FREQUENTLY ASKED QUESTIONS:
Net zero Company Benchmark

General Questions

Climate Engagement Canada (CEC) developed its Net Zero Benchmark to provide a set of common standards for investors to evaluate corporate issuers’ progress towards aligning with the Paris Agreement’s ambition, limiting global warming to well below 2 degrees Celsius, while pursuing efforts to limit the increase to 1.5 degrees.

The CEC Net Zero Benchmark is not a disclosure mechanism or a database, but rather an assessment tool, based on publicly available information. It gathers data on corporate progress on climate disclosures and the transition to net zero emissions by 2050 or sooner.

CEC participants use the Benchmark for input and discussion in their engagement activities with Focus List companies. The results of the Benchmark also provide input to investor participants and other stakeholders on areas that require additional focus, research or support.

The inaugural CEC Benchmark, based on the Disclosure Indicators Framework, was published in December 2023. Starting in 2024, the Benchmark is published annually in November – allowing investors more time to analyze and absorb the information ahead of the subsequent proxy season, a period of increased engagement with companies.

Alignment Assessments complement the Disclosure Indicators by providing independent evaluations of how company actions align with the goals of Climate Engagement Canada and the Paris Agreement. 

The Policy Engagement Alignment Assessments were first published in April of 2024 and are updated annually alongside the publication of Disclosure Framework Indicators.

In 2025, CEC partnered with the Carbon Tracker Initiative to expand the Benchmark with new assessment areas. These include evaluating whether planned capital expenditures align with global climate goals, and whether companies and their auditors adequately reflect material climate-related risks in financial statements and audit reports.

The CEC Net Zero Disclosure Benchmark Framework includes ten disclosure indicators—as recommended by the Technical Committee and its Just Transition/Indigenous Issues Working Group—whilst layering in additional context specific to Canada’s unique economy. The assessment methodology for the CEC Disclosure Benchmark Framework has been further refined through feedback and consultation with CEC participant investors—including some of Canada’s largest asset managers and asset owners, NGOs, and Indigenous representation.

The company assessments are based on information readily and publicly available to investors about emissions reductions targets, decarbonization strategy, capital allocation alignment, climate policy engagement, governance and just transition issues (e.g., regulated filings and voluntary disclosures such as ESG/Sustainability Reports). These assessments also evaluate the extent to which companies disclose according to the globally-recognized frameworks recommended by the International Financial Reporting Standards (IFRS)’ International Sustainability Standards Board (ISSB) S2 and the Canadian Sustainability Standards Board (CSSB)’s Canadian Sustainability Disclosure Standards (CSDS) 2. The Benchmark draws on distinct analytical methodologies and data sets to provide investors and other stakeholders with a robust tool to facilitate engagement with CEC Focus List companies.

Focus List companies operate across the Canadian economy in the oil & gas, utilities, mining, agriculture & food, transportation, materials, industrials and consumer discretionary sectors. The CEC Net Zero Benchmark provides a set of detailed and comparative common standards to support corporate issuers’ progress towards aligning with the Paris Agreement’s ambition.

CEC participants use the Benchmark for input and discussion in their engagement activities with Focus List companies. The results of the Benchmark also provide input to investor participants and other stakeholders on areas that require additional focus, research or support.

The CEC Benchmark provides insight into results, trends and opportunities for  exchange and engagement. The Benchmark will continue to support CEC’s goal of fostering dialogue with Canadian corporate issuers to advance a just transition to a net zero economy.

Disclosure Indicators

According to the CEC Benchmark, in order to qualify as having a net zero target, a company must clearly identify a base year and affirm that the target covers all or nearly all of the company’s Scope 1 and Scope 2 emissions.

“Indicator 1: Net Zero Ambition by 2050 (or sooner)” of the CEC Benchmark is designed to capture the company’s high-level commitment to net zero. Indicator 1 should be seen as complementary to “Indicator 2: Long-term targets” of the CEC Benchmark, which includes a verification step in the form of Sub-Indicator 2.3 that evaluates whether a company’s long-term target (covering the timeframe from 2036-2050) is aligned with a 1.5°C pathway for its sector. Sub-Indicator 2.3 as well as Sub-Indicators 3.3 and 4.3 come closest to SBTi’s approach, though they are not the same thing.

Transition Pathway Initiative (TPI), which assesses Sub-Indicator 2.3, 3.3 and 4.3 for CA100+, uses a slightly different approach to verifying company targets, although both TPI and SBTi draw on the same foundations (both SBTi and TPI use the IEA’s Net Zero Emissions by 2050 – or 1.5°C – scenario and the Sectoral Decarbonization Approach to map out 1.5°C pathways for sectors). This means that they don’t always come to the same conclusion on whether targets are 1.5°C aligned or not. In sum, Indicator 1 is framed differently than the SBTi standard, but together with Sub-indicator 2.3, it puts forth a similar level of ambition by checking whether companies have robust, 1.5°C-aligned long-term targets.

