ESG Ratings and Profitability in Canada

What 2024 vs 2025 Data Really Shows

For years, sustainability professionals have debated whether ESG performance genuinely supports financial success. Is ESG a cost, a compliance burden, or a driver of long-term profitability?

CSE’s Sustainability Leaders 2026 Annual Research offers one of the clearest answers to date. By analyzing 210 of the most profitable companies, the research compares how ESG ratings correlate with profitability across 2024 and 2025. The findings are especially relevant for Canadian companies, as ESG expectations tighten across capital markets, regulation, and global supply chains.

The message is nuanced but powerful. ESG maturity does not guarantee profitability, yet profitability increasingly aligns with structured ESG management.

ESG and Profitability: The Big Picture

Across both years, the data confirms a consistent pattern.
Most highly profitable companies hold medium-to-high ESG ratings.

CSE’s research shows that around 72 percent of the most profitable companies fall into this category. A medium-high ESG rating signals that a company actively manages ESG risks, addresses climate exposure, and discloses performance. These companies are not always ESG leaders, but they have embedded sustainability into governance, risk management, and strategy.

Based on CSE’s work with Canadian organizations across energy, financial services, manufacturing, and real estate, this level of ESG maturity often marks a turning point. Companies move from ad hoc sustainability initiatives to structured decision-making. That shift supports resilience, investor confidence, and operational stability.

Comparing 2024 and 2025 ESG – Profitability Correlations

The image data highlights how correlations evolved across three major ESG frameworks.

Sustainalytics: Strong but More Demanding

In 2024, 80 percent of the most profitable companies achieved medium-to-high ESG ratings under Sustainalytics.
In 2025, this figure declined slightly to 77 percent.

This change does not suggest weakening ESG commitment. Instead, Sustainalytics has continued to refine how it evaluates unmanaged ESG risk. Companies with incomplete data, limited board oversight, or weak climate risk integration now face tighter scoring.

For Canadian firms, this reinforces an important lesson. ESG risk management must be systematic. Informal policies or partial disclosures are no longer enough to sustain strong ratings.

S&P Global: A Clear Methodological Shift

S&P Global shows a more pronounced change.
In 2024, 91 percent of profitable companies held medium-to-high ESG scores.
By 2025, that share dropped to 79 percent.

This shift reflects evolving expectations rather than declining performance. S&P Global increasingly rewards decision-useful metrics, sector-specific disclosures, and forward-looking governance. Companies relying on high-level commitments without measurable outcomes now score lower.

This aligns closely with Canada’s move toward ISSB-aligned sustainability disclosures. Investors want ESG information that supports capital allocation, not just reputation management.

CDP Climate: Meaningful Progress Where It Counts

CDP Climate tells a different story.
In 2024, only 51 percent of profitable companies achieved medium-to-high climate scores.
In 2025, this rose to 59 percent.

This improvement is significant. CDP focuses narrowly on climate governance, emissions data quality, and transition planning. Scores remain lower than broader ESG ratings because climate performance demands granular Scope 1, 2, and increasingly Scope 3 data.

However, the upward trend shows that companies are strengthening climate competencies. For Canada, where physical climate risks and transition risks are both material, this progress matters.

What the Trends Mean for Canadian Companies

When viewed together, the 2024–2025 comparison highlights three clear insights for Canada.

First, ESG and profitability remain closely linked. Even as methodologies tighten, profitable companies continue to show stronger ESG structures.

Second, the bar is rising. Slight declines in Sustainalytics and S&P Global scores signal that ESG maturity now depends on data quality, governance, and integration into business strategy.

Third, climate action is accelerating, but unevenly. CDP results suggest growing momentum, yet many companies still struggle with Scope 3 emissions, scenario analysis, and transition planning.

For Canadian organizations, this means ESG competence is no longer optional. It is a prerequisite for managing risk, maintaining investor trust, and staying competitive in global markets.

A key insight from the data stands out. Profitability does not require ESG perfection, but it does require ESG competence.

Why ESG Skills Matter More Than Ever in Canada

Canada’s sustainability landscape is evolving rapidly. ISSB adoption, investor scrutiny, and supply-chain pressure all demand higher ESG capability. At the same time, economic uncertainty requires ESG leaders to demonstrate financial relevance, not just ethical intent.

The companies that perform best in CSE’s research treat ESG as a management discipline, not a reporting exercise. They understand rating methodologies, climate risk exposure, and how ESG performance influences financial outcomes.

That expertise does not develop by chance. It requires structured learning, practical frameworks, and real-world application.

Strengthen ESG Leadership Skills in Canada

For professionals who want to connect ESG performance with business value, the Canada Sustainability ESG Course – Cohort 1 is designed to meet this need.

The program helps participants:

• Understand ESG rating methodologies and investor expectations

• Align ESG strategy with profitability and risk management

• Strengthen climate governance and disclosure readiness

• Translate ESG data into decision-making insights

Learn more and register here:
https://cse-net.org/trainings/canada-sustainability-esg-course-26-cohort1/

Research Transparency

The Sustainability Leaders 2026 Annual Research is based on a comparative analysis of ESG ratings and financial performance among 210 of the most profitable companies, using publicly available data from Sustainalytics, S&P Global, and CDP Climate disclosures.

As the 2024–2025 data shows, ESG is no longer a side conversation in Canada. It is a core driver of resilient, future-ready profitability.