What are Canadian businesses doing to reach net zero?

• HSBC is putting greater focus on emissions created by its global customer base in a bid to reduce its Scope 3 emissions (its “financed emissions”).
• The global bank is offering a range of sustainable finance products and solutions and taking a more proactive role in helping its customers reduce emissions throughout their value chain.
• Companies will need to look at their own emissions and may also need to pay attention to emissions created within their value chain.
• Setting and achieving sustainability goals presents challenges – and great opportunities – for businesses.

Many businesses globally and across Canada have made commitments to reaching net zero emissions by 2050. There is increasing pressure from customers, investors, lenders and civil society to put those commitments into action. To meet his demand, companies will need to gain deeper insights into their own decarbonization options as well as that of their suppliers. So what solutions are businesses putting in place to accelerate the transition to net zero?

The recent Sustainabile Finance Summit hosted by The Globe and Mail explored the risks and opportunities for business leaders as they seek to forge their own paths to net zero. It featured important insights from HSBC, as well as McCain Foods and Canadian Pacific Kansas City (CPKC) railways, major Canadian companies that are taking concrete steps to manage their sustainable transitions.

HSBC has set ambitious global targets to become a net zero bank, including an aim to align its financed emissions to net zero by 2050 or sooner. The majority of the bank’s global emissions are Scope 3 emissions, the proportional share of emissions created by the customers that it finances. This means HSBC is increasingly engaging with its global customer base on how they are progressing towards net zero.

“There’s been tremendous progress in the past few years on corporate action towards net zero, and that will continue going forwards,” says Dana Krechowicz, Assistant Vice President, Sustainable Finance, HSBC Bank Canada. “Banks are increasingly taking a net zero lens. We are looking for opportunities to support our customers to achieve their emission reduction goals,” she says.

Part of HSBC’s approach is to provide sustainable finance products, such as Green loans, Green Trade Finance, and Sustainability-Linked Loans, as well as connecting them to tools and advisory services, explains Krechowicz. “We have partnerships with external organizations that help companies, especially small companies, who might not have the resources to hire a sustainability consultant,” she says. “We're providing a lot more practical support to customers to help them get started on sustainability and decarbonization initiatives.”

HSBC is working to operationalize its net zero targets across its business strategy, risk management, customer engagement and portfolio management. “We are taking an active role inhelping businesses reduce emissions,” says Krechowicz. “We want to understand our customer’s emissions profileand their decarbonization plan,” she adds. “ Going forward financed emissions will increasingly be factored into the bank’s decision making processes.”

HSBC’s focus on supporting climate action includes building out specialized expertise and insights in decarbonization technologies to support customers’ decarbonization strategies..The experience of Canadian frozen food manufacturer McCain Foods provide insights into how businesses can accelerate their decarbonization journey.

As food manufacturers, companies like McCain Foods have a strategic need to map an effective route to decarbonizing business operations. “In the past we would have seen around one natural disaster every 10 years. Now it’s very rare if we don’t get two or three in one year,” says Charlie Angelakos, Vice President, Global External Affairs & Sustainability, McCain Foods. McCain Foods’ sustainability strategy builds on the family-owned business’ founding ethos and has buy-in from its shareholders and employees, explains Angelakos. Its Scope 1 and 2 emissions targets are validated by the Science-Based Targets initiative (SBTi) and it is working on defining its near term targets, he says. “We are investing in solar and wind power in our facilities but 80% of our emissions are Scope 3 emissions, which is the big focus for us going forward,” he says.

In order to tackle its Scope 3 emissions McCain Foods has committed to transitioning to fully regenerative agriculture by 2030. Regenerative agriculture is a sustainable farming practice designed to protect the soil and wider agricultural ecosystem while maximizing crop yields. As part of its commitment to regenerative agriculture McCain Foods has announced three “farms of the future,” which are exploring best practices for scaling sustainable farming techniques to help its farmers and growers reduce carbon emissions. Angelakos believes it is important for businesses to secure wider buy-in from stakeholders if they are to reach their goals. “It's not just about just having a sustainability team working in a silo, you really need to embed that through the entire business and bring all your stakeholders along on your sustainability journey.”

Canadian Pacific (CP) recently merged with Kansas City Southern (KCS) to become Canadian Pacific Kansas City (CPKC), making it the first and only single-line railway connecting Canada, the U.S and Mexico. CPKC has been facing increased pressure from customers and shareholders in recent years. “Around 2018, we realized that we had not kept up with evolving expectations around sustainability,” says Glen Wilson, Vice President, Safety, Environment & Regulatory, CPKC. “So we confronted that head on, implementing really high standards for sustainability disclosures, engaging in climate scenario analysis in alignment with the Task Force on Climate-Related Financial Disclosures and developing a comprehensive climate strategy.”

To make its operations more sustainable, CPKC is tackling the emissions created by its fleet of diesel-electric locomotives. It is developing new hydrogen-powered locomotives and has committed to the production of hydrogen hubs, a network of green hydrogen production and storage sites.

CPKC’s experience demonstrates that all companies have an interest in honoring their climate commitments. This presents opportunities as well as challenges. Wilson rejects the notion that a focus on sustainability means limiting economic growth, explaining that CPKC is reinvesting 20% of its revenue into infrastructure and helping in the transference of freight haulage from road to rail, anticipating a reduction of 64,000 trucks per year on US highways.¹ “The end result is more investment in infrastructure, increased benefits to the transportation sector, and the growth of the economy,” says Wilson.

“Internally, a large proportion of our employees are also motivated to reach net zero; it all helps with staff attraction and retention and has so many other benefits,” he adds. “My message to companies is that you can achieve a lot in a relatively short time if you really commit yourselves to it.”

Today, we and many of our customers contribute to greenhouse gas emissions. We have a strategy to reduce our own emissions and to help our customers reduce theirs. Find out more about our climate strategy in Canada and globally.

You can read more about the Sustainabile Finance Summit and watch a replay of the event here.