TORONTO | Traditional territories of the Mississaugas of the Credit, the Anishinaabeg, the Haudenosaunee and the Huron-Wendat – Climate Engagement Canada (CEC) is an investor-led engagement initiative with 60 institutional investors representing ~$10.7 trillion focused on driving Canada’s business transition to net zero. The initiative released new Alignment Assessments of Focus List companies, complementing its Benchmark Disclosure Framework Indicators by providing independent evaluations of the alignment of company actions with the goals of the Paris Agreement. These assessments, conducted by the Carbon Tracker, include Climate Accounting and Audit assessments applying to all focus list companies except certain rate-regulated utilities, and capital allocation assessments applying specifically to the Upstream Oil and Gas and Utilities sectors.

This research equips investors with direct insights on corporate decarbonization strategies and their alignment with accounting and auditing, as well as capital expenditures.  For more information on the Alignment Assessment methodology, click here.

The assessments provide a new baseline for progress – a starting point for investors to begin engagements on these topics. The findings reveal that Canadian companies are at the starting line and investors need to clarify the information needed to properly assess climate-related financial risks. These insights will be leveraged by participant investors in framing constructive engagements with Focus List companies on areas of strength, opportunity and where greater effort is needed.

ACCESS THE ASSESSMENTS HERE

Key Findings

Climate Accounting and Audit Assessments (35 companies assessed):

• • • There is room for engagement with no assessed companies yet disclosing whether they comprehensively reflect material climate-related matters in their financial statements, as per Carbon Tracker methodology.

• • • 8 companies partially provided key quantitative assumption and estimate information and can be encouraged to provide more complete data.

• • • Across all companies assessed, audit reports require evidence that auditors considered relevant climate-related risks and the impacts of transition pathways.

Capital Allocation Alignment Assessments – Oil and Gas (5 companies assessed):

• • • Only one company sanctioned new projects in the last year, and these were incompatible with Paris pathways; the others either had no new recent investments identified for analysis, or they did not greenlight new investments in the last year.

• • • 3 companies did not disclose a maximum price in their commodity price forecasts used in impairment testing, or the year it was reached.

Capital Allocation Alignment Assessments – Utilities (6 companies assessed):

• • • Although all companies have announced plans to control CO2 emissions by leveraging gas-fired generation as a fuel to support renewables integration during the transition, these plans exceed the International Energy Agency’s estimates for the minimum amount of gas generation required for power system stability.

CEC is committed to working closely with investor participants and Focus List companies, leveraging their insights to refine and enhance the Alignment Assessments’ impact on companies, investors and Canada’s transition to a net zero economy.

For additional information on CEC’s methodology, evaluation processes, Focus List company input, research partners and governance, click here.

CEC Disclaimer and Data Usage Terms and Conditions

The CEC Net Zero Benchmark does not score or rank corporate issuers, nor does it use overall numeric or alphabetic ratings. Please see both the CEC Disclaimer and the Data Usage Terms and Conditions for additional information.