ESG Underground

Part 1: The Rebrand and the Silence

Mar 20, 2026

Corporations may have dropped the three-letter acronym and gone quiet, but the policies, targets, reporting requirements, and capital-allocation rules are advancing faster than ever — with massive consequences for Canada’s oil and gas sector.

In January 2025, Canada’s Big Five banks — RBC, TD, Scotiabank, BMO, and CIBC — exited the Net-Zero Banking Alliance. Headlines framed it as a retreat from “ESG overreach.”[1] The banks cited legal risks and the need for “pragmatic” energy policy. Public statements softened; websites scrubbed alliance logos; net-zero rhetoric vanished from earnings calls.

Yet the underlying machinery never stopped. Internal climate risk models, Scope 3 tracking, supplier scorecards, and transition-financing criteria remain fully operational. Some of Canada’s largest banks have also acquiesced to activist pressure and will be calculating an energy supply ratio, measuring how much financing flows to low-carbon energy versus hydrocarbon industries. In 2024, that ratio sat at 0.61:1—meaning 61 cents went to wind and solar for every dollar going to oil and gas. Activists want to reverse it until the ratio is zero for hydrocarbons. The banks are slowly complying.[2]

Back in September, the Office of the Superintendent of Financial Institutions (OSFI) released its first assessment of the mandatory climate risk returns the major financial institutions were compelled to make. OSFI’s 2025 Climate Risk Returns report shows Canadian financial institutions carrying 360 MtCO₂e of financed emissions — roughly half of Canada’s total. The Superintendent and news coverage seemed shocked by this, but they shouldn’t be. Banks and insurers fund the real economy, and the real economy still emits. If 85–90 % of GDP produces emissions, a naïve pro-rata share of banking exposures would be well north of 400 MtCO2e, so 360 MtCO2e is actually a bit below expectation, not some shocking revelation. The role of cooperatives and other non-OSFI regulated entities or private equity are likely making up a large part of the difference.

A deeper concern lies in the logical endpoint, which has been articulated by Mark Carney and the Liberal Party for over 10 years now. If Canada’s policy goal is a genuine commitment to net-zero by 2050, financed emissions must fall from ~360 Mt today to near zero within one investment cycle. That outcome cannot be achieved through incremental efficiency gains alone; it necessarily requires the deliberate obsolescence of large segments of today’s transition-vulnerable sectors (conventional and unconventional oil and gas, heavy transport, and fertilizer-intensive agriculture) and a forced reallocation of trillions of dollars of capital into new zero-emission activities. The OSFI report, with its push for counterparty-specific data, geospatial hazard overlays, and eventual risk-weighted capital penalties, looks like the framework that will steer that reallocation.

While OSFI doesn’t impose a blanket mandate, it requires banks to assess borrowers’ transition plans, integrate them into credit decisions and scenario analysis, and treat the lack of a credible plan as a material risk flag.

This is a different kind of greenhushing in action: the deliberate quieting of climate talk while the policies accelerate.[3] Communications firm Edelman-Smithfield believes this is good for companies and the financial industry: “Greenhushing helps sustainability evolve from an aspirational movement into a managerial function [emphasis added] measured by operational outcomes, not headlines.”[4] This is happening at full speed across the board — exactly when Canada’s hydrocarbon industry can least afford it.

Think of it like a power company that publicly announces, “No more rate increases!” then quietly installs smart meters that automatically raise your fixed monthly charges based on “energy transition” formulas. The rate stays flat, but your bill still climbs.

Corporations and the financial industry have three strategies: replace “ESG” with bland corporate-speak, go completely silent publicly while keeping every internal process intact, or both.[5]

The language shift is obvious. “ESG” has been swapped for “sustainability,” “climate resilience,” “transition planning,” “responsible business,” and — most telling — “Scope 1–3 management.” In 2025, ESG appeared in the titles of only six percent of S&P 100 sustainability reports, down from forty percent a few years earlier. Climate-related mentions on earnings calls dropped roughly seventy-six percent.[6]

The rebranding runs so deep that insiders are openly acknowledging the tactic. Speaking at the Canadian Sustainability Standards Board (CSSB)-UN Principles for Responsible Investing (PRI) panel on sustainability disclosure in Canada, Lindsey Walton, Executive Director of the UN PRI, explained how sustainability teams operate:

So, taxonomies, disclosures, transition pathways—it’s really not a question of how fast but what have they completed for the most part and when will they have completed the rest. So, it’s not if; it’s how fast. And I don’t want to see us falling behind, but we are. Even our neighbours to the south showed up in huge numbers in Brazil. And they are using—yes, they’re using—a thesaurus to do a lot of find-replace term for terms like ESG that are triggering to some, but they are fiduciaries and they understand that they have to consider all material information. [7]

In plain language, they hit Ctrl+H, swapped out the politically charged words, and kept every target, every scorecard, and every capital screen exactly as before.

