The creation of Canadian Pacific Kansas City Limited (CPKC) in April 2023 reshaped the North American freight rail industry. With global headquarters in Calgary, Alberta, Canada, CPKC is the only single-line transcontinental railway linking Canada, the US, and Mexico, offering shippers unparalleled rail service and access to major North American ports and global markets. Stretching approximately 20,000 route miles, and employing around 20,000 railroaders, CPKC is a major transportation service provider, employer and neighbour to communities across the continent.

CPKC’s combination of two historic railroads – Canadian Pacific (CP) and Kansas City Southern (KCS) – has steadily built momentum, bringing new competition to supply chains and creating more value for our customers, while remaining steadfast on the integration of our operations, service and safety. This strategic union also created a unique opportunity to embed responsible business practices as we continue to build our business for the future. Since CPKC’s formation, our progress has been firmly rooted in early-stage integration measures encompassing governance, workforce, and systems integration. These strategic steps have supported us in upholding our commitment to safety, supporting seamless service delivery to our customers, and fostering sustainable operations.

In a year of significant change for our company, we ended 2023 with a strong performance. CPKC led the industry with the lowest Federal Railroad Administration-reportable train accident frequency among Class I railroads, building on CP’s legacy of 17 consecutive years leading the industry in this metric. We established a new climate goal for CPKC’s combined locomotive operations and continued to invest in industry-leading low-carbon technology. We deepened our connections with local communities through impactful community investment initiatives and meaningful partnerships. We also reconstituted our Diversity & Inclusion Council to lead our efforts in this area as we integrate CPKC.

These important measures clearly demonstrate to our employees, customers, suppliers and the communities where we operate our continued commitment to being a sustainability leader. As we move through our second year as CPKC, sustainability remains front and centre of our integration journey.

A sustainably driven culture
Combining two railroads operating in three countries and a diverse team of around 20,000 railroaders is a significant undertaking. People and culture are key drivers to CPKC’s success. A primary goal of our integration has been to foster a culture united in the pursuit of safety excellence, best-in-class service for our customers and responsible business practices.

Sustainability remains front and centre of our integration journey

Safety is foundational to everything we do, and maintaining stringent safety standards is crucial amid the complex changes taking place in our business. In 2023, we rolled out Home Safe, our flagship safety programme, across our Southern US and Mexico operating regions. Through Home Safe, we work to protect our railroaders, our communities, our customers and the environment. Upholding our Home Safe commitment daily, we enhance our safety culture through quarterly safety walkabouts and celebrating safety performance through our annual Safety Awards for Excellence. Safety walkabouts bring together management, Workplace Health & Safety Committee members, frontline railroaders and various regulators to proactively identify and address workplace hazards while promoting a safe working environment.

Throughout our network, many passionate railroaders embody our Home Safe commitment and actions. Every year, we recognise these individuals at the CPKC Safety Awards for Excellence, honouring their commitment to championing our Home Safe principles and looking out for the wellbeing of their colleagues every day. While we continually work to be safer today than we were yesterday, we also recognise that safety is a journey, not a destination. We will continue reinforcing a robust safety culture in pursuit of our goal of being North America’s safest freight railroad.

With employees in three countries, fostering a culture where all perspectives are heard and valued is essential to unlocking the full potential of CPKC’s workforce. We established a Diversity & Inclusion Council led by senior leaders to champion the development of our diversity and inclusion strategy as we integrate CPKC. The council held 15 virtual Diversity Dialogue engagement sessions to tap into the wealth of CPKC employee perspectives. Over 200 employees participated in these sessions, providing insight to help inform the evolution of CPKC’s strategy.

Expanding our operational reach brings added responsibility. As a neighbour to hundreds of communities across North America, CPKC is dedicated to operating safely and making a meaningful impact in the communities in which we live, work and operate. In 2023, we expanded our emergency response training and public safety awareness engagement with personnel, community first responders and other stakeholders in communities along our right of way. CPKC organised or participated in 82 community awareness and emergency training events, attended by more than 4,000 emergency responders. In support of local food banks, our annual 2023 Holiday Train programme reached communities across our network in Canada, the US and Mexico, raising CAD$1.8m and collecting over 160,000 lbs of food.

CPKC climate strategy
The transportation sector has a vital role to play in the transition to a lower-carbon economy. Our goal is to be a leader in this transition. Freight rail is the backbone of global trade, moving goods across vast distances with greater fuel efficiency than long-haul trucking. CPKC strives to reduce operational emissions and drive change within freight rail through innovation and collaboration with industry partners, customers, governments, and suppliers on climate solutions.

Freight rail is the backbone of global trade, moving goods across vast distances

One of CPKC’s early accomplishments was to release our commitment to climate action, which sets out our commitment to develop an emissions target aligned with a 1.5°C future. At the same time, we announced a GHG emissions reduction target, which was validated by the Science Based Targets Initiative, to reduce our well-to-wheel locomotive emissions by 36.9 percent per gross ton-mile by 2030 from a 2020 base year.

As we refine our climate strategy, we continue to implement initiatives to reduce operational emissions, including exploring and investing in industry-leading low carbon solutions. This includes developing North America’s first line-haul hydrogen-powered locomotive using fuel cells and batteries to power the locomotive’s electric traction motors. Since the programme’s inception in 2020, we have continued to meet key milestones in this pioneering endeavour. In 2023, we completed two hydrogen locomotive conversions and advanced production on a third, as well as the installation of hydrogen production and fueling facilities. Together with CSX, we announced a joint venture to build and deploy hydrogen locomotive conversion kits for diesel-electric locomotives at CSX’s locomotive shop in West Virginia.

In March 2024, we marked another important milestone with the one-year anniversary of our locomotive biofuel trial project. As part of this initiative, CPKC is collaborating with our industry peers and locomotive suppliers to test the long-term operational impacts of utilising diesel blended with 20 percent biodiesel renewable fuel within our locomotive fleet. In 2023, we completed more than 500 fuelling events and utilised more than 8.2 million litres of B20 fuel in our locomotive operations. For every litre of conventional diesel fuel that is replaced with B20, we reduce total emissions by 18 percent. This pilot project is a critical step in validating the operational impacts of utilising advanced blends of renewable biofuels in CPKC’s locomotive fleet.

In addition to our investments in low carbon initiatives, CPKC continues to upgrade our locomotive fleet and rail network to improve overall efficiency and provide system reliability through our capital expenditure programme. In 2023, we invested CAD$2,468m in capital expenditures to maintain and upgrade our locomotive fleet and network to improve overall efficiency and ensure system reliability.

These accomplishments reflect CPKC’s commitment to operating sustainably and a culture of continuous improvement. As we advance through our second year as CPKC, we are keeping sustainability front and centre in our integration journey. We remain committed to promoting positive change both within CPKC and beyond.

Please see our filings with securities regulators in Canada and the US for additional information and cautionary statements relating to our sustainability efforts, including factors that could affect the forward-looking information in this article.