2024 CEC NET ZERO BENCHMARK COMPANY ASSESSMENTS SHOW INCREMENTAL PROGRESS

Second annual Net Zero assessment of Canada's top reporting or estimated emitters on the Toronto Stock Exchange shows Net Zero commitments increased and over half of companies now have transition plans in place.

TORONTO, Nov. 7, 2024 /CNW/ - Traditional territories of the Mississaugas of the Credit, the Anishinaabeg, the Haudenosaunee, and the Huron-Wendat – Climate Engagement Canada (CEC) is a growing investor-led engagement initiative with 51 institutional investors representing almost $7 trillion focused on driving Canada's business transition to net zero. The initiative released its second annual Net Zero Benchmark, providing an updated tool for CEC participant investors to frame and measure the success of their engagements with Focus List companies. These companies represent many of 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 toward 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 new assessments, released today, show encouraging results against the Benchmark indicators. The public policy alignment assessments released earlier this year have also been updated. Notable progress in 2024 includes 9 new companies disclosing transition plans detailing the actions they plan to take to achieve their GHG reduction targets, 7 new companies performing scenario analysis, and formal board oversight of climate change across all 41 Focus List companies.

Greater action, however, is needed from companies to support global efforts to limit temperature rise to 1.5°C. Many have yet to set adequately ambitious or comprehensive emissions reduction targets in accordance with their net zero commitments, and companies' decarbonization plans so far systemically fail to acknowledge their social impacts.

With new year-over-year data, CEC participant investors will continue using the Benchmark for input and discussion in their collaborative engagement activities with Focus List companies. The initiative will provide ongoing insights and input into the Benchmark results, trends and opportunities for collaboration and engagement. These efforts support CEC's goal of driving dialogue with Canadian corporate issuers to promote a just transition to a net zero economy.

DOWNLOAD THE 2024 ASSESSMENTS HERE

2024 Key Findings

• Focus List companies made incremental progress on all but 2 of the 10 Benchmark indicators.
• Over half of companies now have transition plans in place detailing the actions they will take to decarbonize, with nine companies increasing their scoring since last year.
• Seven new companies performed scenario analysis in 2024, an important step for future-proofing corporate strategies in a rapidly changing landscape of climate risks and opportunities. Over half of companies still need to do so.
• The number of net zero commitments increased to 20 out of 41 companies. However, over half of companies have yet to set adequately ambitious or comprehensive long-term emissions reduction targets accordingly.
• Three companies have committed to aligning their capital expenditures with their stated targets, demonstrating that their plans have been costed.
• Decarbonization plans systematically fail to acknowledge the social impacts, risks and opportunities presented by the activities therein, raising the potential that just transition matters have not been appropriately considered.
• Transparency on advocacy and industry involvement has improved drastically, with 11 new companies disclosing their climate-related lobbying activities.
• Accountability for climate action also improved, with formal board oversight in place across all 41 companies, however only 12 have formal assessments for competencies of climate oversight in place.
• 26 companies have linked executive remuneration to climate change performance, with 21 specifically linking pay incentives to progress on the company's GHG targets.

For additional information on CEC's Evaluation Process, 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.

Note on Bill C-59

The CEC Net Zero Disclosure Benchmark follows a methodology including a June 1^st cut-off date for all disclosures and company reports to be considered. Changes to corporate disclosures as a result of Bill C-59 or any other factors after June 1st, have not affected the results of the 2024 CEC Benchmark. All focus list companies are encouraged to continue reporting all critical climate disclosures and note that public disclosure is a requirement for evaluation for Climate Engagement Canada's 2025 Net Zero Benchmark.

