Canadian Businesses Need Government Support to Reach Green Goals
A recent KPMG survey of 505 medium-sized businesses revealed that they require support from the Canadian government to effectively compete with the new American and European Union green tax legislation. In advance of the 2023 federal budget, hundreds of Canadian business leaders have actively committed to becoming more sustainable and administering environment, social, and governance (ESG) methods into their daily business methodologies. However, their efforts alone are not sufficient enough. These businesses have pleaded the need for government support to aid in these companies’ transition into an eco-friendlier economy.
“Canada’s business leaders are ready to make the green transition but need government to create a more supportive environment, including further tax relief to help them transition away from carbon-intensive products and invest in clean energy and net-zero technologies,” said Lucy Iacovelli, Canadian managing partner of Tax at KPMG Canada.
The KPMG survey revealed that eight in 10 (80 percent) of Canadian businesses surveyed believe that additional tax incentives and investment tax credits will make becoming green much more feasible for their company. The Canadian government would have to compete with The U.S. Inflation Reduction Act which ends tax credits for renewable energy sources and provides 30% tax credits for wind and solar. The European Commission adopted guidelines to support businesses attempting to reach their climate goals by reducing their emissions by at least 55% to match the EU Green Deal. Canadian business leaders are ready for this challenge and strive to achieve a net-zero economy, so long as the country’s government buttresses their efforts.
High Inflation Hindering Company’s Climate Goals
“More than eight in 10 (84 percent) indicated that they are using existing government incentives to reduce their environmental footprint, but to stay competitive, they believe it is vital that Canada keeps pace with the new green investments and tax measures being adopted in the U.S. With the right supports and tools, Canadian businesses can play a key role in driving clean growth, creating sustainable jobs and carving out a unique place for Canada in the new global economy.”
High inflation costs and rising interest rates can hinder a company’s ability to reach its climate goals. The survey revealed that 84 percent of business leaders assume inflation will extend into 2024 which impacts sustainability goals because consumers are, as a result, switching to less expensive alternative products to purchase instead of sustainable options. “Business is not just looking for tax incentives and programs that focus on them. Most (80 per cent) think government needs to support their green business transition by implementing more consumer incentives to further drive consumer demand for change,” stated Doron Telem, national ESG leader of KPMG Canada.
“It is encouraging to see that these business leaders plan to increase investments and resources in their ESG practices this year. However, many may only be able to do so with stronger government support. We expect the federal budget will offer more details on the government’s economic plan to support business and the green transition, with a specific focus on emerging sectors, clean technologies, zero-emission vehicles, and batteries, critical minerals and energy sources,” Telem explained.