Why It Matters
Climate change is the challenge of our generation, presenting both risks and opportunities for CP and the global supply chain. Impacts on our operations from physical risks, including heavy precipitation, flooding, temperature extremes, and powerful storm events, can disrupt CP's network and are expected to intensify due to climate change. Additionally, market fluctuations, emerging regulations and technological changes, driven by stakeholder expectations for lower carbon goods and services, are anticipated to create both risks and opportunities across value chains. Mitigating climate risks while capitalizing on emerging low-carbon opportunities will require strategic and decisive action as businesses rise to this challenge.
For more than 140 years, CP has embodied strategic, long-term thinking and continued successful operations through substantive economic, cultural and political changes. As we look ahead, we remain committed to long-term sustainable growth, planning for the future and confronting the challenges created by climate change. Climate leadership within the rail industry will require a diverse range of actions and expertise, from alternative fuels and emerging technologies to customer engagement, business integration and improved resilience of our physical assets. Transportation of freight by rail will play an integral role in the low-carbon future for North America, and we are proud to take a leadership role in this transformation.

44
%improved locomotive fuel
efficiency since 1990
RELATED RESOURCES
Our Approach
CP'S FRAMEWORK FOR CLIMATE ACTION
CP’s Climate Strategy outlines the Company’s approach to managing potential climate-related impacts, reducing our carbon footprint and establishing CP as an industry leader in the transition to a low-carbon future.
Our Climate Strategy provides consistent direction across the business and is essential to align financial planning processes, support strategic investments, enhance network resiliency and unlock cost savings to help CP achieve our climate action goals. We recognize that a clear, proactive Climate Strategy is critical to attracting and retaining customers pursuing their own climate action goals, building trust and collaboration across the value chain and empowering our employees to identify innovative ideas and solutions. Ultimately, we believe that this strategy will strengthen CP’s brand as a sustainable transportation solution, delivering long-term sustainable growth for shareholders.
Our Climate Strategy applies to all of our business operations in Canada and the U.S. and supports ongoing collaboration and engagement with stakeholders within and beyond our value chain. To ensure relevance and comparability within and outside of our sector, our Climate Strategy aligns with internationally recognized frameworks, including the Task Force on Climate-related Financial Disclosures (TCFD); the Paris Agreement on climate change mitigation, adaptation and finance (within the United Nations Framework Convention on Climate Change); and the Pan-Canadian Framework on Clean Growth and Climate Change.
To respond to the risks and opportunities posed by climate change and meet our decarbonization commitments, our Climate Strategy includes actions across five strategic pillars.
Our Five Strategic Pillars
GOVERNANCE
The implementation of our Climate Strategy will align with our existing sustainability governance structure. CP’s President and Chief Executive Officer (CEO) is ultimately accountable for our climate change performance. The Risk and Sustainability Committee of our Board of Directors provides oversight and reviews climate-related risks and opportunities. Due to the importance of fuel efficiency on CP’s overall carbon footprint and bottom-line performance, key indicators related to fuel efficiency are indirectly linked to the annual bonus compensation for operating executives in our compensation program, including our President and CEO.
To lead our focus on decarbonization, we have established a Carbon Reduction Task Force, composed of CP’s industry-leading engineers and operations experts. The Carbon Reduction Task Force will evaluate and implement climate action measures to reduce our greenhouse gas (GHG) emissions and drive performance in the direction of our science-based targets. CP is working to foster an enterprise-wide innovation mindset that encourages creative thinking and collaborative problem solving to reduce our carbon footprint by lowering—and potentially eliminating—GHG emissions across our business.
UNDERSTANDING CLIMATE-RELATED RISKS AND OPPORTUNITIES
A clear understanding of the risks and opportunities related to climate change and our business is fundamental to effectively manage potential impacts. CP’s awareness of these issues and plans to mitigate climate risks are subject to an increased focus by the financial community and other stakeholders. To inform the development of the Climate Strategy, we completed our first climate scenario analysis in 2020. This analysis evaluated possible impacts to CP under different future climate scenarios, allowing us to stress-test the business and assess our resilience under a range of possible climate conditions. The following scenarios were used in the analysis:
- Business as Usual scenario, where no (or limited) significant actions are taken to respond to climate change, current policies remain in place, and physical impacts from extreme weather are significant. Market distortions are possible, and business conditions could be more variable and less predictable. Overall global warming is expected to be in the range of 5 to 6°C.
