Investors embrace ‘Google Maps for the Canadian climate transition’
A new Paris alignment framework in Canada aims to measure investors' engagements with the country's top emitters
"Think of this as the Google Maps for the Canadian climate transition," said Kevin Thomas, CEO of the country's Shareholder Association for Research and Education (SHARE).
Thomas is referring to Canada's new Net Zero Benchmark Criteria, a recently launched initiative from Climate Engagement Canada (CEC), an investor-led collaborative engagement grouping.
The benchmark will serve as a tool to support the 'Just Transition' among Canada's corporate issuers towards a net zero economy by standardizing expectations from the financial community, as the group put it.
"Rigorously tracking our collective progress along this route is how we make sure we all get to our destination. It will keep us honest, it keeps us effective," Thomas said.
Common standards
The CEC Net Zero Benchmark provides a set of common standards for investors to evaluate corporate issuers’ progress towards aligning with the Paris Agreement’s ambition: limiting global warming to well below 2 degrees Celsius, while pursuing efforts to limit the increase to 1.5 degrees.
"It allows investors to frame, and soon measure, their engagements with Canada’s top emitters, inclusive of corporate issuers," the group explained in a statement.
"With this framework in place, participant Investors can identify areas for discussion with CEC Focus List companies and identify areas for additional improvement in their net zero transition."
Rigorously tracking our collective progress will keep us honest, it keeps us effective.
The benchmark is closely aligned with the benchmark developed by Climate Action 100+, the current global standard for collaborative shareholder engagement.
It follows this example whilst layering in additional context specific to Canada’s economy. Feedback from a public consultation period was incorporated, which involved some of Canada’s largest investment managers and asset owners.
Because of this groundwork, responses across Canada have overwhelmingly been positive.
Barbara Zvan, president & CEO of UPP, called it "a much-needed tool along the path towards a net zero economy.”
She stressed the common standards will give collaborative stakeholder engagement a push.
"It will provide participating investors with a collective view of key engagement developments and themes in the Canadian context, which helps inform focused and consistent dialogue between Canadian companies and investors,” Zvan noted.
Also read
Proxy season with a twist: The rise of the activist shareholder
In addition, Karen Lockridge, director of ESG Investing at Canada Post Pension Plan, a major Canadian pension fund, stressed that the current climate trajectory presents a systemic risk to investment portfolios and long-term returns to pension fund beneficiaries.
She called the benchmark "a valuable tool for companies to understand investor expectations."
Lockridge added that "it guides transparency around credible net zero emissions strategies and can support constructive dialogue between companies and investors.”
Investors are intensifying their engagement with companies, calling for near-term action from the companies they are invested in.
Finally, Patricia Fletcher, CEO of Canada’s Responsible Investment Association, said in agreement that the benchmark is "a crucial step" on the path towards a net zero economy in Canada, providing corporate issuers with "a clear and consistent framework" to identify opportunities for climate action.
She concluded that “the benchmark will underpin the conversations between investors and large corporate emitters as they work to measure and advance decarbonization across key sectors in Canada’s economy.”
The CEC Net Zero Benchmark comes at a time when various tools are being developed for use by Canadian investors, such as the recently announced Taxonomy Roadmap Report by the Sustainable Finance Action Council.
The Benchmark, when used along with the Taxonomy, will provide a standardized approach to measure companies' performance against climate objectives and serve as a way for investors to categorize their evaluations of corporate issuers, the CEC stressed.
Also read
Climate motions do not stand a chance in Canada’s banking space
