Independent think tank Quebec Net Positive (QNP) has released its 2023 Business Transition Barometer, a comprehensive survey of how the province's business sector is responding to the need to reduce greenhouse gas (GHG) emissions.

Using its new Transition Index to measure Quebec's success in advancing toward a low-carbon economy, QNP has determined the province is making sluggish but demonstrable progress.

According to the report, Quebec businesses scored an average of 32.4 on the Transition Index, which means they are implementing less than one-third of "desirable climate actions" across four key metrics: operations, value chain, organizational culture, and steps taken to adapt to climate change.

A score of 100 would indicate a firm is "perfectly aligned with a low-carbon pathway" by taking all possible steps to improving performance in these four areas.

The Transition Index is based on data collected by Quebec research and polling firm Léger, during a survey of 596 Quebec business leaders between Aug. 18 and Sept. 13, 2023.

What the survey results mean

The results show only seven per cent of Quebec businesses scored an Index rating of 71 and above while 11 per cent score between 50 and 70. In effect, this suggests only 18 per cent of the province's firms are more than halfway committed towards a green energy future.

Over a third (35 per cent) scored below 20.

Nevertheless, QNP believes the 2023 Barometer offers important grounds for optimism, described as "winning conditions," in the trend toward greater adoption of carbon reduction measures.

"Thanks to the Barometer and the new Transition Index, it is now possible to track the progress of climate actions by businesses across Quebec, from the smallest to the largest, including SMEs (small and medium-sized enterprises). The results reveal concrete avenues to help companies successfully engage in the major economic transformation currently underway," Anne-Josée Laquerre, executive director and co-founder of QNP, said in a statement that accompanied the release of the report.

Transition dependent on a company's culture and management

A key finding is that a company's organizational culture and management team are the most important indicators of the level of implementation of decarbonization strategies.

The Transition Index scores are significantly higher than average for companies that rely on internal or external environmental expertise, averaging 58.2 as opposed to those which do not, at 25.

Scores are also higher for businesses with "committed management teams" (41.3) or those which are aware of climate risks (39.0). This is especially true in the case of firms where management acknowledges an awareness of the benefits and opportunities associated with the transition to a low-carbon economy (42.8).

Corporate board-level commitment is another critical factor.

The report found that firms with a "committed board of directors" scored a higher Transition Index (49.6). The Index is also influenced by board members being aware of climate risks (47.1), and even more so when board members are aware of the benefits and business opportunities of the transition (49.1).

In addition, it was revealed that consumers and clients are the single greatest source of pressure (33 per cent) pushing companies to reduce GHG emissions, a significant increase compared to 18 per cent in 2022.

More firms aware climate impact

In the case of risk perception, twice as many Quebec firms (23 per cent of respondents) today as compared to last year (12 per cent) report their management is aware of the impacts and risks of climate change and the accelerating transition to a low-carbon economy. 

Overall, 82 per cent of the province's businesses reported they believe it is "urgent" to reduce carbon emissions, while 68 per cent believed they were well-equipped to respond to this need. Fifty-seven per cent are implementing at least one climate action within their operations.

Finally, the survey determined Quebec companies have been increasing efforts to optimize energy management (30 per cent today as compared to 22 per cent last year) as well as transportation (29 per cent vs. 22 per cent). These sectors represent the two principal sources of carbon emissions in the Quebec economy.

Companies need to implement a clear sustainability plan

Laquerre sees her organization as a "laboratory of ideas" whose raison d'etre is to accelerate the transition to a low-carbon economy. 

"Governments have a role to play at the federal, provincial and municipal levels and at the present time corporations do not have a fixed and precise obligation to follow a comprehensive (decarbonization) plan," Laquerre said in an interview with Sustainable Biz Canada.

"This is harming the transition, so we hope the data we provide will bring greater awareness and perspective to Quebec businesses and raise red flags when we feel that businesses need to improve their performance.

"At QNP, we believe that it is the duty of every company to not only reduce its own carbon footprint, but also contribute to reducing GHGs as much as possible on the planet if it has the capacity to do so. Climate change has no borders and companies should not limit themselves to what we can do locally."

Quebec companies need to push each other to lower carbon emissions

Another important change QNP wants to bring about is to introduce reporting requirements regarding carbon intensity in products and materials to advance the cause of a circular, sustainable economy.

"When it comes to reporting regarding green and sustainable products, there are no rules. In Quebec, the sale of alcohol is highly regulated, for example," Laquerre said. "This is an area where Quebec businesses need to step up and play their part. Today, not only are customers placing pressure on companies to decarbonize, but so are major contractors. 

"Today, the major contractors are telling their partners in their value chain, 'listen, if you want to be my supplier, tell me what you are doing to reduce your carbon emissions? What's your plan? How are you going to help me lower my GHGs?' "

"One of the most encouraging findings in this year's Barometer was that twice as many companies are now working with their suppliers to help reduce carbon emissions. Last year, it was eight per cent, this year it's 16 per cent - that's a strong upward trend."

Raising sustainable awareness among Quebec businesses

Laquerre believes QNP has a vital role to play in raising sustainability awareness among Quebec companies, especially in the small- and medium-sized business sector which employs 2.35 million people, or 68 per cent of its total workforce.

"The level of (sustainability) awareness in Quebec is still low among businesses and is still low between different sectors of the economy. This means that we have an opportunity in Quebec to take a positive approach and improve the level of communication with the hundreds of thousands of businesses across Quebec to ensure that we can generate systemic change," Laquerre said.

"We need to develop a constructive dialogue within the business community as a whole."