Canadian businesses are facing profit losses due to extreme weather conditions.
Toronto — A newly released survey of Canadian business leaders reveals a widespread and growing concern regarding the impact of climate change on their operations. The survey, conducted by KPMG in Canada, indicates that a vast majority of businesses are now acknowledging the tangible threats posed by extreme weather events, with over half reporting a direct negative effect on their profits. The findings underscore the urgency with which Canadian companies must address climate-related risks, highlighting the shift from theoretical concerns to demonstrable operational challenges. KPMG’s research, compiled through a survey of 350 business owners and executives, reveals a significant proportion – 92 percent – expressing apprehension regarding the potential impacts of climate change and increasingly frequent extreme weather events.
The survey’s central finding – that 67 percent of respondents are either extremely or very concerned about the effects of these events – reflects a startling realization amongst Canadian business leaders. It’s clear that what was once considered a long-term, abstract threat is now demonstrably affecting profitability and operational stability. The respondents identified a range of potential impacts, including direct disruption to operations, reduced worker productivity, and significant challenges to supply chains. Fifty-six percent of businesses stated that extreme weather events, whether manifested as forest fires, flooding, or extreme heat, had already impacted their financial performance during the preceding year.
A key aspect of the survey revealed that while companies are recognizing the serious nature of the threat, there’s a disparity between concern and action. Eighty-eight percent of the surveyed businesses expressed a willingness to invest more in climate-related initiatives – a testament to their understanding of the evolving landscape. However, a sobering 80 percent admitted that their firms lacked the necessary resources to prioritize emissions reductions with the urgency demanded by the situation. This suggests a critical gap between acknowledgement and practical implementation, highlighting the need for strategic investments and targeted support to facilitate effective climate action.
Roopa Dave, KPMG’s Canadian climate risk leader, emphasized the evolving reality for Canadian businesses. “This has obviously become very real for Canadian businesses,” she stated. “The survey underscores the need for a fundamental shift in how companies approach risk management. It’s no longer sufficient to simply acknowledge the potential for climate change; action is required now.” Dave’s commentary reflects a growing recognition that climate risks are now considered enterprise-level, demanding the same level of strategic attention and resource allocation as other critical business risks.
The survey’s findings are closely tied to observable trends in Canada’s business sector. The increasing frequency and intensity of extreme weather events are having a demonstrable impact on insurance coverage. Thirty percent of surveyed businesses reported that their insurance coverage had been either cancelled or significantly increased in cost, reflecting the heightened vulnerability exposed by climate change. This trend is further compounded by the substantial insured damage caused by recent disasters. According to Catastrophe Indices and Quantification Inc., insured damage reached over $3.1 billion last year, a figure that represents a significant escalation from the $2.3 billion average recorded between 2011 and 2020, which itself had doubled from the previous decade’s average of $675 million. The escalating costs underscore the financial ramifications of climate change for Canadian businesses.
Looking ahead, the survey highlighted the evolving policy landscape and its implications for business operations. The rising trend of extreme weather events is driving shifts in policy and creating new challenges for businesses. A proactive approach, characterized by comprehensive climate risk assessments and strategic mitigation measures, is considered increasingly vital. As Roopa Dave noted, “It really just speaks to the importance of companies being nimble.” This call for agility reflects the rapidly changing conditions and the need for businesses to adapt and respond effectively to minimize their vulnerabilities and to capitalize on the opportunities presented by a transitioning economy.
The survey was carried out between June 5th and 14th using Sago’s business research panel. The survey revealed that over half of the companies surveyed had revenue of under $500 million, and just under half had revenue of under $10 million. While this sample presents a broad overview of Canadian businesses, it does point to the significant diversity of the country’s commercial sector. Moving forward, it is crucial for policymakers and business leaders to consider the needs of smaller businesses – those with fewer resources – in addition to larger corporations to ensure a comprehensive and equitable response to the challenges posed by climate change.
The survey’s insights contribute to a growing body of evidence regarding the critical role that climate change will play in shaping the Canadian economy. The data reinforces the need for a collaborative effort between government, industry, and academia to develop effective strategies for mitigating risks and promoting sustainable practices. The current findings serve as a clear call to action, urging Canadian businesses to embrace proactive risk management, invest in climate resilience, and contribute to a more sustainable future.
