Investors and regulators want clearer information about how firms are aiming for sustainability goals
Canadian companies are better than many global peers when it comes to transparency in reporting sustainability goals and achievements.
But complacency is not an option as the outperformance belies the demands of investors, the public, and regulators for even clearer insights on how environmental, social, and governance (ESG) is being managed.
According to a global report from KPMG, 92% of Canada's top 100 companies report on ESG performance. That’s a rise of 10% in the last three years with almost three quarters including sustainability-related information in their annual reports – a jump of 25% since 2017.
"2020 has been a significant watershed moment for Canadian companies when it comes to reporting on ESG," says Bill Murphy, head of Sustainability & Impact Services, KPMG in Canada. "The pandemic, pressure from institutional investors and Canadians at large, and the momentum towards developing universal standards have combined to create an expectation that companies provide substantive disclosures regarding their sustainability performance.”
However, only 43% seek third-party assurance on their disclosures, something Murphy says is important in building credibility and trust among stakeholders.
Climate risk needs context
While most of the largest Canadian firms acknowledge climate change as a financial risk, just 3% quantify the potential financial impact of those risks.
"Tone at the top is essential, but what gets measured gets managed," says Roopa Davé, partner, Sustainability & Impact Services, KPMG in Canada. "Canada's businesses have more work to do to increase transparency and credibility by reporting on their progress in achieving their ESG goals and meeting the growing expectations of their stakeholders. Companies that do it right will be better positioned to manage the risks to their business and ensure access to capital, while staying relevant with consumers and attracting top talent."
