Sustainability has emerged as a focus for Canadian business leaders, with environmental, social, and governance (ESG) factors dominating operational agendas, according to KPMG’s 2024 CEO Outlook. The report underscores the growing importance of ESG in response to regulatory pressures, climate-related risks, and shifting consumer expectations.
Among Canadian CEOs, 29% identified ESG as their primary operational priority, significantly higher than the global average of 13%. Regulatory and reporting obligations drive 78% of ESG prioritization.
While 75% of Canadian CEOs expect ESG investments to deliver returns within three years, 63% admit to facing challenges in embedding ESG into value-creation strategies.
Canadian companies face increased scrutiny, particularly under new legislation such as Bill C-59, which aims to curb greenwashing. As a result, businesses are increasing efforts to substantiate claims, such as carbon neutrality and ethical sourcing, with 53% of CEOs expressing confidence in their sustainability statements, up from 29% last year.
Despite progress, sustainability leaders report significant obstacles to advancing ESG initiatives. A study conducted for KPMG highlighted frequent regulatory changes (79%), challenges in ESG data collection and aggregation (74 %), and difficulty in building a business case (61%) as key barriers.
Other issues include budgetary constraints (57%), financing difficulties (56%), and a lack of senior leadership buy-in and ESG technology, both cited by 55% of respondents.
Additionally, more than half reported challenges stemming from commercial pressures and a lack of internal expertise, while only 40% found success in creating value from ESG investments.
Doron Telem, KPMG’s national ESG leader, emphasized the complexity of integrating ESG into corporate strategies. “The demands on Canadian CEOs are substantial,” Telem said. “The operational, logistical, financial, and now legal complexities of sustainability call on the entire C-suite to work together to embed ESG across the organization.”
Although regulatory pressures are bringing ESG to the forefront, corporations increasingly recognize that resilience and risk management lie at the heart of their sustainability efforts, according to KPMG.
Management teams are collaborating to evaluate ESG factors that require attention in both the short and long term. They are also refining return on investment (ROI) calculations by incorporating more comprehensive data on risk impacts, innovative technologies, and financing options.
The 10th KPMG CEO Outlook surveyed 1,325 CEOs from July 25 to August 29, 2024. Respondents led companies with annual revenues exceeding US$500 million, with one-third reporting revenues over US$10 billion.
The survey covered 11 countries, including Canada, the US, and China, and spanned 11 industries such as banking, manufacturing, and technology.
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