The assessment of Sub-Indicator 5.2 and related metrics have been designed to leverage the Canadian Taxonomy and/or the European Union’s Green Taxonomy criteria on turnover, revenues and/or green projects as appropriate and will continue to do so in future iterations of the Benchmark. The criteria used to assess companies with significant operations in jurisdictions subject to green revenue classification systems and regional taxonomies will be at the discretion of the CEC Steering Committee and Technical Committee and considered as part of the CEC Benchmark assessment process.

Indicator 7 evaluates whether companies advocate for climate policies aligned with the goals of the Paris Agreement, and whether they ensure their trade associations do the same. Corporate advocacy activities that are inconsistent with commitments to meet the goals of the Paris Agreement may pose financial risks to companies and investors, including:

Regulatory risks – Delays in policy action on climate change could result in the need for stronger and more drastic regulatory interventions later, leading to higher costs for investee companies;    

Systemic economic risks – Delay in the implementation of the Paris Agreement could increase the physical risks from climate change, which elevates uncertainty and volatility in portfolios, and poses a systemic risk to global economic stability; and 

Reputational and legal risks – Investee companies may face backlash from their consumers, investors or other stakeholders if they, or the associations they are members of, are seen to be delaying or blocking effective climate policy.   

Additionally, CEC integrates research findings from InfluenceMap to enhance this Indicator with Public Policy Alignment Assessments. These assessments independently evaluate and provide further insights on the degree to which companies are aligning their climate policy efforts with the objectives of the Paris Agreement, both directly and indirectly through the actions of their industry associations.

To develop a uniquely Canadian approach to accelerate the decarbonization of our economy, Canadian investors are encouraged to reflect national commitments, such as the Calls to Action of the Truth and Reconciliation Commission of Canada, as well as the United Nations Declaration on the Rights of Indigenous Peoples.

To put these commitments into action, the CEC Secretariat formed a Just Transition Working Group that, under the oversight of the Technical Committee and with the approval of the Steering Committee, and determined that the CEC Benchmark should establish an indicator focused on assessing the extent to which a company’s transition may impact Indigenous Peoples. Among the key considerations for having separate metrics around Indigenous issues are to highlight the importance of incorporating an Indigenous lens to Canada’s net zero transition, the unique legal and social context surrounding Indigenous rights and the potential outsized impact that transitioning out of GHG-intensive industries may pose on First Nations, Inuit and Métis workers, communities and customers.

The CEC Just Transition and Indigenous metrics are informed by Canadian and International policy documents, including the CA100+ Just Transition Indicator, Section 35 of the Constitution Act 1982, call to action #92 of the Truth and Reconciliation Commission of Canada, the Paris Agreement, the International Labour Organization’s (ILO) Just Transition Guidelines and the World Benchmarking Alliance’s Just Transition benchmarks, among others. As such, Indicator 9 is crucial in ensuring that Canadian companies adopt practices that support a just transition and address potential impacts to Indigenous Peoples.

The CEC Benchmark measures commitments and targets that companies have established, and whether these are in line with the goal of the Paris Agreement to limit global warming to 1.5°C by the end of the century. A number of the indicators in the Disclosure Framework of the CEC Benchmark focus on this item.

For example, Indicator 1 confirms if companies have pledged to achieve net zero emissions by 2050, which is the level of ambition needed to limit global warming to 1.5°C. Other indicators, such as metrics 2.3, 3.3 and 4.3, examine how closely a company’s emissions align with 1.5°C scenarios. Indicator 6 looks at whether companies plan to invest in ways that align with 1.5°C, while Indicator 7 assesses whether companies are lobbying in support of the Paris Agreement. Finally, Indicator 10 assesses whether companies have included a 1.5°C scenario in their climate-related analysis.

The establishment of a cut-off data is necessary to set a benchmark that can be assessed annually, and to allow Research Partners to conduct the assessment prior to publication.

A consistent annual cut-off deadline for accepted disclosures of June 1 has been applied to the CEC Disclosure Benchmark each year.

Some Focus List companies are beginning to adjust the release date of their climate-related disclosures to match CEC’s Benchmark assessment timelines.

Yes, before the final Benchmark assessments are published, the CEC Focus List companies receive their assessments along with associated methodologies.

Before the annual disclosure assessments are undertaken, each Focus List company is also asked to review the collection of their regulated and voluntary disclosures gathered for the annual assessments. Companies are invited to submit additional documents published prior to the June 1 deadline that should be included.

As a second step, Focus List companies also have an opportunity to review the preliminary assessment of their performance against the Disclosure Benchmark Framework before publication. During this review period, companies are encouraged to provide feedback, questions and additional references that may be considered in their assessment. Final assessments are also shared with the companies before they become publicly available.

