Sustainability gains urgency as majority of the CEOs prioritise ESG compliance, resilience, and long-term value
KPMG's 2024 CEO Outlook highlights sustainability as a critical focus for Canadian CEOs, with environmental, social, and governance (ESG) considerations deeply embedded in corporate strategy.
Canadian executives face mounting pressure to tackle climate risks, decarbonisation, and ethical supply chains, driven by global ESG-related challenges such as extreme weather events, emerging regulations, disruptive technologies, and shifting consumer expectations.
The report stresses that advancing ESG initiatives is not only about meeting compliance standards but also about building resilience and creating long-term value.
Canadian CEOs confront a complex sustainability landscape marked by regulatory challenges and rising operational expectations. KPMG's survey reveals that 55 percent of Canadian CEOs believe it is possible to address all ESG priorities simultaneously.
“The demands on Canadian CEOs are substantial, with leaders under pressure to tackle issues such as climate risk, decarbonization and ethical supply chains,” said Doron Telem, partner and national ESG leader at KPMG in Canada.
He added, “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.”
Nearly 29 percent of Canadian CEOs cite ESG as their primary operational focus, more than doubling the 13 percent reported by their global peers.
Regulatory and reporting obligations play a significant role, with 78 percent of respondents identifying these factors as their main reason for prioritising ESG.
While 53 percent of CEOs expressed confidence that their sustainability claims could withstand scrutiny—up from 29 percent a year ago—many still grapple with substantiating claims such as being carbon-neutral or environmentally friendly.
Despite these challenges, 75 percent of CEOs expect substantial returns on ESG investments, although most anticipate it will take at least three years to materialise.
The recent passage of Bill C-59 has amplified the urgency surrounding ESG compliance. The legislation, introduced earlier this year, aims to prevent greenwashing and protect consumers from misleading sustainability claims.
This regulatory shift requires companies to ensure their environmental and social claims are credible, as failure to do so could lead to significant financial and reputational risks.
While 62 percent of Canadian organisations report adopting a strategic approach to ESG, many face barriers to effective implementation. These challenges often overlap and remain deeply interconnected, making it difficult for companies to determine how to prioritise issues.
Chief sustainability officers (CSOs) are increasingly taking the lead in embedding ESG into corporate strategies. However, 63 percent of CEOs report ongoing struggles to fully integrate sustainability into their businesses as a means of value creation.
Telem noted that ESG priorities extend beyond regulatory compliance, emphasising resilience and risk management as core elements of effective corporate strategies.
“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,” he said.
For Canadian companies, addressing ESG challenges requires a robust strategy. Organisations must allocate resources and capital to secure the expertise, data, and technology needed for long-term sustainable initiatives.
By embedding ESG considerations into core operations and decision-making processes, businesses can ensure their sustainability strategies go beyond compliance and deliver tangible value.
