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Sustainability

Reaching net zero by 2050

June 5, 2022 5-MINUTE READ

RESEARCH REPORT

In brief

  • Almost half (40%) of Canadian companies have committed to reaching net zero by 2050 at the latest.
  • None will meet their target on time, & only 5% are on track to meet net zero targets by mid century if they don’t significantly accelerate their pace.
  • Most companies will need to double the pace of emissions reduction in the next decade, and then accelerate further to achieve their net zero goal.
  • It will take large movement in tech innovation and collaboration to advance, deploy the technology & reduce GHG emissions to zero by 2050.

Making the commitment to net zero

Global warming is having a devastating impact on the world around us, and Canadian companies are bracing themselves for the challenge ahead.

Governments of countries representing two-thirds of the global economy have also committed to reaching net zero before 2050, and many are adopting new policies and incentives, as well as increasing regulatory measures to push companies towards zero-carbon practices.

Government action is key, as conducive regulation can encourage and support emissions-reduction strategies among businesses.

In its 2022 Federal Budget and 2030 Emissions Reduction Plan, the Canadian government announced it will be investing and creating the incentives for companies to take action – incentives to: build green infrastructure, electrify transportation, enhance the critical minerals circular supply chain, change behaviour and regulations for transparency and accountability – such as requiring enhanced ESG reporting and the creation of a new clean water agency.

The Intergovernmental Panel on Climate Change (IPCC) notes that, in order to keep rising temperatures below 1.5 degrees, we require clear signaling from governments, the international community, and stronger alignment of public sector finance and policy.

Some North American carbon-intensive companies have set net zero targets

Although companies have set targets, they still have a lot of transformative work to do to get there.

16%

are aiming to achieve net zero by 2043. The remaining 84% are targeting 2050.

Most Canadian industries are falling behind. While some carbon-intensive companies have set targets, there is a lot more to be done:

  • Most industries have less than 50% of their companies even making commitments;
  • Five industries have less than 30% of companies making commitments.

Canadian companies must do better at reducing their emissions. As of 2022, the Canadian Government has stepped up requiring companies to change with both incentives for investment in green infrastructure and regulations requiring ESG reporting for financial services.

Only 40% of Canadian companies in our sample have set a net zero target, covering scope 1, 2 & 3 emissions. To achieve net zero operations before 2050, the majority of Canadian companies will need to double the pace of emissions reductions by 2030 and quintuple it by 2040.

Reinvention is needed to reach net zero

For most companies, execution at speed requires a step-change in technology development and innovation, supported by cross-industry collaboration, and conducive regulation and incentives.

Simply put, Canadian businesses must reimagine and reinvent the way they work – taking action to cut emissions in their own operations and collaborating across industry boundaries to decarbonize supply chains and product use.

A step-change in technology and innovation, collaboration across all levels of government, industries and value chains, and a rethink of regulation will be important ingredients of successful strategies for reducing Canada’s emissions. In some industries the solution is relatively clear and available; in others existing technologies and options will not be sufficient to deliver net zero. New technologies (digital or otherwise) will need to be invented and/or scaled, and processes and business models will need to be reshaped. Governments need to establish the incentives for investment and change.

Creating an ecosystem of partners

The growing commitment of Canadian businesses to address emissions in their value chain (scope 3) will be a critical step to get more companies and industries to reach net zero before 2050.

The challenge is too immense for companies to do it alone.

The race to zero is a team pursuit: Government, Businesses and Citizens working together.

Greater and faster strides in reducing emissions can be made when working together, through public-private partnership, along value chains and across industries. For example, collaboration between steel producers and petrochemical companies in scaling green hydrogen production for low-carbon steel manufacturing will help automotive companies accelerate the pace of emissions reduction.

Public services and large companies have a major role to play in the collaborative ecosystems essential for the rapid application of net zero technologies and processes.

Decisive action to get to net zero

By establishing an explicit zero-carbon strategy and using carbon intelligence to get there, the Canadian business community can realize its goal by 2050. Execution at speed, purposeful industry collaboration and a step-change in technology development and innovation are also essential to reach their objective. We’ve identified three key steps to help companies on their net zero journey:

  • Commit to a science-based target. Research shows that targets do work. Companies in our sample with net-zero targets reduced their Scope 1 and Scope 2 emissions between 2010 and 2019, while those without increased their emissions.
  • Embed carbon intelligence into the very fabric of the company to better manage the company’s carbon budget, by employing the same discipline used for financial budgets.
  • Leverage influence to mobilize industry and value chain. Large companies can drive greenhouse gas emissions reductions far greater than their own footprint through concerted action on their Scope 3 emissions—engaging suppliers and making changes in product design and adopting circular business models.

It will take reinvention of business itself to ensure a commitment to the planet and create transformative change that will last for generations to come.

SLIDESHARE: Reaching Net Zero by 2050

Namit Bhargava

Canadian Sustainability Lead

Stephen Gardiner

Senior Managing Director – Canada

Sarah Lyons

Canadian Public Service Sustainability Lead

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