In the wake of the Paris agreement – a historic, global pact on climate change – the results of this quarter's Canadian C-Suite Survey are encouraging.
Conducted just prior to the COP21 negotiations in Paris, the survey reflects the general support of Canadian business for this kind of deal. Eighty-nine per cent of respondents agreed that Canada "should be a part of any global agreement on greenhouse gas reductions if it includes the world's major economic powers."
A clear majority of respondents also indicated that the Liberal government should move ahead with a framework of regulations on climate change and emissions.
Of course, significant uncertainties do remain globally in terms of practical implementation of the Paris agreement, and our situation in Canada is no different. The upcoming meetings between the federal and provincial governments to develop a national climate change strategy framework will be an important next step. National and provincial emissions-reduction targets will need to be advanced and aligned, while recognizing that carbon pricing mechanisms will likely continue to vary by province.
In the meantime, leading businesses – both globally and in Canada – are not waiting for governments to finalize their agendas before they act. The active participation of businesses at the COP21 meetings and ancillary events demonstrates this to be the case.
KPMG International's recent corporate responsibility reporting survey found that a significant number of the world's largest companies (55 per cent in North America) already publicly disclose their carbon-reduction targets. A number of companies are also incorporating an internal carbon price in their capital decision-making. They are making educated assumptions as to the carbon pricing mechanisms that various jurisdictions will ultimately adopt, and evaluating the corresponding impact on the payback of longer-term investments.
All companies will need to revisit their products and services to help them better understand the market impact accompanying a shift to a low-carbon economy. These could range from reduced demand for energy-intensive products, to new opportunities in renewable energy services.
Articulating a strategy will be important, given that investors will inevitably shift their asset mix toward companies that are well positioned to succeed in a low-carbon economy. This shift will likely be led by large institutional investors such as Canada's pension plans and investment boards, many of whom are signatories to the UN's Principles for Responsible Investment. These investors also apply environment, social and corporate governance considerations in their due diligence processes.
The international business community appears to be largely in step with its governmental counterparts regarding the approach taken in the Paris agreement. At the same time, the true heavy lifting is yet to come, and business will play a critical role in helping to develop and drive investment in advanced technological solutions at a scale never seen before.
Bill Murphy and Chris Ridley-Thomas are partners in KPMG Canada's sustainability services practice.