- Incremental scenario, where most nations implement pledges made under the Paris Agreement and actively progress towards their stated goals. However, changes are slow, signals are mixed and common action to raise ambition beyond the Paris Agreement is unrealized. This future scenario assumes 3 to 3.5°C of global warming.
- Transformative scenario, where most countries, especially the largest economies, embrace a rapid pace of climate action and a low-carbon transition. This action puts the world on a path for warming to be well below 2°C by 2050 by quickly changing regulations, markets and technologies. This scenario assumes 1.7°C of global warming.
The outcomes of the scenario analysis have advanced our understanding of how policy, market, technology and physical impacts may manifest in future risks and opportunities to CP.
CP’s Key Climate Risks and Opportunities
By completing scenario analysis and engaging with a wide range of CP’s internal stakeholders, we identified several priority climate impacts for further exploration and detailed financial modelling.
RESPONDING TO PHYSICAL RISKS FROM CLIMATE CHANGE
To support the resilience of our business, we are aligning our technical expertise and network management systems with leading climate science. Continually improving our physical risk identification and assessment mechanisms will inform CP’s climate-related strategies and guide investments in our network and assets. Read more about our efforts to enhance CP’s resiliency against physical climate risks in Asset & Rail Network Resiliency.
REDUCING OUR CARBON FOOTPRINT
We are committed to reducing the carbon footprint of our operations, including all Scope 1, 2 and 3 GHG emissions. Our Climate Strategy includes ambitious science-based targets that we have set to guide emissions reductions across our business.
The majority of CP’s carbon footprint is associated with the operation of our fleet of diesel-powered locomotives. We have long focused on locomotive fuel efficiency measures to lower operating costs and reduce the environmental impact of our operations; however, we recognize that achieving further emissions reductions will require innovative technology and operational changes. CP is a critical component of the North American supply chain, and our efforts to reduce our GHG footprint benefit our business and support the climate action objectives of our customers.
CP's GHG Emissions Footprint (Targets Baseline)
[1] Tank-to-wheel refers to a subrange in the energy chain of a vehicle that extends from the point at which energy is absorbed to discharge
[2] Well-to-tank refers to the subrange of fuel supply from production to supply
- Scope 1 emissions are from CP’s direct combustion of fuel, including fuel that powers our locomotives and company vehicles and facilities.
- Scope 2 emissions are associated with the electricity we purchase across our extensive Canada and U.S. network.
- Scope 3 emissions are associated with other parts of our value chain, such as purchased goods and services, other fuel- and energy-related activities, business travel and employee commuting.
TIME FRAME
The challenges presented by climate change require immediate and sustained action during the coming decades. To align our approach with leading scientific and policy guidance, our Climate Strategy establishes science-based emissions reduction targets to guide our activities until 2030. CP also acknowledges the importance of the 2050 time horizon in response to climate change and will continue our leadership in the pursuit of technology and other means that have the potential to deliver more significant decarbonization beyond our 2030 target.
Climate Action
With a focus on operational efficiency and performance improvement, CP works diligently to optimize energy consumption and reduce costs. CP has made significant strides to increase fuel efficiency and reduce GHG emissions by investing in and improving locomotives, rolling stock, components and tracks; optimizing train configuration; using software for route and speed optimization and automation and improving fuel conservation through operational practices. As we continue our focus on fuel-efficiency efforts in the near term, we are actively supporting the advancement of alternative fuels and emerging technologies for the rail sector. As new carbon reduction solutions become available, we will work closely with our rail sector peers, manufacturers and industry associations to validate performance prior to deploying across our operations.
Freight by Rail — A Low Carbon Solution1
[1] Freight Rail & Preserving the Environment, published by the Association of American Railroads in April 2021, How railways can be part of Canada’s climate change solution, published by the Railway Association of Canada in July 2016.
CP Locomotive Fuel Efficiency2
[2] Gross ton-mile (GTM) is the movement of one ton of train weight per mile. GTMs are calculated by multiplying total train weight by the distance the train moved. Total train weight comprises the weight of the freight cars, their contents and any inactive locomotives.
TRIP OPTIMIZER
First implemented in 2009, Trip Optimizer (TO) technology has contributed to improving locomotive fuel efficiency at CP. This technology enables CP’s train crews to create and execute trip-specific plans that conserve fuel and optimize train energy consumption over a given section of track. In many ways, TO is a sophisticated locomotive cruise control optimized for fuel economy, taking into account factors such as train length, weight and track grade to determine the optimal speed profile for a given segment of track.
