Corporate Canada starts to hit the brakes on climate reporting: ISF study

The Institute for Sustainable Finance (ISF) has once again taken the pulse of climate commitments among S&P/TSX Composite Index companies, analyzing trends revealed by their GHG disclosures and net-zero targets. This year’s study is a critical resource for investors and public- and private-sector leaders alike.

Findings show more companies are disclosing emissions, and overall emissions by firms have fallen in recent years — though the energy sector remains an outlier. Disclosures are also becoming more robust, with tentative growth in material Scope 3 reporting and increased use of third-party assurance. Yet progress on disclosures remains uneven and the number of firms with net-zero targets has plateaued, reflecting headwinds created by the economic and policy environment and foreshadowing continued deceleration in climate-related reporting initiatives.

To download the report, “Canadian Corporate Performance on GHG Emissions, Disclosures and Target Setting: Fourth Edition,” click here.

“Comprehensive climate-related reporting by corporate Canada is the key to staying competitive in the global race for climate capital,” said ISF’s Director of Research, Yrjö Koskinen. “We’re seeing some progress, but I am afraid we haven’t come far enough, fast enough. And there is evidence that what progress we’ve seen is slowing when we need to speed up. These findings provide further evidence that Canada needs to implement mandatory climate-related disclosures.”

“What really sets this report apart is its depth,” said ISF Executive Director (Academic) Thomas Walker. “It’s a great resource for decision makers in business and government as it reveals trends over time, and digs into the drivers of quality sustainability reports so we can see what factors might encourage greater adoption in the future.”

For the study, ISF researchers examined the 2024 sustainability reports (covering FY 2023) of companies listed on the S&P-TSX Composite Index and looked at trends since the institute’s first report five years ago. It breaks down findings by sector, and looks at the metrics and the drivers of quality sustainability reporting.

Key findings include:

• 79% of firms report Scope 1 and 2 emissions (emissions from their own operations and energy purchases for heating and cooling) up from 72% in 2021, though the overall market cap of reporters declined due to energy sector exits following the federal government’s anti-greenwashing legislation, C-59.
• 49% of firms now report some Scope 3 or value chain emissions (up from 38%), but only 12% cover all material Scope 3 categories — indicating a focus on easier metrics over more relevant ones.
• 44% of firms obtain third-party assurance for emissions data, an increase from 37% in 2021.
• Sectoral variation is significant: Communication Services and Utilities show strong reporting practices; Financials vary widely.
• Larger firms and those with higher institutional ownership are more likely to disclose emissions data.
• Net-zero and carbon-neutral target adoption has plateaued, likely due to rising skepticism and lawsuits alleging greenwashing.
• Firms with multiple decarbonization targets tend to have stronger, more comprehensive reporting frameworks.
• Reported use of ESG-linked executive incentives rose from 31% in 2021 to 51% in 2023.
• Since 2019, long-term Index firms have reduced net GHG emissions by 35.7 million tonnes of CO₂e, mainly from the Utilities sector.
• Upstream Energy firms increased emissions by 9 million tonnes.

While the findings from this report are somewhat promising in terms of continued growth in the adoption of climate-related reporting, the period covered may prove to be an inflection year as firms respond to changing policy signals both domestically and globally. Momentum toward more consistent and comprehensive ESG reporting practices is slowing.