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Understanding Canada’s Carbon Reporting Requirements

Navigating Canada’s carbon reporting requirements? Discover federal and provincial frameworks to align compliance with sustainability goals.

Ava Montini

Jan 7, 2025

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Canadian companies required to report their carbon emissions face an increasing need to balance compliance with sustainability leadership. For larger businesses and public companies, carbon reporting is no longer about following regulations. It’s about meeting stakeholder expectations, addressing environmental challenges, and securing a competitive advantage in a rapidly evolving market.

Navigating Canada’s carbon reporting requirements might seem overwhelming, especially with the layers of federal, provincial, and international frameworks. But these challenges also bring opportunities—to improve operational efficiency, identify cost-saving measures, and build trust with investors and customers.


This guide aims to break down the complexities and provide actionable insights to help businesses comply while aligning with broader sustainability goals.


Why Carbon Reporting Matters

Carbon reporting has become a cornerstone of corporate accountability and a critical tool for mitigating climate change. In today’s market, stakeholders demand transparency regarding environmental impacts, which directly influences investor confidence, customer loyalty, and employee engagement. Public companies in Canada often find their carbon disclosure tied to financial performance metrics, and failure to comply can impact access to capital or even lead to penalties.


Beyond immediate compliance, carbon reporting reflects a company’s commitment to sustainability. By aligning business practices with Canada’s net-zero ambitions for 2050, companies can reduce their environmental footprint while positioning themselves as industry leaders.


The risk of inaction can be significant: businesses that fail to prioritize emissions reporting and reduction may face regulatory fines, reputational harm, and missed opportunities for innovation.


Overview of Canada’s Carbon Reporting Framework


Federal Regulations

Canada’s federal government has implemented comprehensive reporting programs to standardize emissions tracking and accountability. One of the cornerstone programs is the Greenhouse Gas Reporting Program (GHGRP). Managed by Environment and Climate Change Canada (ECCC), this program mandates facilities emitting 10,000 tonnes or more of greenhouse gases (GHGs) annually to submit detailed emissions data. For those emitting over 50,000 tonnes, third-party verification becomes a mandatory requirement, adding another layer of rigour to the reporting process.


The Canadian Net-Zero Emissions Accountability Act sets the national stage by establishing legally binding targets to achieve net-zero emissions by 2050. While primarily focused on government accountability, the Act’s associated policies filter down to businesses through funding programs, technology incentives, and strategic initiatives that encourage industries to adopt cleaner practices.

Another critical component is carbon pricing and offsets. The federal Output-Based Pricing System (OBPS) applies to large industrial emitters, requiring them to track emissions and offset excesses through credits or direct reductions. Companies need to report accurately and integrate these calculations into their financial strategies, as carbon pricing directly impacts operational costs.


Provincial and Territorial Regulations

Provincial and territorial governments add another layer of complexity. Regulations vary by region, reflecting local priorities and emissions profiles:


  • Ontario has introduced the Emissions Performance Standards (EPS), which require facilities emitting 10,000 tonnes or more of GHGs annually to report and adhere to sector-specific benchmarks. This system provides flexibility but also demands meticulous emissions tracking.

  • British Columbia focuses on public accountability through its Climate Change Accountability Act. While primarily targeting public-sector organizations, it offers guidelines for businesses interested in voluntary reporting, creating an environment of proactive sustainability.

  • Quebec operates a cap-and-trade system, one of North America’s most robust. Businesses emitting over 25,000 tonnes of GHGs annually are required to participate, submitting emissions data to ensure compliance with allocated caps and trading allowances as needed.


For businesses operating across provinces, this mosaic of regulations underscores the importance of tailored, region-specific reporting strategies.


International Reporting Standards

Canadian companies with global operations or international investors may also need to align with widely recognized frameworks like the Task Force on Climate-related Financial Disclosures (TCFD) and the Global Reporting Initiative (GRI). These frameworks emphasize the integration of climate-related risks into financial disclosures, offering guidance on best practices for reporting Scope 1, Scope 2, and Scope 3 emissions. Adhering to these standards can enhance credibility with international stakeholders and ensure readiness for emerging global regulations.


