What does Canada’s Net Zero Emissions Act Mean for Businesses?
In early July, Canada officially passed the Canadian Net Zero Emissions Accountability Act (Bill C-12), a piece of legislation that enforces Canada’s government to plan and report on its path to net zero by 2050. Among other measures, the act will establish both a long-term net zero target by 2050 as well as require interim milestones every 5 years starting in 2030.
Building on the establishment of its carbon tax in March 2021, Canada’s climate action and net zero plan is a signal to not only North America but also to the rest of the world that Canada has established itself as a global leader in the fight against climate change. Particularly in the wake of the IPCC’s latest report on climate change, the actions the Canadian government is taking to deliver on national net zero goals are critical to ensuring a safe and prosperous future for the country. Underlined in the publication of this report, reaching global net zero emissions by mid-century is essential to avoid the worst impacts of climate change and to embrace the economic opportunities presented by a shift to a low-carbon economy.
An important message to Canadian businesses
The legally binding net zero legislation has huge implications for the environment and for government actions – but what does it mean for the Canadian business community? The government is holding itself accountable to ambitious emissions-reduction goals and transparency, sealing the net zero transition into writing for Canada. This move sets the precedent for Canadian businesses to also accelerate their emissions-reduction commitments and disclosures.
Although the bill does not expressly outline the accountability of businesses and organizations in Canada, private sector participation is key to achieving net zero emissions in the country by 2050. Due to Canada’s wealth of natural resources, such as gold, various other minerals, and oil, this transition to net zero will require many of Canada’s biggest companies to fundamentally transform their business models and rethink operational processes. The energy intensity required to make practical use of these resources results in a high level of emissions. Businesses in these ‘hard to abate’ sectors will need to consider how to drastically alter their mining and extraction practices to be less energy-intense and environmentally damaging, or divert their investment and resources into cleaner business ventures. Yet, to enable businesses to take part in the net zero transition, it is the government’s responsibility to set regulatory processes and support funding mechanisms that aid in and reward corporate emission reductions and sustainable transformations.
Maple Leaf Foods is an example of a Canadian business that is already leading in the country’s journey to net zero emissions. The company recognized the impact that the global food system has on the environment, and is taking important steps to drive the transformative change needed in the industry to reduce global greenhouse gas emissions to zero. In 2019, Maple Leaf became the first major food company in the world to achieve carbon neutrality, and through its Science-Based Target is committed to aggressively reducing emissions not only throughout its operations but also more broadly within its supply chain.
Embracing the net zero opportunity in Canada
As Jonathan Wilkinson, Canada’s Minister of Environment and Climate Change, stated, “Climate change is the biggest long-term threat of our generation, but it is also the greatest economic opportunity.” Businesses face risks of inaction, including market reputation, physical threats from climate change, and the likelihood of compliance schemes being put into place in the future. But there are also economic opportunities for acting. Investors, shareholders, customers, employees, supply chain partners, and other stakeholders are counting on businesses to take part in the net zero transition. Businesses that lead will reap the benefits. Increasingly, investors like BlackRock are rewarding businesses that pair ambitious climate and sustainability goals with concrete, material actions. And businesses that embrace net zero and sustainable business transformation better position themselves to access tools and resources that bolster resilience and operational viability in the long run.
Frameworks like the Science-based Targets initiative (SBTi) help companies build clear, realistic action plans to make progress against emission-reduction goals. Following best practices from organizations like the SBTi and partnering with experts to help guide the net zero journey, such as through Schneider Electric’s holistic climate change consulting and implementation services, can break down the path to net zero and ensure that climate action becomes a strategic advantage for your businesses.