KINGSTON, Ontario –/COMMUNITYWIRE/– Today, the Institute for Sustainable Finance released the first-ever assessment of TSX companies’ climate target and disclosure performance. The key finding: Corporate Canada falls below several of its global competitors.
The new report – Assessing Current Canadian Corporate Performance on GHG Emissions, Disclosures and Target Setting – highlights the need and opportunity for corporations to close gaps in order to secure their own and Canada’s competitiveness in the global transition to a low-carbon economy. Given the push from financial institutions and shareholders for more and better climate-related information, this report takes the first comprehensive review of the performance of firms on the S&P/TSX Composite Index, which includes over 200 of Canada’s largest companies.
“Despite progress from Corporate Canada, investors are still facing real limitations in getting the information they need from Canadian corporations as they try to assess their carbon exposure,” said Sean Cleary, co-author of the report and Chair of the Institute for Sustainable Finance at Smith School of Business, Queen’s University. “This lack of required information creates very real impediments to financial institutions with respect to their capital allocation decisions and their risk management processes.”
The research shows that only two-thirds of Canada’s publicly traded firms disclose GHG emissions, which is similar to US firms, but well below those in the EU and the UK. Meanwhile only a quarter of Canadian companies have set climate targets compared to more than half of companies on the S&P 500, and two-thirds of large UK companies.
“The bad news is, we are clearly behind our peers—particularly in Europe and the UK. The good news is, those Canadian companies that are disclosing GHG emissions and setting climate targets are among our largest emitters,” explains Dr. Cleary. The research shows that while only 60 companies on the TSX have set climate targets, those companies account for half of the index’s emissions. Achieving those targets could lower the index’s carbon profile by close to 20% by 2030. “Obviously, the actions of Canada’s largest emitters are critical to achieving progress. If the big emitting firms on the TSX that have climate targets successfully achieve them, that is going to have a significant impact.”
The report also notes that among the TSX companies with targets, 15% have published a detailed plan to reach them, while another 62% provide less detail but do communicate some relevant information about how they plan to hit their goal. In addition, a quarter of these companies link achieving climate targets to executive compensation, while another 47% have incentives that are more loosely tied to climate-related issues.
“Canadian firms need to come to terms with what the market is demanding,” says Jim Leech, Chancellor of Queen’s University and former President and CEO of the Ontario Teachers’ Pension Plan. “Investors and financial institutions want not only more climate disclosure data, they also want ambitious climate targets that are supported by credible plans to achieve them. If we want to mobilize the domestic and international capital necessary to compete in a low-carbon economy, we must step up our game.”
– Download the full Corporate Canada Assessment Report.
– The Institute for Sustainable Finance will present the research during a webinar at 1pm on April 21, 2021. Registration details can be found on the ISF Events page.
Argyle PR for Institute for Sustainable Finance