Our train crews use TO technology to execute fuel-efficient, trip-specific plans and conserve locomotive fuel.
CP enhanced TO systems in 2019 to include pacing technology to drive deeper fuel efficiency and system fluidity improvements. Pacing technology accounts for a specific train’s location in relation to other trains operating within the same area of the network. The system detects opportunities to reduce train speed in certain areas along the right-of-way to minimize wait times at stations, thus facilitating continued progression at the optimum speed to deliver on time, in the most energy- and fuel-efficient manner possible.
CP has invested approximately $12 million in equipping 432 high-horsepower locomotives with TO technology over the past six years. We expect to add this technology to an additional 30 locomotives in 2021 and to continue implementation across 50 percent of our high-horsepower locomotive fleet by the end of 2022.
LOCOMOTIVE MODERNIZATION
Starting in 2012 and continuing through 2022, CP is upgrading 450 locomotives with new technology, including new operating cabins, overhauled in-kind or upgraded diesel engines and improved traction systems. A portion of the high-horsepower locomotives are equipped with TO and distributed power systems, both of which are EPA-certified fuel and emissions reduction technologies. Upgrades are expected to improve fuel economy by a minimum of 2.7 percent.
Since 2012, CP has invested $637 million to modernize the locomotive fleet. By the end of 2020, 386 locomotives have been updated through the Locomotive Modernization program. This represents more than 46 percent of CP’s active line-haul fleet, having a direct and positive impact on CP’s fuel efficiency and corresponding GHG and air pollutant emissions. Our performance outlined in the graphics below illustrates our steadfast efforts to achieve maximum diesel fuel efficiency.
CP Locomotive GHG Intensity2
ALTERNATIVE FUELS
Driven by a quest to lower emissions and improve fuel efficiency, our cross-functional Fuel Conservation team continues to explore technologies and solutions to improve the efficiency and carbon intensity of locomotive fuels and alternative energy sources. CP has conducted technology trials on a range of fuel sources, including diesel fuels with varying sulphur profiles and other emissions-reducing qualities, plant-based diesel (biodiesel), liquefied natural gas systems, compressed natural gas, and battery-hybrid technologies. CP is currently undertaking a hydrogen-powered locomotive pilot project to evaluate the use of zero-emissions technology in line-haul freight locomotives.
Our procurement group engages with fuel suppliers, equipment manufacturers, industry associations and regulatory agencies to explore advancements in the use of alternative and next-generation fuels in the rail sector. As required by regulation, CP currently uses 2 percent renewable fuel in our Canadian operations on an annual basis. In 2020, we consumed approximately 15 million litres of biodiesel in our locomotive operations.
CP continues to work collaboratively with industry experts, railway associations, government agencies and equipment manufacturers in the evaluation of renewable fuel products and opportunities.
CP expands Hydrogen Locomotive Program with ERA grant
CP is expanding the scope of its pioneering Hydrogen Locomotive Program with a $15 million grant from Emissions Reduction Alberta (ERA). The grant enables CP to increase the number of hydrogen locomotive conversions in the project from one to three and add hydrogen production and fueling facilities. The program will create a global centre of excellence in hydrogen and freight rail systems in Alberta.
FACILITIES UPGRADES
We are committed to optimizing our energy footprint, reducing our Scope 2 emissions and lowering operating expenses across the business, including our operating facilities, buildings and support networks. CP’s Real Estate and Facilities team has implemented several energy-saving initiatives, including switching from older steam-heating systems to high-efficiency heating, ventilation and air conditioning (HVAC) systems in several larger yards, replacing aging lamps with light-emitting diode (LED) lighting systems, decommissioning unneeded facilities and installing high-efficiency mechanical and lighting systems in all-new construction and facility retrofits. Recently, we have focused on optimizing our yard air compressor systems and reducing energy waste by replacing older compressors with more energy-efficient models.
Our solar energy farm at our Calgary headquarters is one of the largest private solar farms in Alberta. The installation, completed in 2021, spans five hectares and provides employees with four electric car-charging stations and covered parking for up to 500 vehicles. The solar energy farm has the capacity to generate up to five megawatts of electricity, which is expected to generate more power than consumed annually by CP’s main headquarters building.
