Financial impact of climate change is concerning Canada's business leaders

The costs are becoming increasingly real, and leaders say FIs can do more to help

Financial impact of climate change is concerning Canada's business leaders
Steve Randall

The financial cost of climate change is not something that may be a problem for businesses in the future; it’s happening now, and leaders need to know what they can do about it and how financial institutions can help.

The second annual BMO Climate Institute Business Leaders Survey asked executives in Canada and the United States for their insights into how climate change is affecting their organizations today, and the challenges they face in getting to net zero.

Almost half of respondents believe that climate change is already impacting their business and 81% believe it will do so in the next five years.

Worryingly, despite a 6-point rise from last year, just 35% of leaders said they have a plan to address the impact of climate change, although another 35% are developing one. But breaking out the two sets of leaders, the Canadian cohort is less likely to have a plan in place (27%) than their American counterparts (38%).

To help make a difference to greenhouse gas emissions:

  • 76% of Canadian and U.S. businesses chose the use of renewable, compostable, and recyclable resources
  • 61% chose tracking and managing supply chain emissions and cutting back on travel
  • 53% chose the purchase of carbon credits, up 6% from 2022, and an 8% increase in Canada alone.

Asked whether government climate change policies are achievable, 45% of Canadian poll participants said they are but only 3% thought they were just right. U.S. respondents were less optimistic with 38% saying its government’s policies are too ambitious, 34% saying they are achievable despite this, and 24% believing they are lenient.

However, American business leaders feel more supported than their Canadian peers with 25% saying they felt strongly supported to establish and pursue a realistic climate plan compared to just 10% in Canada.

FIs need to do more

Almost seven in ten respondents say that financial institutions can play a role in helping companies become more climate friendly.

But while 28% of American business leaders say FIs are doing this, just 15% of Canadians agreed.

But on both sides of the border leaders have a shopping list for FIs:

  • 77% are interested in the ability to generate insights on how business can adapt and thrive in an evolving climate landscape.
  • 77% are interested in financial premiums for meeting climate-related targets, including discounted loans, and higher deposit rates.
  • 76% value more analysis on how climate change will affect their business.
  • 75% are interested in a tailored suite of green advisory, investment and lending products and services to support climate-related investments.
  • 78% of Canadians and 70% of Americans are looking for an easier way to track greenhouse gas emissions.
  • 70% of Canadians and 65% of Americans are looking for help with carbon offsets and trading carbon credits globally.

"The results of the survey reveal that 61% of leaders with a plan are doing it because they think it's good for their business, while those without a plan are looking for advice and support in mitigating the impacts of climate change on their businesses," said Michael Torrance, Chief Sustainability Officer, BMO. "Business leaders are telling us they value products, services and incentives that will help them reduce their footprint, as well as insights to help them adapt and thrive in the evolving landscape.”