If companies want to be awarded large contracts with the Canadian government, they need to measure and disclose their greenhouse gas emissions and plans to reduce their emissions.

The Government of Canada launched the Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets to further its goal of reducing its contributions to climate change. The Standard took effect on April 1, 2023.

The objective of the Standard is to incentivize government suppliers issued procurement instruments valued over $25 million to disclose their greenhouse gas (GHG) emissions and set reduction targets.

This Standard is important because the federal government is one of the largest customers for goods and services in Canada. It has the ability to influence demand, drive innovation, create jobs, and encourage suppliers to adopt more sustainable practices.

What businesses need to know

• Mandatory disclosure: Suppliers involved in procurements over $25 million (including taxes) are required to measure and disclose their GHG emissions.
• Science-based targets: Suppliers for procurements over $25 million (including taxes) must adopt a science-based target to reduce their GHG emissions to net-zero by 2050.
• Methodology: The Standard does not prescribe a methodology with which suppliers must comply in order to disclose their GHG emissions.
• Participation in initiatives: Federal suppliers subject to the Standard may also be required or encouraged to participate in initiatives such as the Net-Zero Challenge.
• Exceptions: The requirements set out in the Standard do not apply to contractual arrangements, procurements using emergency contracting authorities, or procurements established through foreign military sales.

Impact and benefits for businesses

Besides being eligible for government procurement contracts and potential emissions reductions, there are many positive outcomes of measuring and disclosing GHG emissions and adopting science-based targets to reduce GHG emissions including:

• Reducing business costs through improved energy efficiency
• Increasing investor and public confidence
• Attracting new customers
• Improving competitiveness locally and globally
• Enhancing resilience to climate-related financial risks
• Supporting employee recruitment, engagement, and retention
• Stimulating innovation

Moving forward

Businesses that want to participate in federal public procurement for goods or services should consider how they measure and disclose their GHG emissions and set science-based targets to reduce their emissions.

Even businesses that do not anticipate contracting directly with a federal authority may find themselves subcontracting to such a project, and so may find themselves subject to similar obligations.

Additionally, we may see other large players, such as cities (like Edmonton) or universities (like UBC), adopt similar standards in their own private procurement processes.

Business leaders need to be ready to comply with these requirements in federal government procurements. If you have questions about the disclosure of climate-related financial information, please reach out.