Coalition of investor groups targets 40 high-emitting companies to improve their climate records

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A coalition of Canadian investor groups has named 40 high-emitting companies that it will try to push to set tougher targets to reduce greenhouse-gas emissions and advance the transition to a low-carbon economy.

Climate Engagement Canada is targeting 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. CEC efforts will include persuading the companies to improve climate-related disclosure and to align their advocacy with the goals of the Paris Agreement on fighting climate change.

The Paris accord commits countries including Canada to get to net-zero emissions by 2050, with interim targets along the way.

Cenovus Energy Inc. CVE-T, Tourmaline Oil Corp. TOU-T, MEG Energy Corp. MEG-T, Atco Ltd. ACO-Y-T, Brookfield Infrastructure Partners BIP-N, Alimentation Couche-Tard Inc. ATD-T, Air Canada AC-T and Canadian National Railway Co. CNR-T are among the companies on the focus list.

CEC is launching its campaign at a time when investors in Canada and around the world grow increasingly worried about energy security. International sanctions against Russia in response to its invasion of Ukraine have contributed to a reduction in the supply of oil and gas, sending prices skyward. This has contributed to a backlash in some quarters against maintaining the pace to decarbonize economies.

Nonetheless, companies still must have a plan of action for meeting commitments to achieve net-zero emissions and prevent the worst effects from climate change, said Kevin Thomas, chief executive of Shareholder Association for Research and Education, or SHARE, which is co-ordinating the coalition’s corporate engagement and research.

“These are companies that are meant to be managed for the long term. These are shareholders that have interests in the long term, especially the pension plans here in Canada, and we have to be responsible to that interest,” Mr. Thomas said.

“There’s so much coming at [corporate directors] in terms of change, and the pace of change is rapid. But that is part of the job of being on a board. We can’t pretend it away or say it’s something we will deal with another day.”

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CEC brings together shareholders, lenders and insurers, and is made up of umbrella groups SHARE, the Responsible Investment Association and CERES. Its teams will meet with the companies’ boards and top executives over the next several months in efforts to “spur organizational change.” They will set the agendas for meeting with company officials, co-ordinate research and develop benchmarks.

“This benchmarking will be available to all the participants,” said Barbara Zvan, CEO of University Pension Plan and chair of the CEC steering committee. “Then they can go use it in their own investment processes so they can see how companies evolve or not evolve. Engagements are typically multiyear.”

If companies are resistant to the engagement process, the members of the group could use their power as large shareholders to vote for change at annual meetings to make sure their interests are protected from climate risks, Mr. Thomas said.

CEC was formed as a Canadian version of the Climate Action 100+, which does similar climate-related engagement work internationally. Six other Canadian companies – Canadian Natural Resources Ltd., Enbridge Inc., Imperial Oil Ltd., Suncor Energy Inc., TC Energy Corp. and Teck Resources Ltd. – are on the CA100+ focus list for similar advocacy efforts.

The CEC initiative is aimed at getting to a standardized approach to climate action among large emitters, while regulators such as Canadian Securities Administrators and the U.S. Securities and Exchange Commission develop their own rules for mandatory disclosure of climate-related risks, Mr. Thomas said.

“So if we’ve got the same kinds of expectations being set by all capital market actors on climate, then there’s no room for companies to look for the lowest standard and adhere to that. We will ratchet up standards as we go in keeping with the best science on climate change.”

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