Quotes from CEC representatives:

• "It's encouraging to see incremental progress across nearly all key indicators in the 2024 Benchmark, especially with over half of companies now implementing transition plans to decarbonize. However, we must recognize that while commitments to net zero are increasing and accountability for climate action is improving, greater action is needed to ensure Canadian companies can meet investor expectations and remain competitive in global capital markets. Thank you to the many parties involved with CEC for the dedication and efforts in driving this important work forward." Barbara Zvan, President and CEO, UPP and CEC Steering Committee Chair
• "CEC's second annual Net Zero Benchmark illustrates incremental progress across the majority of assessed Benchmark indicators. CEC investor dialogue with Focus List companies will benefit from this valuable new year-over-year data, as investors look to mitigate portfolio climate risk through stewardship. It is crucial that Canada's highest emitters further progress towards aligning with the Paris Agreement; investors will be looking for ambitious and comprehensive emissions reductions targets to accompany the growing number of net zero commitments being made." Katie Wheatley, Head of Canada, UN-backed Principles for Responsible Investment (PRI), and CEC Steering Committee Vice-Chair
• "Climate Engagement Canada was founded as a platform to facilitate meaningful dialogue between the financial community and corporate issuers to advance a just transition to a Net Zero economy. At RBC GAM, we believe that engagement can be an effective way to consider how issuers manage material ESG factors. The results of the CEC Net Zero Company Benchmark show progress on many of the year-over-year comparative indicators, which highlights the importance of investor dialogue with companies and will continue to inform further engagements." Maia Becker, Senior Director, Responsible Investment, RBC Global Asset Management, and CEC Technical Committee Chair
• "This second edition of the CEC Benchmark shows that progress has been made in the short period since CEC was launched. It also makes clear that investor – company dialogues need to become more sophisticated to focus on the capital allocation and social inclusion challenges that are central to decarbonizing our economy." Delaney Greig, Director, Investor Stewardship, UPP, and CEC Technical Committee Vice Chair
• "Climate Engagement Canada members continue to make an impact on the reporting landscape in Canada. The second Net Zero Benchmark provides investors with comparative data we can now use to determine company performance on decarbonization. This data, in turn, helps us continue to deliver on our commitment to sustainability and make progress on our own ambition for net zero." Katharine Preston, Vice President, Sustainable Investing, OMERS, and Chair of the CEC Industry Leaders Advisory Panel
• "The 2024 CEC Benchmark is an important step in tracking progress and moving the dial. All steps, big and small, are steps in the right direction as investors work with issuers to ensure the long-term sustainability of their investments and organizations' progress in their decarbonization efforts." Patricia Fletcher, CEO, Responsible Investment Association, CEC Joint Secretariat Co-Lead, and CEC Steering Committee Member
• "These companies are responsible for a substantial portion of Canada's corporate emissions, so their actions – and those of their shareholders – matter. Our benchmark tells us we're getting better at setting climate goals, so now we have to work on aligning expenditures and financial accounting with those goals to make sure we reach them." Kevin Thomas, CEO, SHARE, CEC Joint Secretariat Co-Lead and CEC Steering Committee Member
• "We are encouraged that the results of the 2024 CEC Net Zero Benchmark assessment demonstrates the progress Canadian companies are making in understanding and developing comprehensive plans to mitigate climate related transition and physical risks. The results also show that there is considerable work ahead to continue to advance on inclusive approach that the CEC Net Zero Benchmark espouses. We believe that this approach is an effective path forward in addressing systemic risks and opportunities in the Canadian market for long term investors." Priti Shokeen, Vice President & Director, TD Asset Management Inc, CEC Industry Leaders Advisory Panel, and CEC Participant
• "Our aspiration is that this research is catalytic for constructive engagement discussions and expedited progress for the Canadian economy to remain competitive in an inclusive, net-zero future. We commend those companies who are developing and executing on credible climate transition plans and are encouraged to see progress across the 2024 Benchmark results." Joanna Kipp, Senior Manager, Quinn+Partners
• "The second annual CEC Net Zero Company Benchmark is a useful tool that now allows investors to evaluate data year over year, including the greenhouse gas emissions reduction targets of many Canadian businesses. In light of the finding that only 41% of Focus List companies indicate that executive remuneration is linked to climate change performance, the benchmark helps expose the importance of effective climate governance in advancing the transition to a low-carbon future in Canada." Sonia li Trottier, Director, Canada Climate Law Initiative

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, 51 investor participants (with almost $7T 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.

SOURCE Climate Engagement Canada

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