Two recent studies that surveyed 967 institutional investors and 2,000 CEOs outline how corporate boardrooms and investment committees “will maintain or expand their climate, environmental, and social commitments over the next two years.” There is a disconnect between the very public narrative that there is an “ESG backlash” and broad “political resistance”, but the reality in the boardroom is strikingly different. According to a report on the studies, “86% of asset owners plan to increase allocations to sustainable investments, while 79% of asset managers expect sustainable AUM growth. This represents not retreat, but strategic recalibration.”[8]

British banking giant Barclays released its “Transition Realism” white paper in February 2026. Aggressive net-zero language is gone; the new framing is “hybrid energy systems” and “electrons plus molecules.” Despite the seemingly realistic spin, the infrastructure-financing and transition-planning machinery is still there.1

European bank Credit Agricole was fined by the European Central Bank in February 2026 precisely for allegedly failing to identify and manage climate risks — proof that regulators have not relaxed one bit.[9]

CDPQ, a major Net Zero Asset Owners Alliance (NZAOA) member and Canada’s second largest pension fund, released its Transition Financing Framework 2025–2030 Climate Strategy with a complete purge of the term “ESG” — zero mentions across the entire 24 page document. The language has shifted entirely to “Climate Action,” “decarbonization pathways,” “low-carbon assets,” and “climate maturity,” yet every underlying net-zero target, engagement commitment, transition plan requirement, and capital-reallocation rule remains unchanged and in full force. [10]

The silence is strategic. Companies and some financial institutions learned that loud ESG rhetoric invites scrutiny, public backlash, and litigation, so they went quiet. But the capital-allocation rules, executive compensation links, and supplier mandates never slowed down.[11] In fact, one assessment describes it as a new “Quiet Revolution—CEOs Advance Commitments While Refining Communications”.[12]

The data is unambiguous: implementation has not slowed; it has simply become harder to see. Most Canadians are unaware that the regulatory drivers remain locked in. The Canadian Sustainability Disclosure Standards (CSDS) (ISSB-aligned) are gradually rolling out on schedule. OSFI Guideline B-15 climate-risk requirements, which have been revised to align with Canada’s CSDS, are fully phased in for larger institutions and advancing for smaller ones.[13] Methane regulations are tightening. The federal oil-and-gas emissions cap framework, while politically contested, continues to shape capital budgeting. ECCC’s 2026–2027 departmental plan and ongoing work on Canada’s Sustainable Investment Taxonomy keep the policy momentum alive.

The public thinks ESG retreated. The boardrooms and regulators know better.

Stay tuned for Part 2: How this underground shift enables classic policy laundering — with Mark Carney’s long-standing vision still running the show.

[1] https://financialpost.com/fp-finance/banking/bmo-first-canadian-bank-leave-un-climate-alliance

[2] https://www.msn.com/en-ca/money/topstories/banks-moving-forward-on-measuring-key-climate-financing-measure/ar-AA1Z0sZs?ei=9

[3] https://www.edelmansmithfield.com/how-greenhushing-can-save-corporate-sustainability

[4] https://www.edelmansmithfield.com/how-greenhushing-can-save-corporate-sustainability

[5] https://ksapa.org/ceos-and-investors-double-down-on-sustainability/

[6] https://www.prnewswire.com/news-releases/last-year-just-25-of-big-companies-used-esg-in-their-report-titles-the-slowdown-continues-in-2025-302441386.html

[7] https://www.frascanada.ca/en/cssb/meetings-and-events/in-person-panel-discussion-cssb-un-pri-sustainability-disclosure-in-canada/cssb-un-pri-sustainability-disclosure-in-canada-transcript

[8] https://ksapa.org/ceos-and-investors-double-down-on-sustainability/

[9] https://www.lemonde.fr/en/climate/article/2026/02/13/ecb-fines-french-bank-credit-agricole-for-failing-to-identify-climate-risks_6750466_96.html

[10]https://www.lacaisse.com/sites/default/files/medias/pdf/en/climate_strategy_2025-2030.pdf

[11] https://cse-net.org/canada-sustainability-trends-2026/

[12] https://ksapa.org/ceos-and-investors-double-down-on-sustainability/