Ethical Funds Co. has issued a report arguing that Canada’s oil and gas sector is proving slow to take action on their climate change responsibilities.

Canada’s oil and gas companies have failed to take action to mitigate their greenhouse gas emissions, with only two Canadian companies responding appropriately to the risks presented by climate change, according to Ethical Funds. Despite the existence of global leaders in Canada’s oil patch, only Shell Canada and Suncor are well positioned to function in a more carbon-neutral environment, it concludes.

The research paper analyzed 48 Canadian oil and gas companies and included two global leaders on climate change, BP plc and Royal Dutch Shell, to establish an international best practices benchmark. Companies were assessed on their management systems, action plans, performance, and transparency to determine the extent which they are preparing for the future. Only four of the 50 companies assessed, including two of the 48 Canadian companies, were found to be responding appropriately to the risks presented by climate change.

“We believe that all facets of society – government, corporations, and citizens – can and should play a role in tackling climate change, but the response of the oil and gas sector is crucial,” said Bob Walker, vice president sustainability, at Ethical Funds. “With effective action and the right market incentives, this sector can be viewed, not as the enemy, but as a key ally in tackling climate change.”

The report concludes by offering practical guidance to both companies and investors seeking to integrate climate change performance metrics into their investment decision-making, “Companies need to take immediate action steps to reduce their risk exposure, while investors need to support companies taking these steps and provide appropriate incentives to those which have yet to take action.”

“We hope the Canadian oil and gas sector will use this report to unite in a process to stabilize emissions, achieve carbon neutrality and, in the decade to come, make the transition to a carbon-free energy system,” said Walker. “Climate change is without a doubt the most significant environmental challenge facing our society today.”