KPMG survey says most businesses won’t reach climate goals without more government support

TORONTO — Ahead of this year’s federal budget, most Canadian business leaders are committed to integrating environment, social and governance (ESG) practices into their business strategies but say they need more help from government if Canada is to transition to a greener economy, finds a new KPMG in Canada survey.

The survey of 505 medium-sized enterprises reveals that most believe government needs to do more to compete with new U.S. and European Union green tax legislation, with eight in 10 (80 per cent) calling for additional tax incentives and investment tax credits to make it feasible for their company to adopt clean technologies and clean energy sources.

“Canada’s business leaders are ready to make the green transition but need government to create a more supportive environment, including further tax relief to help them transition away from carbon-intensive products and invest in clean energy and net-zero technologies,” says Lucy Iacovelli, Canadian Managing Partner, Tax, KPMG in Canada.

“More than eight in 10 (84 per cent) indicated that they are using existing government incentives to reduce their environmental footprint, but to stay competitive, they believe it is vital that Canada keeps pace with the new green investments and tax measures being adopted in the U.S. With the right supports and tools, Canadian businesses can play a key role in driving clean growth, creating sustainable jobs and carving out a unique place for Canada in the new global economy.”

Key survey findings

• 82 per cent believe small- and medium-sized enterprises are key to the green transition in Canada
• 89 per cent say they have already integrated ESG practices into their business strategies
• 84 per cent stated their company currently uses government incentives to reduce their environmental footprint
• 77 per cent are finding the process of decarbonization increasingly complex
• 84 per cent think it’s vital for Canada to pivot quickly to stay competitive with new U.S. and European Union green tax legislation
• 82 per cent feel government investments need to grow significantly to develop the clean technologies/solutions that businesses need to meet Canada’s climate commitments
• 80 per cent think their company needs more consumer incentives for Canadians to adopt clean energy products

Prolonged economic volatility a key factor

KPMG’s survey reveals more than eight in 10 (84 per cent) think inflationary pressures will last longer than expected, stretching into 2024. Most (81 per cent) peg this continued volatility, in part, on the green energy transition as well as supply shocks caused by deglobalization and rising political pressures.

The survey reveals a strong commitment to sustainability among business leaders with 84 per cent saying their entire leadership team is engaged in support of their ESG strategy. The survey also found that most organizations (82 per cent) are planning to increase the amount they invest this year.