The Dawn of a New World Order: How Canadian businesses are adapting their energy transition plans

Amidst geopolitical turbulence, policy uncertainty and the accelerating fragmentation of the global liberal order, Canadian businesses are operating in a fundamentally different landscape than they were at the start of the decade.

Characteristic of this new global context is a rising tide of climate skepticism and mounting pressure to dilute — or abandon altogether — net zero pledges. And, as the world’s largest economy rolls back its own commitments, other G7 nations find themselves in flux.

The Iran conflict and subsequent oil shock have compounded this instability, ushering in a fresh era of energy price volatility and supply uncertainty. Following years of similar disruption in the wake of Russia’s invasion of Ukraine, many are once again questioning the reliability of imported fossil fuels.

Which raises the central question: where does Canada stand on this complex world stage?

On a government level, Canada’s decarbonization initiatives are anchored in their 2030 Emissions Reduction Plan, a roadmap setting out ambitious plans to cut greenhouse gas (GHG) emissions by 40 per cent below 2005 levels by 2050. But with Prime Minister Mark Carney recently pledging to “update” the climate plan and loosen regulations on clean electricity, the fate of Canada’s net zero targets looks increasingly uncertain.

The business reality

Any successful carbon reduction strategy will be underpinned by buy-in from the private sector who contribute significant GHG missions and are critical in shaping consumer habits and demand.

BSI’s 2026 G7 “temperature check” surveys 7,000 G7 business leaders to understand how business leaders are deploying net zero policies. For Canada, the picture is encouraging: 93 per cent of businesses remain committed to net zero targets, compared to 83 per cent across the G7. And despite political uncertainty, 78 per cent of Canadian businesses have actually increased their level of climate action over the past year.

Yet while commitment remains firm, businesses are adapting both their language and their strategies in response to global events and growing climate skepticism. BSI’s research identifies an emerging phenomenon of “climate coding” — whereby net zero policies are increasingly reframed around resilience, risk management and business continuity, rather than environmental impact. This shift is most pronounced in Canada, where three quarters (75 per cent) of businesses say they have changed how they promote or communicate net zero action in the last 12 months, compared to 63 per cent globally.

Renewable energy is increasingly viewed as an economic and security opportunity, not just an environmental imperative — with 76 per cent of Canadian businesses believing that net zero policies could help grow the economy, create jobs and strengthen energy security. As the ongoing conflict in the Middle East continues to underscore the fragility of fossil fuel supply chains, the economic case for the energy transition is only set to intensify.

The U.S. Question

While global conflict has sharpened the argument for energy transition, significant headwinds remain. Chief among them is the increasingly hostile stance of the US federal government towards net zero  a dynamic with the potential to meaningfully derail Canada’s progress.

Beyond rolling back its own federal net zero policies, the current U.S. administration under President Donald Trump has adopted an antagonistic posture towards other nations’ environmental commitments, pressuring the EU to roll back on green regulations, while labelling the UK ban on North Sea oil drilling as “heartbreaking.”

Canadian businesses are predictably spooked by growing American interventionism. BSI research finds that Canadian businesses have heightened vigilance to external events — being significantly more likely than their global peers to view external political dynamics as a risk. And, when the risk comes from the world’s biggest economy and Canada’s only direct land neighbour, concern from business leaders will only be amplified. We can see this in the BSI research which finds that 60 per cent of Canadian business leaders see increased climate skepticism within the U.S. federal government as a direct threat to their business resilience, while 64 per cent view it as a threat to Canada’s overall economic growth.

While Canadian businesses appear to be holding course on their net zero commitments for now, this anxiety is a cause for concern — one that could foreshadow future rollback if left unaddressed.

The need for greater support

In this challenging economic and geopolitical environment, businesses need active support for their net zero commitments and clear incentives to press ahead with the energy transition.

Instead, political leaders too often generate ambiguity. Prime Minister Carney’s pledge to “update” the 2030 Emissions Reduction Plan is a case in point. Policy uncertainty is a well-documented barrier to green investment: three quarters (76 per cent) of G7 businesses say that ambiguity around net zero policy makes it difficult to invest with confidence.

And even where ambition is strong, execution remains a challenge. Globally, while over two thirds of G7 businesses report having a clear pathway to net zero, and 68 per cent feel confident they understand the actions required to reach net zero by 2050, only 55 per cent believe they will ultimately get there. The gap between intention and delivery is real — and closing it demands both policy clarity and practical support.