Key Steps for Compliance


1. Understand Your Obligations

Compliance begins with a thorough assessment of applicable reporting requirements. Start by identifying which federal, provincial, and international frameworks apply to your operations. This will depend on factors such as your industry, geographic footprint, and annual emissions levels. Companies operating in multiple provinces must account for variations in regional regulations and ensure that their reporting systems can handle these complexities.


2. Implement Robust Data Collection Systems

Accurate data collection is the foundation of effective carbon reporting. Businesses should invest in systems capable of tracking emissions across all scopes:


  • Scope 1 emissions cover direct emissions from owned or controlled sources, such as fuel combustion in company vehicles or manufacturing processes.

  • Scope 2 emissions refer to indirect emissions from purchased electricity, steam, heating, or cooling.

  • Scope 3 emissions include all other indirect emissions across the value chain, such as supplier activities, employee commuting, and waste disposal.


Learn more about Scope 1, 2, 3 Emissions here


Advanced software solutions can automate data collection, reducing human error and improving reporting accuracy. For larger organizations, integrating emissions tracking into existing enterprise resource planning (ERP) systems can streamline operations and ensure consistency across departments.


3. Seek Third-Party Verification

Third-party verification is not just a regulatory requirement for some businesses; it’s also a critical trust-building tool. Independent audits lend credibility to your emissions data, reassuring investors and regulators that your disclosures are accurate and reliable. Verification partners, such as Bureau Veritas, SGS, and DNV, specialize in conducting thorough audits and providing certification for environmental compliance. These organizations often go beyond basic verification, offering insights into data gaps and areas for improvement, helping companies refine their reporting processes and maintain long-term accuracy.


4. Develop an Emissions Reduction Strategy

Carbon reporting is most impactful when paired with an actionable emissions reduction strategy. Use your emissions data to identify key areas for improvement, such as energy efficiency upgrades, renewable energy adoption, or supply chain optimization. For companies subject to carbon pricing, reductions can also translate into direct cost savings by lowering compliance obligations.


5. Stay Informed on Policy Changes

Canada’s regulatory landscape is constantly evolving to meet climate goals. Regularly review updates from Environment and Climate Change Canada, as well as provincial and territorial authorities. Engaging with industry associations can also provide early insights into upcoming policy shifts, ensuring that your organization remains ahead of the curve.


Benefits Beyond Compliance

Committing to robust carbon reporting and reduction offers far-reaching benefits. Transparent emissions disclosures can attract sustainability-focused investors who are increasingly scrutinizing ESG (Environmental, Social, Governance) metrics. Operationally, emissions tracking often highlights inefficiencies, leading to cost savings and streamlined processes. Furthermore, by taking a proactive stance on sustainability, companies enhance their brand reputation, fostering loyalty among environmentally conscious consumers and employees alike.


Resources for Canadian Businesses

Navigating carbon reporting can be challenging, but there are numerous resources available to support businesses:


  • Environment and Climate Change Canada’s GHGRP Portal: A comprehensive guide to federal reporting requirements. Visit Here

  • Canada’s Climate Action Incentive Fund: Financial support for businesses investing in emissions reductions. Visit Here

  • Task Force on Climate-related Financial Disclosures (TCFD): A globally recognized framework for climate-related disclosures. Visit Here



Canada’s carbon reporting requirements represent a vital step toward addressing climate change and fostering a more sustainable future. For businesses, compliance is an opportunity to demonstrate leadership, drive operational improvements, and build stakeholder trust. By adopting detailed and transparent carbon reporting practices, companies can position themselves as change-makers in the transition to a net-zero economy.

Writer's pictureJennifer Crowley
Aug 1, 2023

What are ESG Goals and Why Are They Important?

