Canadian SMEs Dealing with “Other Priorities” Rather than Climate Change: Survey

BMO

Businesses in Canada are concerned about the impacts of climate change but, according to a BMO Climate Institute survey of small and medium-sized businesses (SMEs) in North America, other priorities, and the high costs of climate mitigation mean few have plans in place to fight it.

The inaugural BMO Climate Institute survey of SMEs’ views on climate change found 69 per cent of respondents expect the physical impacts of climate will disrupt operations over the next five years, and almost a third say severe weather patterns are already creating challenges. Despite this, only 24 per cent of Canadian businesses have a plan in place to address it. Many SMEs say they are either unsure where to begin or are focused on more immediate challenges to justify the cost of mitigating climate change.

“The BMO Climate Institute commissioned this survey to seek a deeper understanding of how small and medium-sized businesses – fundamental participants in a successful energy transition – view climate change and the associated challenges as well as opportunities,” notes Susan McGeachie, Head, BMO Climate Institute. “While we weren’t surprised that most SMEs don’t yet have a climate change plan in place, for myriad reasons, we were surprised to learn that so many of them are already feeling its impact. There are right-sized strategies for SMEs that they can undertake now to protect their businesses from climate change-related risks due to factors like changing weather, and measures to accelerate a low carbon transition.”The survey results contrast with the actions many large organizations are taking to manage greenhouse gas emissions throughout their entire supply chain. Either through collaborative disclosure initiatives or on their own, large companies are increasingly asking their suppliers to report their GHG emissions which enables them to calculate, monitor, disclose and, ultimately, reduce the carbon intensity of their products.

Few SMEs (15 per cent in Canada) however, view greenhouse gas reduction and other transition risk as the top climate-related impact on their business. But 44 per cent of respondents perceive climate change through the lens of severe and unpredictable weather patterns – potentially missing climate-related opportunities tied to the transition to a lower carbon economy.

“A key challenge for both Canada and the U.S. in making progress on national climate change goals is that we’re still lacking the right economic incentives to both decarbonize and invest in more resilient operations, particularly when the costs associated with addressing climate change are highly uncertain,” explains McGeachie. “These challenges create a divergence between corporate strategy and policy goals for decarbonization, especially for SMEs.”

Thirty per cent of Canadian companies said GHG costs are already having an impact on their economic performance and 24 per cent of Canadian companies expect carbon pricing to be a challenge within three years, while, across North America, 21 per cent of respondents said investor expectations influenced their decision to adopt a climate change policy.

Additionally, many of those surveyed said they are too preoccupied with inflation, supply chain and labor issues to implement climate strategies: in Canada, 80 per cent of SMEs ranked labour shortages as their biggest concern, ahead of supply chain challenges (77 per cent) and climate change (71 percent). Moreover, only nine per cent of Canadian SMEs said they feel supported by government.

SMEs account for more than 98 per cent of businesses in Canada. They employ approximately 70 per cent of the total workforce and have been responsible for creating more than half of net new private sector jobs over the past few decades, yet they feel they receive very little support from government and external partners to help them with climate change.

Established in 2021, the BMO Climate Institute is a centre of expertise bridging policy, science, and finance to help shape the market for climate solutions. The BMO Climate Institute survey was conducted by Pollara with more than 600 business leaders in the US and Canada between October 18 and October 21, 2022.

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