A new climate initiative is advising Canadian companies on how to develop effective climate transition plans as part of a larger effort to support a sustainable financial cause.

Business Future Pathways — spearheaded by Barbara Zvan, president and chief executive officer at the University Pension Plan — will bring together financial industry leaders for climate-change initiatives and is based on the previous work done by similar groups such as the Sustainable Finance Action Council and Climate Engagement Canada. “We’re going to turn our focus on how we start bringing in the corporate perspective,” she says.

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When it comes to sophisticated climate reporting, Canadian firms are being left behind compared to other peers, including the U.S., Zvan says, noting these disclosure efforts are essential for institutional investors to gauge the transition path of various companies.

More than a third of S&P 500 companies have science-aligned plans with another 14 per cent having commitments that aren’t verified yet. Meanwhile, only 15 per cent of companies on the S&P/TSX 60 Index have modern plans and 12 per cent have commitments.

“Everyone always looks at the U.S. [The] U.S. is actually ahead of us still, [but] Europeans are ahead of that and Japan is also ahead of the U.S. when you look at verified plans . . . . This is all about making [Canadian] companies competitive.”

Business Future Pathways consists of three different working groups, including a secretariat leadership team, a financial advisory committee and a technical advisory committee. Within the organization, there are several representatives from Canadian institutional investors, including Jennifer Coulson, senior managing director and global head of ESG at the British Columbia Investment Management Corp.

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“Companies are already on the journey for that disclosure,” says Zvan. “They just need to catch up to where their global peers are.”

The creation of this new group comes on the heels of the Canadian Securities Administrators pausing its development of a mandatory climate-related disclosure rule for Canadian issuers, a decision Zvan calls “disappointing.”

In a public statement, Wendy Berman, the new chair of the Canadian Sustainability Standards Board, which the CSA highlighted in its decision, said regulatory approaches may evolve in response to market conditions, but there’s credible and growing demand for comparable sustainability information. The CSSB launched its sustainability disclosure standards, known as CSDS 1 and CSDS 2, last year. However, these are voluntary metrics for Canadian companies.

Moving forward, Zvan says the new group is planning to publish a report highlighting the importance of accurate climate reporting and how investors rely on transition plans later this year.

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