Pathways over Promises: Designing Strategies That Survive Policy Whiplash 

By Zach de Jong, Director, ESG Global Advisors

Canada’s federal government is at a crossroads. After years of ambitious climate policy under the Trudeau administration — from carbon pricing to mandatory disclosures — the current leadership is recalibrating its stance. Flagship initiatives like the EV mandate are under review, political signals around energy transition are increasingly mixed, and Canada’s current policy and economic pathway is off track with its 2030 emissions targets.

This climate policy unease is being felt globally, but it’s particularly acute in Canada. As a resource-rich, energy-intensive economy, our emissions reduction journey is inherently complex. Even during times of climate tailwinds, meaningful action requires navigating deep economic dependencies and regional disparities. Add to that our deep economic interconnection with the United States, where sustainability policy is becoming increasingly fragmented and contested, and the path forward becomes even more uncertain.

Amidst all of this, many corporate executives and sustainability teams are feeling untethered. The political uncertainty creates headwinds to investment and action, and 2025 has so far seen many companies waffling on climate activities and walking back targets. To stop blowing in the political wind, corporate ESG strategies of the past must be reimagined for a new era.

For years, most corporate sustainability strategies involved high-level ambition statements and neat downward-sloping lines: one target, one pathway, one end state. It’s not as though these strategies relied entirely on do-good morality, but they presupposed continued political and economic forces that would enable progress and reward ambition. That era, for now, is over.

Instead, long-term strategic resilience demands glidepaths — flexible roadmaps for the future that consider different policy outcomes and allow companies to adjust pace without losing credibility.

Why North American divergence matters now 

While Canadian corporates and investors are feeling the shifting political winds south of the border, the Canadian Government is finding its own footing on key sustainability issues. In the context of economic uncertainty, geopolitical tensions, and major national projects, a tale of two countries is emerging:

• Climate and energy policy:
  • Canada: A federal repeal of the consumer carbon tax but a strengthening of industrial carbon pricing; flagship policies like the EV mandate under review but still aligned with net-zero by 2050 goal; a Prime Minister keen on energy-focused “projects of national interest” are creating clear signals for renewable power and electrification, though with continued fossil fuel investment, to enable the energy transition.
  • U.S.: Recent regulatory rollbacks on emissions standards; blocked wind and solar projects and rescinded clean energy mandates; reinvestment into fossil fuels and uncertainty for transition-aligned investments.
• Capital markets and sustainable finance:
  • Canada: Large asset owners and banks are tightening expectations around transition planning; CSSB, though still voluntary, providing IFRS-aligned standards; exodus from major climate coalitions but (outside of a minority of institutions) continued climate disclosure and ambition.
  • U.S.: Sustainable finance facing direct political headwinds; ESG funds seeing continued outflows; SEC abandoning support of its climate disclosure ruling; major financial institutions pressured into reduced disclosure.
• Corporate action on social issues:
  • Canada: Bill S-211 is now in effect, requiring companies to report on forced and child labour risks in their supply chains. While DEI language is softening, many firms continue to embed equity and inclusion under broader umbrellas like “belonging.”
  • U.S.: Executive orders have dismantled federal DEI programs, and many companies are rebranding or retreating from public-facing social commitments amid legal and political pressure

This divergence creates a reality where companies –particularly those cross-listed in both markets, or with inextricably linked supply chains– need to navigate dual and opposing regulatory and stakeholder expectations. A reality where they must show credible ambition, but also preserve operational and financial flexibility in the uncertain economic landscape. This means that an investment and operational “glidepath” to reduce your risk and secure your results over time is critical, but must be ready to flex under broader global and national scenarios.

Set your strategic glidepath, but understand how plans may change

Instead of betting on one future, companies can build credibility with glidepaths that contain core programs plus flexible bands, each tied to clear triggers.

1. No-regret, high value strategy
Anchor the glidepath in programs that are cost-effective, value creating, and resilient across both U.S. and Canadian scenarios. For example:

• Implement efficiency upgrades and methane abatement
• Electrify operations (in sectors with proven cost savings)
• Procure or produce renewable energy for resilience and price hedging

2. Consider action bands for possible policy shifts
Overlay adaptive plans to possible scenarios beyond core glidepath. For example:

• Conservative band: Minimal federal action in the U.S., slower rollout of renewables, limited disclosure enforcement.
• Ambitious band: Stronger carbon pricing, mandated transition disclosures, expanding clean energy incentives.

Triggers could include: changes to carbon pricing policies, election outcomes, sustainability disclosure mandates, or new provincial/state renewable targets, ESG litigation.

3. Preserve flexibility
Negotiate supply and offtake contracts that preserve optionality. For example:

• Renewable power deals with flexible delivery points
• Commodity contracts with embedded carbon-intensity or social responsibility clauses
• Financing structures that adjust to policy-driven shifts in cost of capital
• Widen vendor pool to absorb supply chain impacts

4. Trigger playbook
Pre-define what happens when a band is crossed. For example:

• Accelerate renewable procurement when Canadian incentives hit cost parity
• Defer U.S. project expansions if federal tax credits are rolled back
• Rebalance capital deployment when disclosure requirements alter investor expectations

5. Communicate the narrative
Investors, regulators, and stakeholders don’t expect certainty — they expect clarity. Outlining a climate glidepath informed by scenario analysis and capital implications demonstrates both ambition and resilience. This method is clearly recommended in emerging guidance (i.e., IFRS S2), where linking your transition plans to governance and financial planning can future proof your strategy further.

Sectoral Applications

This approach presents opportunities for long-term strategy success across industries, but with particular opportunity for those with exposure across borders:

• Utilities: Stage renewable investments in line with provincial/federal incentives, while structuring PPAs flexibly in U.S. jurisdictions, build diverse supply chains to navigate tariffs and materials needs.
• Mining: Consider dual power procurement strategies — grid renewables in Canada, modular renewables and lower carbon fuels in U.S. operations.
• Financial institutions: Stress-test lending portfolios against divergent U.S./Canada climate policies, integrating IFRS S2 and emerging jurisdictional disclosure rules. Build robust internal commitments, policies and procedures to guide capital allocation and client engagement to maximize returns, mitigate risks, and achieve climate targets credibly.

The Takeaway

In today’s fragmented policy and regulatory landscape, the ESG strategies that survive won’t be straight lines. They’ll be flexible and resilient strategies informed by scenario analysis — credible in Canada, adaptable in the U.S., and transparent to global investors. For corporates, this approach is no longer just risk management — it is a signal of disciplined, forward-looking governance.

Contact us to learn more about ESG Global Advisors, our team, and how we can help you with your approach to strategy, governance & reporting in the current market. ESG Global offers a comprehensive range of ESG services for companies and investors including customizable board education sessions. Visit Our Services to learn more.

Disclaimer: AI contributed to the creation of this article, but it was guided, reviewed and fact-checked by ESG Global’s human experts. Please note that the content and material provided in this article is for general information purposes only. It is not to be taken or relied upon as legal advice and should not be used for professional or commercial purposes. This article is intended to communicate general information about relevant sustainability matters and reporting requirements as of the indicated date. The content is subject to change based on evolving regulatory reporting requirements.