KPMG survey shows 92% of leaders fear climate events, pushing them to rethink risk strategies
A new survey from KPMG in Canada reveals that 92 percent of Canadian business leaders believe last year’s extreme weather events are the new normal and anticipate their organizations will face climate-related incidents this year.
The survey, which included 350 business leaders, found that 56 percent of companies saw profitability declines due to extreme weather, while 49 percent experienced significant cost increases from productivity losses, supply chain disruptions, and higher insurance costs.
Roopa Davé, KPMG in Canada’s National Climate Risk leader, emphasized the financial impact of climate change, stating, “The extreme weather events of the last couple of years have driven home the cost of climate change to the Canadian economy and the bottom line of individual businesses.”
She noted that more than half of Canadian companies experienced profit impacts from events like forest fires, floods, hurricanes, and extreme heat, with a significant number fearing further impacts this year.
Businesses are now treating climate risk as a critical enterprise risk, taking steps to adapt and build mitigation strategies. Effective climate risk assessments are integrating factors such as potential impacts on facilities, supply chains, and business models.
The survey found that 92 percent of businesses expect extreme weather to be a frequent occurrence and fear their organization will be affected by a climate-related event this year. Of these, 21 percent are extremely concerned, 46 percent are very concerned, and 25 percent are slightly concerned.
Last year’s extreme weather impacted various aspects of business operations. 57 percent of companies experienced direct operational impacts, such as loss of power, water supply, and communication.
Employee productivity was affected in half of businesses, while 47 percent faced supply chain disruptions. Thirty percent reported significant increases in insurance costs or cancellations.
Despite these challenges, 89 percent of businesses are more determined to reduce their environmental impact, with 88 percent willing to invest more in achieving their climate-related goals.
Doron Telem, partner and National ESG leader for KPMG in Canada, noted that while companies have strengthened their commitment to sustainability, many face hurdles in implementing these goals.
“Most are struggling to find the capacity, collect the required data, and navigate an increasingly complex regulatory environment,” Telem said.
This complexity has slowed decarbonization investments, with only 33 percent of companies integrating sustainability criteria into product design, manufacturing processes, and supply chain operations.
Telem advised companies not to wait for regulatory mandates to drive their sustainability efforts. Instead, they should focus on value creation and protection by developing and executing transition plans to lower emissions.
Understanding which projects can yield a positive return on investment and identifying operations that challenge sustainability goals are crucial steps.
The survey highlighted that 91 percent of companies have strengthened their strategic commitment to sustainability, climate risk, or decarbonization. However, 80 percent lack the time and resources to prioritize reducing their carbon footprint immediately.
Additionally, 75 percent lack the necessary data to effectively measure and evaluate their carbon footprint. There is a consensus among 89 percent of businesses that regulations are needed to drive decarbonization across industries globally.
Despite these challenges, only 29 percent have set specific targets for carbon emission reduction, and 33 percent have integrated sustainability criteria into various business operations. Furthermore, 42 percent have invested in renewable energy sources.