Science-Based Targets
In 2021, we established science-based emissions reduction targets. These targets were developed following methodologies approved by the Science Based Targets initiative (SBTi), and together, address 100% of our Scope 1 and Scope 2 emissions and more than half of our Scope 3 emissions. We continue to pursue technology and other means that may deliver more significant decarbonization in the future, and to work with our supply chain to support further reduction of our Scope 3 emissions.
To meet our science-based target for 2030 and continue further decarbonization towards 2050, CP will evaluate a wide variety of potential levers for GHG emissions reductions. These levers will include both commercially ready and emerging solutions. We recognize that new business approaches will be needed, including systematic ways to:
- identify potential carbon-reduction levers
- rigorously assess new levers in terms of carbon-reduction potential, feasibility for the rail sector and costs to CP
- conduct bench-scale and pilot testing
- successfully deploy promising alternative fuels and propulsion methods
- engage and collaborate to progress this work
In pursuing these goals, we will foster an enterprise-wide innovation mindset. Creative thinking and collaborative problem solving will be needed to lower—and potentially eliminate—GHG emissions associated with the operation of CP's assets, facilities and rolling stock. Learn more about how we are using innovation to drive efficiencies, improve resiliency and operate safely in Asset & Rail Network Resiliency.
Business Integration & Engagement
BUSINESS INTEGRATION
CP recognizes the need for incorporating climate change risks and opportunities into business planning, and we are enhancing our governance to drive effective management of our climate change commitments and actions. Our business integration plans are aligned with the practices recommended by the TCFD.
The implementation of CP’s Climate Strategy will require leadership and coordination to cascade commitments across our business and value chain. Successful execution requires a shared understanding of the risks and opportunities of climate change and the Company's commitment to climate action. Ensuring the integration of climate factors into planning and decision-making processes across our business will require a strong change management process built upon ongoing engagement, training, and dialogue with all CP employees and functional groups.
ENGAGEMENT
Engagement with internal and external stakeholders through education and awareness, partnerships, policy development and climate-related disclosure is a key component of our Climate Strategy. Through these processes, CP will work to fully explore and understand the climate-related impacts facing our business, build internal capacity for climate action, enhance the resiliency of our network and remain connected with emerging technology solutions that support our emissions reduction objectives. We recognize that sharing experiences and insights with external stakeholders will add value to CP’s climate programs, supporting collaboration and learning from different perspectives.
Building internal awareness of climate risks and opportunities will promote a shared understanding of roles, challenges and the underlying value in executing CP’s Climate Strategy. External to CP, dialogue will focus on opportunities to align CP’s climate ambitions with our customers’ climate objectives. Ongoing engagement with investors and communities can demonstrate CP's leadership position as we stay informed of evolving expectations.
CP is well-positioned to pursue partnerships with industry associations, other railways, equipment manufacturers, communities and stakeholders. Strategic partnerships support the industry-wide collaboration required to drive innovation, advance and improve the accessibility of emerging technology and take action to decarbonize the rail sector. CP is currently working with the Railway Association of Canada (RAC), the Association of American Railroads (AAR) and Transport Canada to promote climate resilience in the rail sector. As a leader in this field, we are open to new pathways for partnerships, including existing and prospective suppliers, academia, railway peers and other institutions.
Globally, climate-related legislation and regulations are emerging in response to growing scientific evidence and societal awareness of climate change. CP frequently engages with others in our industry on regulatory issues that impact our business and the rail transportation sector in Canada and the U.S. These strategic engagements support our Climate Strategy, including topics related to cap-and-trade programs, carbon taxes, fuel efficiency standards, renewable fuel standards and emissions reporting programs.
CP also routinely connects with regulatory agencies, equipment manufacturers and other railways to discuss emerging issues and opportunities related to air emissions from our locomotive fleet. For example, CP has members on both the AAR’s Locomotive Committee and the Steering Committee for the Locomotive Emissions Monitoring program, a joint initiative of the RAC and Transport Canada. The goal of these groups is to reduce the railway industry’s air and GHG emissions. These collaborative efforts have resulted in significant improvements in locomotive fuel economy while driving industry-wide emissions reductions. We carefully maintain and regularly test all locomotives to meet the emissions regulations set by Environment and Climate Change Canada and the U.S. Environmental Protection Agency to allow for fluid movement across the Canada-U.S. border. CP’s train crews receive frequent training on operating practices and technologies designed to improve fuel economy.
Our Performance
We track and report on our Sustainability performance annually. View our Climate Change data here.