Two thirds of Canada’s largest companies were still committed to net zero in 2024, but coverage of Scope 3 emissions remained a challenge.
Over the past year, Canadian corporate climate action has ebbed and flowed. Whether it’s been pausing the development of climate-related disclosure rules, Canada’s major banks walking out of global net zero initiatives, or pushback on climate action from the United States, it would appear at first glance that climate ambition is waning.
Yet despite the headlines, big Canadian firms remain quietly committed to net zero, at least in principle: two-thirds of the top 60 companies on the Toronto Stock Exchange (the TSX 60) retained their net zero targets in 2024-25, a slight drop of five percentage points over 2023.
The latest update to the 440 Megatonnes Corporate Climate Commitment Tracker is now live. It reveals that most of the largest Canadian corporations remain committed to their net-zero targets. But as this Insight explains, the next step for many corporations is to offer more detail about how they plan to get to those targets.
Corporate climate commitments in Canada remain resilient despite headwinds
Tracking the details of corporate climate commitments reveal what emissions companies are aiming to reduce. These details help improve accountability and transparency and are an indicator of whether a company’s commitments are credible.
The Corporate Climate Commitment Tracker covers the climate commitments and emissions reduction progress of the 60 largest companies listed on the TSX. Based on the latest publicly available reports from TSX 60 companies, 63 per cent of the index remains committed to net zero for at least their Scope 1 emissions, or the emissions directly emitted from their operations (Figure 1). Our data covers the latest publicly available reports up until August this year.
Compared to the previous year, there was a slight drop in companies publishing net zero commitments, which can be largely attributed to a pullback in emissions targets set by oil sands producers.
Notably, with the passage of Bill C-59, the federal government amended the Competition Act to require companies to substantiate environmental claims with “adequate and proper tests”, adding additional—whether real or perceived—legal risks as companies can be sued for misleading environmental claims.
Figure 1
It should be noted that there have been a few firms this year that have expressed difficulties reaching their original near-term targets. Four firms have explicitly loosened their commitments by weakening their emissions targets or dropping some sectors-specific targets across financed emissions. On the other hand, four other firms increased their targeted reductions, including new forest, land and agriculture (FLAG) emissions targets, and new Scope 3 emissions targets.
Canadian companies improved their emissions reporting, but need to broaden coverage
Over two years ago, we published an Insight revealing the lack of material emissions reporting from the TSX 60. Since then, a number of firms have started to report on their entire emissions footprint. This is a good sign of progress because as businesses improve their understanding of their carbon footprints, they can identify more opportunities to address their emissions.
A large majority of firms are generally setting targets that cover their Scope 1 and 2 (embodied in electricity, heat or hydrogen) emissions (Figure 2). Scope 1 and 2 targets are generally easier to set and achieve. These are direct emissions from sources owned or controlled by a company, and indirect emissions from the generation of purchased energy. Companies have long made progress on these areas of their emissions footprint, and solutions to these controllable emissions are becoming increasingly more available. Examples include cheaper renewables, biodiesel, electric vehicles, LED lighting, and heat pumps.
As for material Scope 3 emissions (indirect upstream and downstream emissions such as the emissions of their suppliers or investments), the overall coverage remains a challenge for Canadian firms. Only 23 per cent of companies have targets that cover their largest Scope 3 emissions sources.
Figure 2
One of the complexities of setting Scope 3 targets is that not all of these emissions will be within the control of the firm. Therefore, it is often much more difficult to guarantee Scope 3 emissions reductions. Instead, actions to reduce Scope 3 targets have to be more collaborative, for instance working with companies along their upstream and downstream supply chain—such as only procuring from suppliers who have their own targets—rather than explicitly on reductions.
Canadian companies need credible plans to meet targets and reduce transition risks
Nevertheless, the data show that progress has been made: some firms have strengthened their short-term targets as their own data improved, and 7 per cent of firms ramped up ambition and coverage.
However, there is still work to be done. Many companies still do not have targets for large segments of their business streams, especially for Scope 3 emissions. That can hurt the credibility of their net zero commitments.
And as 440 Megatonnes has written before, net zero commitments alone are not enough: companies need to take action with credible transition plans. Canadian firms are behind their international peers when it comes to taking these concrete steps to reduce transition risks, as outlined in a recent report from Business Future Pathways. As more companies announce comprehensive targets, the question of how a company will get to net zero is increasingly important to fill in credibility gaps and improve transparency. It is a good sign that companies remain largely committed to the goal of net zero emissions, and the next step is to show how they can deliver on their promises.
Arthur Zhang is a Senior Research Associate at the Canadian Climate Institute.