ESG and sustainability are topping corporate agendas for CEOs in Canada, according to KPMG’s 2024 CEO Outlook.
The focus on these areas was driven by factors like increasing extreme weather, emerging regulations, disruptive technology and shifting consumer perspectives, KPMG wrote in a press release. The Big Four firm added that compliance was not the sole reason for ESG and sustainability progress; the key objectives were long-term resilience and value creation.
The survey of 1,325 CEOs revealed that 29 percent of Canadian-based respondents considered ESG their main operational focus; by contrast, just 13 percent of global CEOs had the same priority. Moreover, 55 percent of Canadian CEOs indicated that all ESG priorities can be addressed simultaneously.
For 78 percent of respondents, the increased focus on regulatory and reporting obligations was the core reason for the significant uptick in the crucial value of ESG. Canadian CEOs, in particular, are considering the recently announced Bill C-59 provisions that seek to restrict greenwashing and shield consumers from misleading claims about sustainability.
Fifty-three percent of CEOs believe their sustainability claims can pass muster – an increase from 29 percent in 2023. Nonetheless, more Canadian CEOs are inviting their chief sustainability officers to help integrate ESG into key organizational strategies.
“The demands on Canadian CEOs are substantial, with leaders under pressure to tackle issues such as climate risk, decarbonization and ethical supply chains. 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,” said Doron Telem, partner and national ESG leader of KPMG in Canada, in a statement.
Sixty-two percent of Canadian CSOs and sustainability heads indicated that their organizations had implemented a strategic ESG approach; however, they also highlighted barriers to effective ESG execution. Sixty-three percent of respondents reported that they continued to struggle to fully incorporate ESG into their businesses as a way to create value.
“Although regulatory pressures are pushing ESG to the forefront, corporations realize that resilience and risk management are in fact at the core. Management teams are coming together to analyze the ESG factors that need to be addressed in the short and long run. They are also refining the ROI calculations to take into account more data on risk impacts, innovative technologies and financing options,” Telem said.
Seventy-five percent of respondents anticipated considerable returns on ESG investments after at least three years.
The 2024 KPMG CEO Outlook is the 10th edition of the report. KPMG International conducted the survey, obtaining responses from CEOs in Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the UK, and the US.
The respondents worked across the asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications sectors.