Cars were stuck on the flooded Don Valley Parkway in Toronto after torrential rain caused the Don River to overflow at the Dundas Street bridge, on July 16.Melissa Tait/The Globe and Mail
More than half of Canadian businesses took financial hits last year from extreme weather, yet a large majority of executives say their companies lack the time and resources to prioritize cutting carbon emissions, a new survey finds.
The poll of executives from 350 companies, conducted by accounting consultancy KPMG, found 56 per cent suffered lower profit because of wildfires, floods, heat waves and other weather damage in 2023.
Half suffered productivity losses and broken supply chains, and 30 per cent reported having their insurance cancelled or premiums increased, the survey released Wednesday found.
In addition, nine out of 10 believe their organizations will have to deal with a climate-related incident this year, KPMG said.
Drone footage of the Don Valley Parkway shows the extent of flooding after torrential rain passed over Toronto on Tuesday. Cars were stranded and motorists backed up in both directions of the freeway to the east of Toronto's downtown.
The Globe and Mail
The results show how the physical impact of climate change is a growing business risk, in addition to more stringent government and regulatory policies related to moving to a lower-carbon economy. In 2023, severe weather and natural disasters in Canada caused more than $3-billion in insured damage for the second year in a row, and wildfires, flooding and extreme heat are again wreaking havoc across the country.
“Around 90 per cent of businesses are seeing the impacts of extreme weather and right around that same number are those who want to make more investments and support climate-related goals. So they’re connecting the dots from our perspective,” said Roopa Davé, partner and national climate risk leader at KPMG.
However, four out of five company officials say their organizations lack the time and resources to make reducing their carbon footprint an immediate priority. Fewer than a third report setting specific targets for emissions reduction.
This is largely owing to the competition for capital as companies deal with other problems to be solved, such as inflation and other business risks, Ms. Davé said.
”It’s not to say that this diminishes it. It is just a challenging business environment,” she said.
“Getting the business case is sort of the main focus for a lot of us who work in this space and it can be a challenge.”
KPMG surveyed top executives and owners of companies with annual revenues ranging from above $10-million to more than $1-billion in industries such as transport, health, mining, oil and gas, and retail.
Among the top reasons for struggling to meet climate targets, companies cited difficulties adapting to changing regulations, securing funding for large decarbonization projects and balancing short-term financial constraints with meeting long-term net-zero goals.
KPMG’s statistics track closely those compiled by Climate Engagement Canada, a coalition of institutional investors seeking to persuade the country’s largest industrial emitters to improve their climate-related performance.
Of the more than three dozen companies that generate large volumes of greenhouse gases, nearly all are moving to improve their climate-related disclosure to international standards, but none has committed capital spending to meeting their decarbonizations strategies, the investment group has reported.
Investments for getting to net-zero are likely to pick up as companies gain broader perspectives on how return on investment is defined, Ms. Davé said. That will include adopting highly detailed plans to make the transition to low-carbon operations, and understanding the risks of not doing so, she said.
“It’s a little naive to say that everything’s going to have a positive ROI. That’s unrealistic. So a lot of it is also looking at alternative ways of understanding ROI for the business and I think a big piece of that is value protection,” she said.