Canadian businesses are clear about what they need: 38 per cent highlight training programmes and workshops to build internal capability; 35 per cent want greater guidance on achieving accreditation; and 34 per cent call for practical tools to implement standards effectively. This aligns with broader demand across the G7, and reinforces the case for tangible, hands-on support to translate ambition into action.

Translating intent into action

The outlook for net zero among Canadian businesses is, on balance, encouraging. Despite a global climate of growing skepticism, Canadian business leaders have not abandoned their commitments, they have simply become more pragmatic about why those commitments matter. There is a clear and evolving understanding of the economic rationale underpinning the energy transition.

But in an environment shaped by political uncertainty and external pressures, good intentions alone are not enough. Businesses need — and are explicitly asking for — the support, clarity and tools required to turn their net zero ambitions into reality.

Feds in the legal hot seat over climate targets

The federal government is in the hot seat to create a credible plan to meet its climate targets. As Canada braces for another summer of dangerous heat, wildfires and storms, three young Canadians, alongside health and environmental organizations, are taking the federal government to court, arguing that Prime Minister Mark Carney’s government no longer has a credible plan to meet its legally binding 2030 climate target.

The case, launched by Ecojustice on behalf of Sophia Mathur, Marie Maltais, Shirley Barnea, Canadian Association of Physicians for the Environment (CAPE), and Environmental Defence, alleges that the federal government’s comprehensive rollbacks of key measures in the federal climate plan have created legal violations of the Canadian Net-Zero Emissions Accountability Act (CNZEAA).

The applicants are asking the court to order the federal government to revise its 2030 climate plan so that it meets its legal obligation to chart a credible, up to date course of action capable of achieving Canada’s 2030 emissions target, to protect Canadians from the worsening impacts of climate change. The government would be free to choose the measures it intends to take to achieve the target but the public would have a right to weigh in.

“My generation has grown up surrounded by climate disasters and broken political promises to address them,” says Quebec-based youth applicant Maltais. “We’re told to trust the government’s climate commitments — but commitments mean nothing without a real plan behind them.”

The group argues that over the past year, the feds have weakened or repealed key climate measures — including policies targeting oil and gas emissions, vehicle pollution, and carbon pricing — without presenting alternatives to deal with the resulting increase in climate pollution. The rollbacks culminated last month in agreements to massively expand fossil fuel production while weakening industrial carbon pricing and regulations to control electricity sector climate pollution, alongside the government’s broader push to gut a host of cornerstone federal environmental laws.

As a result, even if fully implemented as it stood in December 2025, the government’s climate plans would at best reduce Canada’s emissions by 21 – 28 per cent in 2030, missing Canada’s legally mandated 2030 target by 90 to 140 million tonnes of climate change fueling carbon emissions. Further weakening of policies since then indicates that gap has only widened.

“You cannot abandon the map and still expect to reach your destination,” says Ecojustice Climate Director Charlie Hatt. “Yet that’s exactly what the federal government has done with its 2030 climate plan. Right now, its only climate plan is a plan to fail — and that’s not just irresponsible, it’s unlawful under the Canadian Net-Zero Emissions Accountability Act. Neither the climate nor the law can tolerate rollbacks today in exchange for promises of action many years from now.”

The case comes as communities across the country grapple with the growing impacts of fossil fuel-driven climate change, including deadly heatwaves, floods, wildfires, rising food prices, public health impacts, and increasingly uninsurable homes. The economic impacts of climate change are no longer a future risk — climate change is already damaging Canadians’ homes, increasing the cost of living, risking food security, and raising insurance costs. Insured losses from severe weather reached a record $8.5 billion in 2024, with uninsured losses estimated at triple that amount.

The case comes as part of a growing wave of citizen-led climate cases around the world and in Canada, as people — especially youth — increasingly turn to the courts when governments fail to uphold their legal obligations to climate action.

The applicants say their case sends a clear message, with Quebec-based youth applicant Barnea adding: “The Carney government’s gutting of climate policy is a massive insult. After presenting himself as a climate leader, our prime minister is now abdicating responsibility — to Canadians, to future generations, to the law. As long as governments continue ignoring climate science and rolling back protections for our futures, young people will continue taking them to court.”

Under the CNZEAA, the federal government is legally required to set science-based climate targets, establish a credible plan to achieve them, and regularly report on its progress. The applicants argue that the federal government no longer has a plan to achieve the critical 2030 target, as confirmed by its own reporting. By law, the 2030 emissions reduction plan must describe the key emissions reduction measures that the Government of Canada “intends to take to achieve” the 2030 Target.