Investors should be able to readily access relevant sustainability reporting in company disclosures, including regulated disclosures (e.g. Annual Information Forms, Proxy Circular, etc.) and voluntary reporting—including but not limited to ESG/Sustainability reports or official company press releases. HTML sites are easily modified, difficult to date, and potentially complex to navigate. As such, these are less reliable sources of information for investors.

CEC Net Zero Benchmark methodology

The CEC Net Zero Benchmark follows global best practices whilelayering in additional context specific to Canada’s unique economy. The Benchmark was developed by the CEC Joint Secretariat (supported with the expertise of SHARE) under the oversight of the CEC Technical Committee and approval of the CEC Steering Committee. It was further refined by incorporating feedback from a consultation period, which involved CEC Participant Investors—including some of Canada’s largest asset managers and asset owners, NGOs, and Indigenous representation.

For a Detailed Methodology of the individual indicators of the Disclosure Benchmark Framework please visit this link.

Updated Definitions for Target Timelines:

  • Indicator 3 (Medium-Term Targets) now refers to targets beginning four years after the assessment date through to 2035 (e.g. 2029–2035 for the 2025 cycle).
  • Indicator 4 (Short-Term Targets) now includes targets set within three years of the assessment date (e.g., 2026–2028 for the 2025 cycle).

Introduction of Sub-Indicator 3.4, Conversion of GHG Intensity Targets to Absolute GHG Emissions Reductions:
A new sub-indicator assesses whether intensity-based GHG targets are translated into absolute emissions reductions, improving transparency and comparability.

Revised Reference for Climate-Related Disclosures (Indicator 10):
All references to the Task Force on Climate-related Financial Disclosures (TCFD) have been replaced with updated language supporting IFRS S2 or CSDS 2 recommendations.

Alignment Assessments

Alignment Assessments complement the Disclosure Framework Indicators by providing independent evaluations of the alignment of company actions with the goals of CEC and the Paris Agreement.  The methodology and assessment for the Alignment Assessments are reviewed and approved by the CEC Technical and Steering Committees.

The Public Policy Engagement Alignment Assessment complements the findings of Indicator 7 of the CEC Net Zero Disclosure Benchmark. The Policy Engagement Assessments focus on understanding the approach of 41 Focus List companies to public policy on climate change and their interactions with the largest and most active Canadian industry associations regarding climate-relevant policy.

CEC’s research partner, InfluenceMap, tracks and evaluates companies to understand the alignment between their lobbying efforts with the goals of the Paris Agreement. This includes both direct and indirect lobbying (through associations). The methodology and assessment for the Policy Engagement Assessments are reviewed and approved by the CEC Technical and Steering Committees.

According to InfluenceMap’s methodology, each Focus List company receives four assessments, capturing its overall performance of climate policy engagement, including:

  • Organization Score, for direct climate policy engagement
  • Relationship Score, for indirect policy engagement via industry associations
  • Performance Band or Real-World Climate Policy Engagement, a full measure of a company’s climate policy engagement, accounting for both its own direct engagement and that of its industry associations, and
  • Engagement Intensity, which correlates with Organization Score, and is a measure of the level of policy engagement by an entity, whether positive or negative.

To review Focus List companies’ most up-to-date results on public policy engagement alignment, please use this link, which leads to the individual assessments currently hosted on InfluenceMap’s website.

The Carbon Tracker Initiative’s Climate Accounting and Audit Alignment Assessments evaluate whether Focus List companies’ accounting practices and related disclosures—as well as their auditor’s report—reflect the effects of climate risk, the global move toward a net zero emissions pathway by 2050 (or sooner), and the Paris Agreement goal of limiting global warming to no more than 1.5°C.

These assessments are important to investors because they help determine whether financial statements accurately reflect material climate-related risks that could affect company performance, asset values and long-term viability.

* These assessments do not apply to rate-of-return regulated electric utilities.

For oil and gas Focus List companies, the Carbon Tracker Initiative’s Capital Allocation Alignment Assessments analyze planned capital expenditures (CapEx) for upstream oil and gas projects that have not yet received final investment approval—and evaluate their alignment with a range of global climate scenarios.

These assessments help investors understand whether a company’s future investment plans are consistent with pathways to limit global warming in line with the Paris Agreement. They provide insight into potential financial risks associated with continued investment in high-emission assets, including the risk of capital misallocation, devaluation of assets or misalignment with evolving regulatory expectations in a transitioning global energy market.

For electric utility Focus List companies, the Carbon Tracker Initiative’s Capital Allocation Alignment Assessments analyze announced retirement schedules for coal- and gas-fired power generation, along with plans to develop new carbon-emitting assets. These are evaluated against a range of climate change scenarios to assess alignment with global decarbonization goals.

These assessments help investors evaluate whether utility companies are aligning their generation portfolios and investment plans with pathways to net-zero emissions. They also highlight potential financial risks associated with delayed transitions, such as stranded assets, regulatory exposure and declining competitiveness in low-carbon energy markets.

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