Box 1: The majority of firms see climate change as relevant to their business operations
As part of the Bank of Canada’s broader efforts to understand the macroeconomic impacts of climate change, firms participating in the autumn and winter Business Outlook Surveys were asked to what extent climate change affects or is taken into consideration in their business operations. The majority of firms, especially those in the goods sector and large and exporting firms, reported that climate change is a relevant or very relevant topic for their business.
More than half of the affected respondents noted negative impacts of climate change for their businesses, mainly for two reasons. First, several have suffered the consequences of extreme weather, including financial losses or damage related to floods, wildfires and hurricanes. Changing seasonal patterns and generally more unpredictable weather also disrupted firms’ operations or sales in agriculture and fishing, as well as industries tied to transportation and construction. Second, many respondents referred to increased costs related to complying with climate-related policy and regulation (e.g., pollution charges, environmental standards and disclosure policies), as well as higher insurance costs for some.
Conversely, one-third of affected firms noted positive impacts of climate change for their firm, often related to new business opportunities. These include firms selling products or services that are energy-efficient or environmentally friendly to customers looking for lower-carbon alternatives. They often pointed to growing demand for green products (including clean technology) and a strong demand for green financial products; some noted that they had benefited from adopting new offerings ahead of competitors. A few businesses also reported that warmer weather helps their sales (e.g., in tourism). Finally, some firms also said that the adoption of energy-efficient technologies helped reduce their operating costs (e.g., due to lower energy consumption).
Over one-third of businesses said they are already taking concrete steps in response to climate change. This is often an important consideration for corporate image and is relevant to both customers and employees (i.e., corporate social responsibility). Several firms describe their move as necessary to attract young or more environmentally conscious workers, to fulfill clients’ or investors’ requirements, or to enhance their marketing. Some firms noted they are focusing on sustainability, investing in green energy such as solar power and low- or zero-emission fleet vehicles. Others said they are prioritizing waste management as a way to reduce their footprint or offering green incentives for their employees. A few reported planning to become or having already become carbon neutral.