Female hand outstretched amidst a blurred grennery backdrop and holding a graphic image depicting images of ESG including people, government, ecology, industrial building, windmills and the globe
Environmental, Social, and Governance, ESG has emerged as a robust framework that evaluates a company’s impact on the environment and society, as well as its governance practices.

In recent years, the business landscape has witnessed a significant shift towards sustainability and responsible practices. One of the key concepts at the forefront of this movement is ESG. Standing for Environmental, Social, and Governance, ESG has emerged as a robust framework that evaluates a company’s impact on the environment and society, as well as its governance practices. This blog post aims to provide an in-depth understanding of ESG goals, highlighting its importance in fostering sustainable and responsible business practices.


Understanding ESG

ESG refers to a set of criteria used to assess a company’s performance in three critical areas: environmental, social, and governance. Each component carries its significance and contributes to evaluating a company’s overall sustainability and responsible practices.


1. Environmental Factors

Environmental factors assess a company’s impact on the environment. This includes its carbon footprint, resource consumption, waste management, pollution levels, and commitment to renewable energy sources. ESG encourages companies to adopt eco-friendly practices, reduce emissions, conserve resources, and work towards mitigating climate change.


2. Social Factors

Social factors focus on a company’s relationships with its employees, customers, suppliers, and communities. It encompasses labour standards, employee welfare, diversity and inclusion, product safety, customer satisfaction, community engagement, and philanthropic activities. ESG emphasizes the importance of fair treatment, ethical behaviour, and positive social impact.


3. Governance Factors

Governance factors evaluate a company’s internal structure, leadership, and decision-making processes. It includes aspects such as board composition, executive compensation, transparency, accountability, and risk management. ESG promotes strong corporate governance, ethical leadership, and responsible decision-making to ensure long-term value creation and protection for all stakeholders.


The Importance of ESG

ESG has gained immense importance in today’s business landscape due to several reasons:


  1. Risk Management

Adopting ESG practices helps companies identify and manage potential risks. By addressing environmental and social issues proactively, businesses can mitigate legal, reputational, and operational risks. Effective governance practices also reduce the likelihood of fraud and unethical behaviour, protecting the company’s reputation and financial stability.


2. Long-term Value Creation

ESG practices contribute to long-term value creation. By integrating sustainability into their business strategies, companies can identify opportunities for innovation, cost savings, and enhanced operational efficiency. Consumers, investors, and employees increasingly prefer companies that demonstrate a commitment to sustainable and responsible practices, leading to increased market competitiveness and profitability.


3. Stakeholder Engagement

ESG encourages companies to engage with their stakeholders, including employees, customers, investors, and communities. By actively involving stakeholders in decision-making processes and considering their perspectives, companies can build trust, loyalty, and stronger relationships. This fosters a positive corporate culture, attracts top talent, and enhances brand reputation.


4. Positive Environmental and Social Impact

Adopting ESG practices allows companies to make a positive impact on the environment and society. By reducing emissions, conserving resources, promoting social equality, and supporting local communities, businesses can contribute to a more sustainable and equitable world. This not only benefits the planet and society but also strengthens the company’s social license to operate.


ESG Score and Rating and What It Means For Businesses

Circular chart depicting the breakdown of ESG Scoring factors broken out by environmental, social and governance factors
To promote consistency and transparency in ESG reporting, several frameworks and standards have emerged.

ESG scores are determined by third-party firms that have their own methodologies to identify a company’s ESG rating. Currently, this isn’t a streamlined process across the board, and different companies have their own way of determining a company’s ESG rating. The rating help give an overall picture of the company’s performance in these three areas.


Typically, ESG scores are rated from 0 to 100, with anything above 70 classified as a “good” ESG rating, while anything below 50 is considered a “bad” rating. Some systems, however, rely on a letter-based scoring system where a grade of C is the worst, and A is the best.


ESG Goals; Frameworks and Standards

To promote consistency and transparency in ESG reporting, several frameworks and standards have emerged. These include the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD). Adopting these frameworks helps companies measure and communicate their ESG performance, enabling investors and stakeholders to make informed decisions.

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