Almost two-thirds of organizations in Canada do not have a net-zero plan, and over half say reducing their carbon emissions is a low priority, an inaugural report by Deloitte Canada found.

The findings illustrate the difficulty organizations face to reach net-zero, furthered by geopolitics and shortages of talent, the professional services company writes in a report analyzing the impact of global disruptions to Canada.

Climate change could shrink Canada’s economy by over $5.5 trillion by the end of the century, the report states. Transitioning to a low-carbon economy will help mitigate this damage, while supporting economic growth, new jobs, industries and energy security.

“Net-zero is very likely to have a very significant impact on the GDP of Canada. How we deal with this collectively and look to lower carbon emissions is very key,” Andrew Swart, a managing partner for the energy, resources and industrials practice at Deloitte Canada, said in an interview with Sustainable Biz Canada.

The report from Deloitte's Future of Canada Centre is based on a survey of 828 managers and executives from organizations, governments and public sector entities of various sizes and industries across Canada, held from June 16 to June 30, 2023.

Canadian organizations not responding to climate urgency

The reasons why a majority of organizations lacked a net-zero plan was not something Swart could explain in detail. But he did offer some theories.

Organizations may not be carbon intensive and thus have no urgency to take on the issue. Some may not face investor pressure because they are private companies. An organization in forestry or farming would feel more impact from climate change compared to a service-based firm, so an organization’s industry or where it lies on the supply chain may also play a role.

In an email to Sustainable Biz Canada, a Deloitte Canada spokesperson said 64 per cent of large organizations (over 500 employees) said reducing their carbon footprint is a priority to some or a great extent, compared to 46 per cent of small organizations (from zero to 99 employees).

Shrinking a carbon footprint could also be a low priority because of the rising cost of capital and global uncertainty that affects investment decisions.

“On the one hand, you have commitments around the need to decarbonize, but at the same time there’s issues around energy security, there’s issues around energy affordability,” Swart said.

There were notable regional disparities. Over half of organizations in Ontario (54 per cent) and 62 per cent in Quebec said Canada needs to shift to a low-carbon economy. By comparison, only a third of organizations in Alberta and 38 per cent in the Prairies held that view.

The difference may be due to the regional economic position, Swart explained. Alberta, a large oil and gas producer, has a different set of constraints from its customers, regulators and investors compared to Quebec.

He emphasized global warming is a “collective problem” that will demand every organization - regardless of size, type, region or how affected it would be from a warming climate - take action.

Opportunities and obstacles to overcome

The shift to a clean energy economy is a potential wellspring of economic growth for Canada, Deloitte says, but faces disruptions from shortages of skilled workers and geopolitical instability.

Between 28,000 to 300,000 new green jobs are expected to be created in Canada by 2030, with most in construction and manufacturing. Labour shortages in the hundreds of thousands of positions, a skills deficit and unequal representation in green jobs must be overcome, the report states.

Deloitte recommends a net-zero skills strategy for educational institutions such as sustainability focused programs in universities, training programs, and attracting and retaining overseas skilled workers.

Swart underscored the importance of deep partnerships with Indigenous Canadians to build a talent pool. He also suggests a new educational model that can “churn out” the talent a clean economy needs, such as incorporating micro-credentialing.

Geopolitics is another major factor.

Canada boosted oil and gas production in response to Russia’s invasion of Ukraine, while the world invests in alternatives to fossil fuels. But not all clean technology will prove effective or economically viable. Canadian businesses are mired in investment uncertainty, Deloitte adds.

To cut through the fog, Deloitte recommends the federal government set “clear and consistent long‑term targets, striving for consensus with provincial and territorial governments, and creating a strong investment environment.” The 2024 budget’s investment tax credits for clean energy technology help meet this, the report explains.

Leading on critical minerals

Finally, Canada can profit from high demand for critical minerals such as nickel, cobalt and lithium that are used in batteries, solar panels and wind turbines. With greater political tension surrounding China, where most critical minerals are refined, Canada can reap the rewards by being both a source and a producer of those minerals, Deloitte writes.

Achieving this could mean cutting red tape while being socially responsible, starting by building strong relations with Indigenous Canadians, investing in low-carbon mining technologies and speeding up permitting.

”How we think about areas like accelerating the permitting of some of those mines and resources will be critical,” Swart said.

“Also, the context of Indigenous communities where these resources are sitting on the traditional lands of many of these communities. How can we create deep partnerships with these communities to look at developing those resources will be really important.”

To take leadership on critical minerals, Deloitte proposes taking initiative on a net-zero value chain with tax incentives to encourage processing in Canada, establishing bilateral ties with allies as a supplier of ethically and environmentally sourced products, and treating critical minerals as a global commodity by creating emergency stockpiles and establishing market oversight.