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Office buildings in Toronto’s Financial District along Adelaide St. West on Sept 28.Fred Lum/The Globe and Mail

Nearly all Canada’s largest corporate emitters are moving toward improving their climate-related disclosure to global standards, but none of them takes the critical step of backing up decarbonization strategies with capital spending commitments, a coalition of top Canadian institutional investors says.

Climate Engagement Canada, whose members manage a total of $5.2-trillion in assets, on Tuesday published its inaugural benchmark data on key climate-related metrics at its focus group of 40 companies. It reveals a mixed bag of performance.

Fewer than half have announced net-zero ambitions, and only 15 have taken partial steps to align short-term emission reduction targets with paths toward limiting the rise in global temperatures to 1.5 degrees above preindustrial levels, the most ambitious target set out in the Paris agreement on combatting climate change.

All but one, Stelco Holdings Inc. STLC-T, have committed to improving climate governance and aligning disclosures with the Task Force on Climate-Related Financial Disclosures, or TCFD, the global gold standard for gathering and reporting such data. Many TCFD measures are expected to become mandatory as Canadian regulators move toward implementing standardized reporting.

Empire Co. Ltd. EMP-A-T, which runs such grocery chains as Sobeys and Safeway, and Canadian National Railway Co. CNR-T lead the pack on setting targets to get to net-zero emissions by 2050, as well as disclosing medium- and long-term goals toward that internationally agreed target, according to CEC.

The investor group formed 18 months ago to influence corporate boards and management to accelerate efforts to decarbonize. The data will be used by its members as a starting point to track the performance of companies within the group’s portfolios. The results are separated into 10 categories dealing with reporting, target-setting, governance, emission reduction and other metrics.

“It shows there is a lot of work to be done to get on the pathway to net zero,” said Patricia Fletcher, chief executive officer of the Responsible Investment Association, a founding CEC organization. “There are some highlights and positive steps that have been taken – almost every company on the focus list has taken some meaningful steps with climate governance and disclosure.”

However, allocating capital toward meeting greenhouse gas reduction targets and developing strategies for dealing with costs to workers and communities of the transition to low-carbon energy will be true measures of any company’s commitment to moving along the path to 1.5 degrees of warming, Ms. Fletcher said in an interview.

“You set your targets and your goals, but are your actions supporting them? That’s really where the rubber is going to hit the road with all of this,” she said.

CEC was established to push the largest emitters for tougher targets to cut emissions and advance the shift to a low-carbon economy. Its list includes companies in oil and gas, utilities, mining, transport and consumer goods, as well as food, agriculture and other industrials, in which its members have investments.

AGF Management, TD Asset Management, RBC Global Asset Management, Alberta Investment Management Corp., University Pension Plan Ontario, Manulife Investment Management and Ontario Municipal Employees Retirement System are among the members. Several charitable foundations and shareholder groups such as Principles for Responsible Investment and Shareholder Association for Research & Education are also involved.

Among other findings: Just over 40 per cent of the companies on the list incorporate climate metrics into the pay of their CEO or other senior executives. In addition, the group said more effort and disclosure are needed to demonstrate whether companies are meeting the tenets of free, prior and informed consent for Indigenous communities.

Fuel retailing and distribution companies had among the lowest scores of the focus list, with Alimentation Couche-Tard Inc. ATD-T and Superior Plus Corp. SPB-T notching only partial marks for climate governance and TCFD disclosure. In oil and gas, ARC Resources Ltd. ARX-T and Whitecap Resources Ltd. WCP-T also had partial scores in those categories, as well as in short-term target setting. Stelco received no marks in any category.

The objective of the data gathering exercise is to develop a road map to inform the companies of the aims of CEC members, Ms. Fletcher said. “We want companies to be successful in a low-carbon future so that investors can be successful – so how do we work together to start the journey?”

CEC said it based its assessments on public disclosures by the companies from June, 2022, to June, 2023.

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