As we mark the second anniversary since the launch of Climate Engagement Canada (CEC), we are pleased to share an update on the program’s progress to date, as well as an overview of the initiatives planned for the second half of 2024, including ongoing efforts to support CEC participant investors. CEC remains committed to providing credible, consistent, and efficient engagement resources for participants, as well as dedicated support to meet engagement teams’ unique needs.

CEC is pleased to report a significant increase in institutional investor participation, marking a growth from its original 27 signatories—collectively representing assets totaling around $3.2 trillion—to 48 participants. This growth has moved the initiative beyond the $6 trillion mark in assets under management (AUM).

CEC Net Zero Benchmark

In December 2023, CEC released its first-ever Net Zero Benchmark (the Benchmark), allowing participating investors to frame and measure their engagements with our 41 Focus List companies. The rigorous evaluation process employed in the implementation of the Benchmark has provided CEC participants, and the broader market, with a comprehensive assessment of the progress made by each Focus List company in addressing climate-related challenges.

The CEC Benchmark is a pivotal component of the initiative’s engagement strategy, offering participant investors a standardized framework for dialogue. Following ongoing consultations with CEC participant investors, including some of Canada’s largest asset managers and asset owners, as well as NGOs and Indigenous organizations, this framework incorporates contextual factors unique to Canada’s economy, such as metrics focused on facilitating a Just Transition.

36 CEC participant engagement teams are currently leading direct dialogues with companies on the Focus List to encourage and support progress against the Benchmark.  With the support of the Engagement Secretariat, they held 75 investor group meetings and 34 meetings with Focus List companies between October 2023 and June 2024. On average, teams had three to four engagement objectives per Focus List company. The two most prevalent engagement objectives were related to Indicator 5: Decarbonization Strategy and Indicator 6: Capital Allocation, followed by Indicator 7: Climate Policy Engagement and Indicator 3: Medium-term targets.

CEC is actively seeking investors to lead the additional five engagement teams yet to be launched: Vermillion Energy, MEG Energy Corp., Whitecap Resources Inc., B2Gold Corp. and Stelco Holdings Inc.

CEC Public Policy Company Assessments

With the support of InfluenceMap, a CEC research contributor, the program released a set of inaugural Public Policy Engagement Alignment Assessments (Policy Engagement Assessments) in April 2024. The Policy Engagement Assessments inform investors on how Focus List companies approach their public policy engagements on climate change. These assessments provide a sense of the alignment between companies’ own lobbying efforts, those of their industry associations and recommendations of the Intergovernmental Panel on Climate Change (IPCC).

CEC Supporters and Collaborators

This project was undertaken with the financial support of the Government of Canada. Funding was provided through the Environmental Damages Fund’s Climate Action and Awareness Fund, administered by Environment and Climate Change Canada. This funding is supporting CEC’s implementation, assessment, awareness and education around the Benchmark.

CEC was pleased to welcome the participation of student fellows from the Rotman School of Management’s MBA program, facilitated by the Dobson Business & Climate Student Fellowship. Through this collaboration, the students had an opportunity to witness climate-related shareholder engagement in action. They also got to meet with senior executives from both corporate and investment sectors while providing research support to select engagement teams under the supervision of the CEC Joint Secretariat.

CEC is also welcomed CDP as the program’s newest Education Contributor.

The CEC Industry Leaders Advisory Panel

The CEC Industry Leaders Advisory Panel (ILAP) provides thought leadership and insight on sustainable finance and on CEC’s strategic direction (in a non-decision-making capacity). With generous support from Desjardins and the Ontario Municipal Employees’ Retirement System (OMERS), and in collaboration with CDP, CEC hosted hybrid meetings of the ILAP. These sessions addressed opportunities and challenges related to setting GHG reduction targets and transition planning. Additionally, the ILAP held a session with David Atkin, CEO of the PRI, who provided the Panel with an update on the PRI’s strategic priorities, including their support and leadership on investor-led initiatives for climate action.

International Supporters

International Supporters are actively contributing to knowledge exchange, providing input on the Benchmark reviews as requested, joining engagement teams led by Canadian participants and supporting CEC’s recruitment of other supporters or participants.  We are particularly pleased to welcome Nordea Asset Management and the California State Teachers’ Retirement System (CalSTRS) as the program’s inaugural European and American international supporters. In recent months, the New York State Teachers’ Retirement System (NYSTRS), United Nations Joint Staff Pension Fund (UNJSPF) and Pictet Asset Management have also joined, enhancing CEC’s collaborative presence on an international scale.

Capacity Building and Training

CEC is providing additional training offerings to investor participants through various channels, including virtual CEC Participant Forums and digital resources to enhance participants’ knowledge. CEC also delivered a session around the Benchmark and driving meaningful engagement with Canada’s top emitters at the 2024 RIA Conference in Vancouver and organized a roundtable about the challenges and opportunities in the net zero transition as part of a CDP event for both investors and issuers held in Toronto. 

External Coordination

CEC will continue to coordinate with stakeholders and strategic partners—including TMX Group, CDP and the University of Toronto/ Rotman School of Management—to build industry capacity, advance constructive engagement with top emitters and amplify and accelerate efforts to guide Canadian businesses toward a prosperous net zero transition.

Conclusion

CEC has made significant progress  in meeting its objective to drive dialogue between the financial community and corporate issuers to promote a just transition to a net-zero economy. This is a result of the commitment and backing of investor participants, program supporters, partners, the Joint Secretariat, current and former members of the Steering and Technical Committees and the Industry Leaders Advisory Panel. The support of investor participants and partners is greatly appreciated, and all feedback is welcome as part of our efforts toward continuous improvement.

Please stay tuned for further news and updates.