Extreme weather directly impacted nearly six in 10 Canadian companies

An unprecedented number of extreme weather events this year - from rampaging wildfires, damaging storms, floods, and heat domes - have impacted nearly 60 per cent of Canadian small- and medium-sized businesses (SMBs), finds new research by KPMG in Canada.

The impacts on their operations ranged from damaged facilities and broken supply chains to increased costs and insurance claims, the KPMG Private Enterprise™ Business Survey revealed. More than half of SMBs (51 per cent) experienced a significant rise in their overall costs, while 44 per cent cited a direct loss in revenue.

“Our survey reveals that climate-driven disasters are having a devastating impact on lives, livelihoods, and the economy,” says Doron Telem, National ESG Leader at KPMG in Canada. “An alarming number of companies - nearly six in 10 - were impacted because of extreme weather events, and the year is not over. A changing climate means businesses need to make climate risk a priority to manage the costly reality of being caught unprepared in the future.”

• 59 per cent of Canadian SMBs say they were “directly impacted” by extreme weather events
• 51 per cent experienced disruptions in their supply chain or broken supply chains
• 45 per cent say their facilities were damaged, for example, a store or factory, etc.
• 41 per cent had to relocate their operations or move to other facilities
• 54 per cent say their costs rose significantly
• 44 per cent suffered a direct loss in revenue
• 44 per cent say their employees were also directly impacted

The survey shows just how much various regions of the country were impacted by extreme weather. For example, in Ontario outside of the Greater Toronto Area, nearly 80 per cent (79 per cent) of SMBs – significantly higher than the national average -- were directly impacted, 72 per cent say their costs rose significantly, 61 per cent suffered supply chain disruptions and more than half (56 per cent) suffered damaged facilities. Similarly, SMBs in B.C. (outside of the Greater Vancouver Area), Saskatchewan, Manitoba, and Atlantic Canada were hit hard by extreme weather.

Canada’s largest companies are also feeling the heat. As many as three-quarters (75 per cent) of Canadian CEOs believe that natural disasters and extreme weather events are trends that will negatively impact their organization’s prosperity over the next three years, according to KPMG International’s 2023 CEO Outlook survey. That compares to only 56 per cent of their global counterparts. Nearly six in 10 (59 per cent) of Canadian CEOs are also concerned about the global trend to downplay climate change and that the failure of climate-change adoption will negatively impact their organization over the next three years, compared to 55 per cent of global CEOs, the survey finds.

“The wildfires this past summer and weather-related tragedies the world over, have intensified climate concerns among Canadian business leaders,” says Mr. Telem. “To address the new reality, companies need to have business-interruption plans at the ready and will also require stronger, more robust climate resiliency and adaptation plans.”

KPMG in Canada surveyed business owners or executive level C-suite decision makers at 700 small-and-medium-sized Canadian companies between August 30 and September 25, 2023, using Sago’s premier business research panel. A quarter of the companies surveyed have more than C$500 million and less than C$1 billion in annual revenue, a quarter have more than C$300 million and less than $500 million in annual revenue, 23 per cent have between C$100 million and C$300 million in annual revenue, and 26 per cent have between C$10 million and C$50 million in annual revenue. No companies were surveyed under C$10 million.

The ninth edition of the KPMG CEO Outlook, conducted with 1,325 CEOs between August 15 and September 15, 2023, provides unique insights into the mindset, strategies, and planning tactics of CEOs. All respondents have more than US$500 million in annual revenue and a third of the companies surveyed have more than US$10 billion in annual revenue. The survey by KPMG International included CEOs from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the U.K. and the U.S.) and 11 key industry sectors (automotive, consumer and retail, energy, financial services, infrastructure, life sciences, manufacturing, technology, and telecommunications). NOTE: Some figures may not add up to 100 per cent due to rounding.