According to the second annual BMO Climate Institute Business Leaders Survey, the business impact of climate change is driving more business leaders to think about mitigation plans, especially in the U.S. Based on a survey of 700 business leaders in the U.S. and Canada, the results of the survey reveal why companies are increasingly taking action, how they are thinking about climate risk, and the challenges and opportunities they face in their transition to net zero.

“Inspired by our purpose to boldly grow the good in business and life, BMO’s climate ambition is to be our clients’ lead partner in the transition to a net-zero world,” Melissa Fifield, head of the BMO Climate Institute. “As we make progress toward this goal, the BMO Climate Institute Business Leaders Survey helps us understand how businesses view climate change. Nearly half are already experiencing an impact on their businesses and many more expect to feel the effects in under five years. Insights from this research help us advance the conversation around the challenges and opportunities of energy transition and respond to our clients’ growing needs in this space.”

Even though, as in 2022, concerns like inflation and interest rates (89%), labor shortages (76%), and supply chain bottlenecks (75%) continue to weigh heavily, business leaders are increasingly paying attention to climate change:

• Nearly half (48%) of business leaders surveyed believe climate change is already affecting their businesses and even more (81%) anticipate it will affect their businesses in the next five years.
• According to the survey, 32% of businesses have a plan in place to address climate change, up 6% from last year, and 35% are in the process of developing one.
• S. business leaders (38%) are more likely to be moving forward with plans (up 10% from las year’s survey) compared to Canada, where only 27% have a plan in place (up 3% from last year’s survey).

Though business leaders are slightly less confident in their ability to make a difference to greenhouse gas emissions, the survey identified actions believed to have the most impact. According to the survey, 76% of Canadian and U.S. businesses chose the use of renewable, compostable and recyclable resources, while 61% chose tracking and managing supply chain emissions and cutting back on travel. In addition, 53% chose the purchase of carbon credits, up 6% from 2022, and up 8% in Canada alone.

Many business leaders think governments and industries could provide more realistic policies to help. Industry policies continue to be perceived as more lenient by all businesses, especially in Canada, where only 44% of businesses find industry policies ambitious (10% too ambitious, 34% ambitious but achievable).

In the U.S, 39% believe the climate change policies set by government are too ambitious to be achieved (up 18% from last year), 34% believe they are ambitious but achievable and 24% believe they are lenient. In addition, in the U.S., 25% of respondents are more likely to say they are being strongly supported by the government to establish and pursue a plan in a way that allows them to make realistic climate goals, up 6% from last year.

In Canada, 45% are more likely to find government policies achievable — similar to last year’s findings — and only 3% of leaders thought their government’s policies are just right. In addition, 10% said they feel strongly supported to establish and pursue a realistic climate plan.

The majority (68%) of businesses leaders continue to believe that financial institutions could play a role in helping companies become more climate friendly, with 22% (28% in the U.S. and 15% in Canada) saying they are already playing this role and 46% saying there is more they need to do. Among the products and services available from financial institutions:

• 77% of leaders 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.
• 74% (78% of Canadian business leaders and 70% of leaders in the U.S.) are looking for an easier way to track greenhouse gas emissions.
• 67% (70% of Canadian business leaders and 65% of leaders in the U.S.) 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,” Michael Torrance, chief sustainability officer at BMO, said. “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. As our clients’ lead partner in the transition to a net-zero world, BMO can meet these needs, helping them to make progress by contributing to their understanding of climate risks, advising them on their climate plans and discussing their financial options.”