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Canada’s large public companies are inching forward when it comes to disclosing greenhouse gas emissions. That’s the problem.

Institutional Investors have set their own emissions targets and are demanding more data on climate-related risks as they run the pros and cons of writing cheques to buy positions for their portfolios. But progress among the largest Canadian companies on delivering that data appears to be stalling, according to new research.

Currently, reporting greenhouse emissions is largely voluntary, but that’s about to change. Regulators in Canada and abroad are finalizing plans to make the practice mandatory. Today’s laggards will be forced to get up to speed awfully quickly once the rules are put into force.

In a new survey of corporate progress on climate-related metrics, the Institute for Sustainable Finance (ISF) at Queen’s University’s Smith School of Business found that just 163 companies in the S&P/TSX Composite Index provide any disclosure on CO2 emissions. That equates to 70.6 per cent of the index, and is up just slightly from 67.6 per cent a year ago.

That puts Canadian companies slightly ahead of those in the United States at 67 per cent, but well below Europe at 89 per cent and Britain at 99 per cent.

The survey found the largest Canadian companies tend to be the ones reporting data, especially the Scopes 1 and 2 emissions – those that stem from a company’s own operations and those from the energy they buy to run their plants. That puts them in decent shape for when mandatory reporting begins, said Sean Cleary, the ISF’s chairman and co-author of the report.

“Clearly, some are ready. I think a lot are thinking about it, but are not quite there yet. It’s going to have a very big impact when the legislation does change,” Prof. Cleary said.

The Canadian Securities Administrators, the national umbrella group for securities commissions, is devising rules for climate-related disclosures. The rules are based on the framework of the international Task Force on Climate-Related Financial Disclosures (TCFD), now a well-established standard.

But the CSA’s initial proposal took some heat for suggesting a softer approach, such as not mandating all three emissions scopes and leaving out the necessity of analyzing risks based on different global temperature scenarios. Scope 3 emissions – those that emanate from the use of products a company makes – involves tricky calculation, but investors are increasingly demanding such data when it is deemed material.

The new rules are expected to be announced after the end of this year.

“First and foremost we thought it was a very encouraging sign – just putting some mandatory disclosures in place will make a big difference. So that was good,” Prof. Cleary said. “But our talks with financial institutions‚ and all of the discussions we’re involved in, suggest that everyone feels we should align these disclosures with global standards.”

The U.S. Securities and Exchange Commission and the new International Sustainability Standards Board are also moving to disclosure standards that follow the TCFD template. But those proposals look to be tougher than what the CSA suggested initially. The SEC, especially, has focused on regulations aimed at making it much tougher for companies and fund managers to engage in greenwashing.

Other parts of the ISF survey show some progress. Of the 231 companies on the S&P/TSX Composite, 120, or 52 per cent, have emission reduction targets. That’s twice the number from last year’s survey.

Again, though, that lags other jurisdictions. In the United States, 53 per cent of companies on the S&P 500 Index and 77 per cent of the Dow Jones Industrial Average have stated targets, as do 67 per cent of those on London’s FTSE 100 Index.

If the Canadian companies meet their 2030 goals, it would mean a reduction of more than 45 per cent in their emissions from 2020 levels. It would also represent a 30-per-cent cut in greenhouse gases for the entire TSX index, the ISF said.

Meanwhile, with environmental, social and governance (ESG) criteria now a key part of doing business, it appears companies are slow to integrate the E items with the G – specifically, tying executive compensation to meeting climate targets. Just 17 TSX companies, or 14 per cent of those with targets, have tied chief executive officer pay directly to meeting those goals.

That compares with 15 companies, representing 25 per cent of those with targets, last year, the ISF said. In addition, just 35 companies have compensation loosely related to climate-related issues.

“This is not a positive signal, since tying compensation to achieving climate goals is necessary to properly incentivize action,” the report said.

Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at

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