Que. businesses are preparing for an economic slowdown, but still overlook ESG practices: KPMG report

MONTREAL — With the likelihood of an economic recession this year, business leaders in Québec are preparing for potential headwinds, with over half (55 per cent) having recently increased their borrowing capacity amid concerns of higher costs and lower revenues, finds a new Focus Québec report by KPMG in Canada.

For the second consecutive year, KPMG surveyed senior executives from all industries and regions in Québec to participate in a comprehensive study to assess the key issues affecting businesses.

“The study’s findings clearly highlight the concerns of business leaders regarding an economic slowdown,” says Benoit Lacoste Bienvenue, Managing Partner in Quebec at KPMG in Canada. “Therefore, with the aim of promoting business prosperity, we rely on the data and key highlights from the study to develop effective solutions that address current challenges, such as digital transformation, data protection, and ESG issues.”

Highlights of the survey:

• Nearly 80 per cent (79 per cent) of business leaders surveyed anticipate an economic slowdown this year
• 72 per cent say they tend to improve their company’s agility given the expected turbulence and economic uncertainty
• 71 per cent anticipate an increase in their operating costs in the next 12 months
• 55 per cent have recently revised their borrowing capacity
• 50 per cent are concerned about the current economic and geopolitical situation

The Focus Québec report also reveals that there is still a lag in the adoption of sustainable practices among small- and medium-sized enterprises in the province, as 56 per cent of respondents confirm that they have not yet implemented sustainability goals or policies within their organizations. Nevertheless, the study does highlight progress in this regard, with an 11 per cent increase from last year’s survey.

“The report shows that there is still work to be done in terms of ESG, as more than half of them have not yet established sustainability goals,” says Mr. Lacoste Bienvenue. “Small- and medium-sized enterprises are slow to implement ESG practices, particularly due to worsening economic conditions. We believe that companies demonstrating leadership in this regard will quickly stand out, particularly in terms of employer branding, investor relations, and to differentiate themselves with major clients.”

The Focus Quebec survey was conducted in Fall 2022 and targeted KPMG’s network. In all, 232 respondents from across Quebec completed the survey. Of these respondents, 90% hold executive positions, including 66 presidents.