- Survey shows small and medium-sized enterprises (SMEs) in
Canada and the U.S. are concerned
about the impacts of climate change, but few have action
plans
- Businesses expect physical impacts of climate to disrupt
operations over the next five years with severe and
unpredictable weather patterns topping the list while one third are
already feeling the impacts
- SMEs say they could use help to understand the impact of
climate change on their businesses
TORONTO, Dec. 7, 2022
/CNW/ - According to a BMO Climate Institute survey of small and
medium-sized businesses (SMEs) in North
America, respondents are very or somewhat concerned about
the impacts of climate change, but 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 SME's' 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. In the U.S., the
number of those with a plan rises slightly to 28 per cent. 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.
SMEs account for more than 98 per cent of businesses in
Canada and over 99 per cent in
the United States. 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.
To make progress against climate change, SMEs need advice and
support
"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," said 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 results of the survey reveal that 35 per cent of those
businesses with a plan are doing it to meet customer expectations,
while those without a plan are looking for advice and support in
mitigating the impacts of climate change on their businesses," said
Michael Bonner, Head, Canadian
Business Banking, BMO. "BMO's climate ambition is to be our
clients' lead partner in the transition to a net-zero world. We are
focused on helping them thrive and make progress by contributing to
their understanding of climate risks, advising them on their
climate plans, and discussing their financial options."
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 and 19 percent in
the United States) however, view
greenhouse gas reduction and other transition risk as the top
climate-related impact on their business. Rather, 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.
"Interestingly while most SMEs are not yet prioritizing GHG
emissions when they consider climate change, many of these
companies are part of the supply chains of much larger
organizations that are," said Ms McGeachie. "This is a gap that
will need to close as large companies seek to understand and remedy
emissions along their value chain. It takes time to put the systems
in place to measure and track GHG output so this is something that
SMEs need to start thinking about now."
For SMEs, economic and commercial factors are the most
important drivers to advancing climate action:
- 30 per cent of Canadian and 19 percent of American respondents
said GHG costs are already having an impact on their economic
performance
- 24 per cent of Canadian and 27 per cent of U.S. companies
expect carbon pricing to be a challenge within three years
- Almost a third of U.S. businesses with climate plans have
them because they expect it will improve their profitability and/or
share value
- Across North America, 21 per
cent of respondents said investor expectations influenced their
decision to adopt a climate change policy
- Many of those surveyed said they are too preoccupied with
inflation, supply chain and labor issues to implement climate
strategies
- More than 90 per cent of business leaders in Canada and the U.S. said they are concerned
about inflation and rising interest rates
- 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). In
the U.S., 80 per cent of SMEs ranked supply chain bottlenecks as
the biggest concern after inflation and rising rates, while climate
change ranked on par with labour shortages amongst roughly 70 per
cent
Small and mid-sized businesses think their banks can help
them plan
Forty per cent of SMEs are in the process of developing a
climate plan but only 19 per cent in the U.S. said they feel
supported by government. In Canada, this drops to nine per cent. The
survey found that many leaders see opportunities to partner with
their financial institutions; seven in 10 of Canadian and U.S.
respondents said financial institutions could help them better
align their business with climate change objectives. In
Canada 17 per cent of SME leaders
said their financial institutions are already playing this role,
compared to 27 per cent in the U.S. Almost half of business leaders
feel financial institutions could do more to help them with climate
plans.
In both Canada and the U.S.,
more than 80 per cent of small and medium-sized businesses say they
are either very or somewhat interested in any insights they could
get from their banks on how to address climate change, including
discounted loan programs to help cover associated costs.
"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," said Ms.
McGeachie. "These challenges create a divergence between corporate
strategy and policy goals for decarbonization, especially for
SMEs."
The BMO Climate
Institute
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 Institute strives to advance
climate action with a focus on decarbonization, resilience and
climate justice. 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
About BMO Financial
Group
Serving customers for 200 years and counting, BMO is a highly
diversified financial services provider - the 8th largest
bank, by assets, in North America. With total assets
of $1.14 trillion as of October 31, 2022, and a team
of diverse and highly engaged employees, BMO provides a broad range
of personal and commercial banking, wealth management and
investment banking products and services to more than 12 million
customers and conducts business through three operating groups:
Personal and Commercial Banking, BMO Wealth Management and BMO
Capital Markets.
SOURCE BMO Financial Group