Businesses say they need more help from the government to help Canada transition to a greener economy, according to a KPMG report. The accounting and consulting firm surveyed 505 medium-sized enterprises in February.
Most companies (89%) say they have integrated ESG practices into their business processes and 84% are currently using government incentives to reduce their environmental footprint.
However, most think the government needs to do more to remain competitive with new US and European green tax legislation, with 80% of respondents saying they need additional tax incentives and investment tax credits to make it feasible for their companies to adopt clean technologies and energy sources.
The US Inflation Reduction Act (2022) extends 30% tax credits for wind, solar, and other renewables and tax credits of up to $7,500 on zero-emission electric vehicles. It also includes new tax credits to incentivize production of solar panels and batteries in US factories.
“Canada’s business leaders are ready to make the green transition but need government to create a more supportive environment, including further tax relief to help them transition away from carbon-intensive products and invest in clean energy and net-zero technologies,’’ said Lucy Iacovelli, Canadian managing partner, tax, KPMG Canada.
Businesses say continued high inflation is making it harder to switch to green energy and processes. Eighty-four percent think elevated inflation will stretch into 2024, with 81% attributing part of this continued volatility to the green energy transition.
“While committed to a green future, high inflation and rising interest rates are making the transition and the required investments increasingly more expensive for business,” said Mary Jo Fedy, KPMG’s national enterprise leader.
Most businesses (82%) told KPMG they plan to increase the amount they invest in ESG this year.
“It is encouraging to see that these business leaders plan to increase investments and resources in their ESG practices this year,” says Doron Telem, National ESG Leader, KPMG in Canada. “However, many may only be able to do so with stronger government support. We expect the federal budget will offer more details on the government’s economic plan to support business and the green transition, with a specific focus on emerging sectors, clean technologies, zero-emission vehicles and batteries, critical minerals, and energy sources.
The federal government will table its 2023 budget on Tuesday, March 28.
Sourced from Consultancy.ca