CEC Net Zero Benchmark Company Assessments
First-Ever Net Zero Assessment of Canada’s Top Reporting or Estimated Emitters on the Toronto Stock Exchange
The CEC Net Zero Benchmark provides 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.
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 mechanism driving Canada’s business transition to Net Zero. The initiative has released its first-ever Net Zero Benchmark, allowing CEC participant investors to frame and measure their engagements with Focus List companies. These companies represent Canada’s top reporting or estimated emitters and/or corporate issuers with a significant opportunity to contribute to the transition to a low-carbon future in Canada. 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.
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CEC Benchmark Insights and Roadmap
The Benchmark follows a rigorous evaluation process designed to provide a comprehensive view of each company’s progress in addressing climate-related challenges. Given the specific challenges faced by certain sectors, the results of the Benchmark also reflect the practical implications of addressing the net-zero transition. The Benchmark is provided as a roadmap for Canadian companies and investors, highlighting its purpose as a guiding tool rather than a conventional scorecard. It will be used to foster a constructive dialogue with Focus List companies on areas of strength, areas of opportunity, and areas requiring further effort.
- 98% of focus list companies explicitly commit to align disclosures with the Task Force on Climate-Related Financial Disclosure (TCFD) recommendations and/or are a public supporter of TCFD.
- Nearly half (44%) of CEC focus list companies have made a qualitative net zero ambition that covers all or nearly all of direct operations. However, the lack of 5°C-aligned short-term targets suggests that additional work is required to demonstrate credible net zero transition strategies.
- Overall, significant effort and further disclosures are required to demonstrate climate action plans i) have positive social and economic impacts for communities and workers; ii) meet thresholds of Free, Prior, and Informed Consent for Indigenous communities; and iii) are supported by sound financial planning and capital alignment.
- 41% of Focus List companies indicate that their CEO and/or at least one other senior executive’s remuneration specifically incorporates climate change performance as a key performance indicator (KPI).
- While several companies have begun mobilizing their capital expenditures to align with action on climate, none have explicitly aligned capital expenditures to their targets in disclosures.
CEC participants will use the Benchmark for input and discussion in their collaborative 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. In the coming months, CEC will continue to provide insight and input into the Benchmark results, trends, and opportunities for collaboration and engagement. The Benchmark and ongoing efforts will continue to support CEC’s goal of driving dialogue with Canadian corporate issuers to promote a Just Transition to a Net-Zero economy.
CEC remains committed to working closely with investor participants and Focus List companies, leveraging their insights to refine and enhance the Benchmark’s impact on companies, investors, and the broader transition to Net Zero.
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.
CEC Net Zero Implementation and Progress
CEC Research and Education Contributors Quinn+Partners and Manifest Climate Inc. undertook an assessment of the CEC Focus List Companies against the CEC Net Zero Benchmark, with supportive review from Ernst & Young and the Canada Climate Law Initiative. This process was guided by the CEC Joint Secretariat, with the approval and oversight of the CEC’s Technical and Steering Committees.
The CEC Net Zero Benchmark is a key element of the initiative’s engagement strategy and offers participant investors a common standard and a framework for dialogue with corporate issuers. The CEC Net Zero Benchmark 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 CEC Net Zero Benchmark 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.
The company assessments were based on the companies’ public disclosures from June 2022 to June 2023 and in line with the CEC evaluation guidance. Companies were provided with an opportunity to submit additional feedback or disclosures to be considered as part of the assessment process. The final results of the Benchmark assessment were completed by the Research and Education Contributors, with support from the CEC Joint Secretariat, and provided to CEC participants and Focus Companies in advance of the public release. Any disclosures that were published after the assessment period may be considered in future annual iterations of the Benchmark.
Over the coming months and following the approval of the program’s governance bodies, CEC will build on these assessments by publishing analysis and information on alignment indicators.
About Climate Engagement Canada (CEC)
Climate Engagement Canada (CEC) is a finance-led initiative that drives dialogue between the financial community and corporate issuers to promote a just transition to a Net Zero economy. Through CEC, 41+ investor participants (with +$5.1T in assets under management covered by the initiative) (a) help Canadian public companies missed by global initiatives successfully evolve their business models and transition toward our country’s climate commitments, and (b) enhance the level of transparency into Canadian climate risk exposure and transition strategies. In 2019, Canada’s Expert Panel on Sustainable Finance made a recommendation to establish a national engagement program to drive a broader and more consistent dialogue with Canadian issuers around climate risks and opportunities (Recommendation 10.2). CEC is a response to that call to action.
Through multi-year CEC engagements, company boards and senior leaders of Canadian companies can learn about the concerns and expectations of the financial sector as they relate to a timely transition to Net Zero emissions by 2050. This includes i) Strong governance frameworks with oversight of climate change risks and opportunities; ii) GHG-emission reduction strategies consistent with the goals of the Paris Agreement; iii) Measurable, sector-relevant targets; iv) Global standard disclosures (e.g., Task Force on Climate-related Financial Disclosures); and, v) Paris Agreement-aligned advocacy activities. CEC is coordinated by its Joint Secretariat: The Responsible Investment Association (RIA) and the Shareholder Association for Research and Education (SHARE). The initiative is also supported by the international investor networks the UN Principles for Responsible Investment (UNPRI) and Ceres.