer, blaming concerns over potential penalties, especially those in energy-related businesses.
Mr. Thomas said he expects the Canadian investment industry to remain focused on trying to reduce business risks associated with climate change despite the election of Donald Trump, who opposes many environmental measures, to the White House.
“We have been facing headwinds as well with states that want to interfere with fiduciary duty in investment decision-making, and I think we will always have that kind of attack on basic investor decision-making,” Mr. Thomas said. “But we know what works and what’s needed and there’s a lot of opportunity on the investor side and the company side to chart a responsible course.”