Large companies point to their supply chains as one of the greatest barriers to achieving net zero, adding pressure on SMBs to decarbonize
TORONTO, Nov. 14, 2023 /CNW/ - Ahead of the upcoming COP28 United Nations global climate summit, the pressure is on Canadian companies to reduce their greenhouse gas (GHG) emissions but many are finding it difficult to go green, finds new research from KPMG in Canada.
Although the vast majority (78 per cent) of small- and medium-sized businesses (SMBs) have established policies or initiatives to reduce their emissions footprint, seven in 10 find they lack the time and resources to make it a priority, finds KPMG's 2023 Private Enterprise™ Business Survey. Similarly, less than a third feel very confident in their plans to reduce emissions across their value chain.
When asked to identify the greatest barriers to achieving their net-zero goals, SMBs cited a shortage of skills and expertise to implement solutions, the complexity of decarbonizing their supply chains, and a lack of appropriate technology. Adding to these challenges is a critical shortage of quality data, with over two-thirds expressing concern about their ability to effectively measure, implement and evaluate their carbon footprint.
"Climate change demands that companies, regardless of size, take immediate action to start reducing their carbon footprint," says Andrew McHardy, National Decarbonization Hub Leader at KPMG in Canada. "While companies are setting targets aligned to Canada's 2050 net-zero goals, our research shows many SMBs are struggling to action their plans as they grapple with increasingly complex decarbonization challenges."
Key SMB poll findings:
- 78 per cent of SMBs in Canada have established policies or initiatives to reduce greenhouse gas (GHG) emissions
- 70 per cent lack the time and resources to make reducing their carbon footprint a top or immediate priority
- Over two-thirds (68 per cent) say they lack the data they need to effectively measure, implement, and evaluate their carbon footprint
- Nearly eight in 10 (79 per cent) are willing to increase their investments in line with their climate-related goals
- Key barriers to achieving net zero: lack of skills and expertise to implement solutions, supply chain complexity, and technology
- Only 29 per cent say that their buyers (or customers) are helping them to decarbonize with bigger and longer-term contracts and/or preferential status (for example, via procurement policies to incentivize decarbonization investments)
- 29 per cent have started to replace their fleet (e.g., trucks, buses, vans) with low GHG emission vehicles
- Fewer than a third feel "very confident" in their emissions reduction plan:
- 29 per cent (Scope 1 - emissions from sources/assets owned or controlled by your company)
- 27 per cent (Scope 2 - indirect emissions created by the production of energy your company buys)
- 28 per cent (Scope 3 - the rest of your upstream and downstream supply chain outside of Scope 2)
According to KPMG International's 2023 CEO Outlook survey, which captures the views of the world's biggest corporations, Canadian CEOs believe decarbonizing their supply chain – which often includes smaller to mid-sized companies – and gaps in technology to be the greatest barriers to achieving net zero.
Relative to their global peers, Canadian CEOs are also much more focused on addressing environmental challenges, including the net-zero transition, and are prioritizing those investments as part of their broader environmental, social and governance (ESG) goals. Similarly, nearly eight in 10 Canadian SMBs are willing to increase their investments in line with their climate-related goals.
While government decarbonization policies, reporting guidelines and stakeholder expectations are helping drive these investment decisions, extreme weather events and other climate-related risks have also added a sense of urgency, adds Mr. McHardy.
"Canadian business leaders are feeling the pressure on all fronts to progress their decarbonization plans, but the level of business transformation needed to address the entire scope of their emissions footprint can be significant," says Mr. McHardy. "Investment in time and resources is key to moving the dial on these big decarbonization challenges in the long run, and collaboration between government, corporates and capital providers will also play an important role in building scalable solutions to accelerate the transition to a lower carbon economy."
Mr. McHardy, alongside Ms. Roopa Davé, Partner, ESG and Climate Services at KPMG in Canada, will be in attendance at COP28 from Nov. 30 – Dec. 12, 2023.
Learn more about KPMG in Canada's recently launched Decarbonization Hub.
Register for KPMG's 19th Annual Mining Executive and Director Forum to learn more about the industry's most pressing challenge: decarbonization.
KPMG in Canada surveyed business owners or executive level C-suite decision makers at 700 small-and-medium-sized Canadian companies between August 30 and September 25, 2023, using Sago's premier business research panel. A quarter of the companies surveyed have more than C$500 million and less than C$1 billion in annual revenue, a quarter have more than C$300 million and less than $500 million in annual revenue, 23 per cent have between C$100 million and C$300 million in annual revenue, and 26 per cent have between C$10 million and C$50 million in annual revenue. No companies were surveyed under C$10 million.
The ninth edition of the KPMG CEO Outlook, conducted with 1,325 CEOs between August 15 and September 15, 2023, provides unique insights into the mindset, strategies, and planning tactics of CEOs. All respondents have more than US$500 million in annual revenue and a third of the companies surveyed have more than US$10 billion in annual revenue. The survey by KPMG International included CEOs from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the U.K. and the U.S.) and 11 key industry sectors (automotive, consumer and retail, energy, financial services, infrastructure, life sciences, manufacturing, technology, and telecommunications). NOTE: Some figures may not add up to 100 per cent due to rounding.
KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across Canada, serving private- and public-sector clients. KPMG is consistently ranked one of Canada's top employers and one of the best places to work in the country.
The firm is established under the laws of Ontario and is a member of KPMG's global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see kpmg.com/ca
SOURCE KPMG LLP
For media inquiries: Katarina Lukich, National Communications & Media Relations, KPMG in Canada, 416-468-7729, [email protected]
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