Companies on the TSX 60 remained largely committed to net zero, but close to half have not disclosed what climate actions they will take to reduce emissions.
Corporate climate target setting has experienced some headwinds this past year, as companies such as Microsoft and Walmart have pulled back on their commitments. And earlier this month, several of Canada’s largest financial institutions also withdrew from the Net Zero Banking Alliance, adding to the string of pullbacks in corporate climate action.
Despite these setbacks, our latest analysis reveals that in 2024 more than two-thirds of the largest Canadian companies remained committed to reaching net zero emissions by 2050. That’s welcome news for a climate policy area that could use some as of late.
Yet setting targets is only part of the equation. More important are the actions that a company takes to reduce its emissions. This matters not just to organizations interested in tracking progress, but also for investors eager to allocate capital to decarbonization projects.
This week’s Insight looks at what Canada’s largest companies are targeting, and how they plan on achieving those targets. While Canadian companies remain committed to reaching net zero, it’s less certain what actions they will take to get there.
Corporate climate targets slipped slightly but remained resilient
Our analysis of the largest 60 companies listed on the Toronto Stock Exchange (TSX 60) reveals that in 2024, 66 per cent of the top companies have reiterated their plan to achieve net zero emissions (Figure 1). That’s a slight drop from 71 per cent in the previous year. The number of interim emissions reduction targets remained roughly the same with 89 per cent of the TSX 60 having an emissions reduction target before 2050.
Some companies are even ramping up their ambitions. For example, Waste Connections doubled their 2033 target from 15 per cent to 30 per cent, and banks such as Scotiabank and the Bank of Montreal have also expanded the scope of their financed emissions targets to cover more sectors in their portfolios, despite recently exiting the Net Zero Banking Alliance.
Room for improvement—moving beyond target setting to action
Some of the backtracking in the corporate climate landscape could be the result of rising pressure on companies to prove that they are serious about fulfilling their climate pledges. That's why our Corporate Commitment Tracker has also started capturing data on climate actions that companies intend to take to reduce their emissions.
Overall, there remains a significant gap between commitments and actions to meet them. Our analysis finds that more than half of TSX 60 companies have published at least one action they plan to take to reduce emissions in their sustainability reports. Yet only 28 per cent have included a timeline for their climate actions (Figure 2). Out of the 89 per cent that have set an emissions reduction target, only 54 per cent of the companies have revealed at least one step they will take to reduce a part of their emissions.
Furthermore, it is unclear whether these actions will be enough to align with their corporate climate targets.
A large majority of the actions identified fall within the efficiency, energy source decarbonization, and end-use fuel switching abatement channels (Figure 3). These include LED retrofits, replacing furnaces with heat pumps, switching to electric vehicles, purchasing more renewable energy, and other sector-specific decarbonization efforts such as methane reduction for energy companies. Other less common actions include exploring the feasibility of carbon capture, utilization, and storage projects, or investments and partnerships for alternative fuel or biofuels pilots.
While this is a good starting point to identify the types of actions companies will be potentially undertaking, most companies haven’t disclosed whether these actions will be enough to align with their targets, nor whether they will be comprehensive enough to cover the company’s entire supply chain. These concerns will be increasingly urgent, especially as the earliest interim targets for some companies are in 2030, just five years away.
Shifting the corporate climate focus to actions and timelines
To corporate Canada’s credit, the vast majority of big Canadian companies previously committed to reducing their emissions remained so in 2024, and even increased their ambitions. As Canadian firms move beyond target setting, companies that move first in their climate actions will be best positioned to be competitive in a low-carbon future.
Companies may not always be able to pursue their climate actions alone. For example, Nutrien, a TSX 60 company, attributed various market demand and volatility concerns as reasons for suspending its ambitious blue ammonia Geismar facility. Governments still have a role to play in helping to reduce uncertainties that face large-scale clean tech projects, even as climate progress is rolled back south of the border.
But companies should not wait on governments to provide support if they are serious about reducing emissions. It’s time for Canadian companies to show how they will meet their climate targets and thrive in a future that’s increasingly going to demand clean products and services.
Arthur Zhang is a Senior Research Associate at the Canadian Climate Institute