A recent report from KPMG in Canada highlights that advancing Environmental, Social, and Governance (ESG) and sustainability efforts goes beyond mere compliance; it’s about building long-term resilience and creating value. The study emphasizes that Canadian CEOs are grappling with numerous ESG risks and opportunities that demand immediate and strategic action to successfully navigate the complex and changing landscape of sustainability. The report revealed that 55% of Canadian CEOs believe it’s feasible to address all ESG priorities simultaneously.
Doron Telem, Partner and National ESG Leader at KPMG in Canada remarked that Canadian CEOs face substantial pressures, including managing climate risks, decarbonization, and ethical supply chains. He pointed out that the complexities of sustainability—ranging from operational and logistical to financial and legal—require the entire C-suite to collaborate closely to integrate ESG considerations across the organization.
KPMG LLP, a Canadian-owned Audit, Tax, and Advisory firm, operates with over 10,000 employees in more than 40 locations nationwide, serving both private and public sector clients.
Key Findings from the Report:
- 29% of Canadian CEOs identified ESG as their main operational focus, more than doubling the figure for their global counterparts (13%).
- 78% of respondents pointed to regulatory and reporting requirements as the key driver for prioritizing ESG.
- 53% expressed confidence that their sustainability claims would hold up under scrutiny, a notable increase from 29% the previous year.
- 75% anticipated that it would take at least three years to see substantial returns on their ESG investments.
- 63% indicated they are still finding it challenging to fully integrate ESG into their businesses for value creation.
The increasing emphasis on ESG for Canadian CEOs stems from several factors, especially the focus on regulatory and reporting obligations. One significant legislative development is Bill C-59, introduced earlier this year, which targets greenwashing and aims to protect consumers from deceptive sustainability claims. This legislation has added significant weight to the ESG agenda, pushing companies to verify their environmental and social claims to mitigate financial and reputational risks.
Despite a rise in confidence, with 53% of CEOs believing their sustainability claims can withstand scrutiny—up from 29% in 2023—there remains uncertainty among companies about substantiating claims related to being carbon-neutral, environmentally friendly, or ethically sourced. As a result, more Canadian CEOs are engaging their Chief Sustainability Officers (CSOs) to integrate ESG into core organizational strategies.
Data from KPMG shows that 62% of Canadian CSOs and heads of sustainability reported that their organizations have adopted a strategic ESG approach. However, they also identified several challenges hindering the effective implementation of ESG initiatives. The survey highlighted that more than half of the CSOs flagged nine out of ten key barriers, emphasizing that each issue is critical and interconnected, making prioritization difficult.
Doron Telem added that while regulatory pressures are driving ESG into the spotlight, companies are increasingly recognizing that resilience and risk management are central to these efforts. He noted that management teams are collaborating to identify both short- and long-term ESG factors and are adjusting their ROI calculations to incorporate more comprehensive data on risk, innovative technologies, and funding options.
To successfully address ESG challenges, the report advises companies to adopt a robust strategy that directs capital towards the right resources, expertise, data, and technology. A genuine ESG strategy that extends beyond compliance requires the integration of sustainability objectives into core business operations and decision-making frameworks.
The findings are part of the 10th edition of KPMG’s CEO Outlook, which gathered insights from 1,325 CEOs between July 25 and August 29, 2024. All participants lead companies with annual revenues exceeding US$500 million, and a third of the firms surveyed generate over US$10 billion in annual revenue. The survey included CEOs from 11 major markets—Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the U.K., and the U.S.—and covered 11 key industry sectors, such as asset management, banking, energy, manufacturing, and technology.
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