Southgate solar in the Township of Southgate, Ont., constructed by PCL Construction. The company believes sustainable building practices are as much about financial efficiency as environmental responsibility.Supplied
Businesses are grappling with optimal ways to address environmental, social and governance (ESG) initiatives.
In a recent KPMG survey of 350 Canadian business leaders, 75 per cent said they worry that publicly talking about climate poses a reputational risk to their organizations. Nearly 80 per cent are also concerned that pulling back on climate initiatives could lead to increased frequency and severity of extreme weather.
The survey was conducted in 2025, between April and May, as the Canadian Securities Administrators (CSA) announced it was pausing development of a new mandatory climate-related disclosure rule, and changes to existing diversity-related disclosure requirements, in response to “recent developments” in the United States.
“I think the pendulum [has] swung so far that people are worried about what you can and cannot talk about with this confluence of the [ESG] backlash and Bill C-59,” says Doron Telem, partner and national ESG leader for KPMG in Canada. Mr. Telem is referring to Canada’s greenwashing and false advertising bill, which went into effect in June, 2024.
“To some extent, it is not a bad thing, because [businesses] really want to make sure [they’re] substantiating claims,” Mr. Telem says.
There’s no question priorities are shifting as businesses recalibrate to consumer trends. The changing sentiment surrounding sustainability is trickling down to suppliers in industries that support ESG goals.
Nakul Mehra, director of sales and marketing at Canada Brown Eco Products, a Mississauga-based packaging company that supplies items such as food trays, straws, reusable bags and paper cups for such companies as Nestlé, Amazon and Skip the Dishes, says the vast majority of clients never leaned completely into sustainable packaging.
“I would say there’s only a handful or less of companies that are 100-per-cent eco-friendly in packaging,” Mr. Mehra says. “Now, with the shift toward cheaper pricing, being more competitive and protecting the bottom line, eco-friendly or environmental consciousness is not at the top of the list for many purchasing officers.”
But the brands that are willing to pay the premium see it as a value-add, Mr. Mehra says.
Wren Montgomery, associate professor of management and sustainability at Western University’s Ivey Business School, has been researching greenwashing for 15 years and its more recent offshoot, ‘greenhushing’ — a company that’s enacted ESG policies but chooses not to publicize it — for the past seven years.
“What we see now, when we have regulations coming in, [is companies] who were actually just greenwashing and weren’t doing anything credible are pulling back on those commitments, which is good,” Ms. Montgomery says. “We were trying to shut down greenwashing, and the best estimates I’ve seen are 50 per cent of claims are greenwashed, so we’re going to see this massive pullback once we start to regulate it.”
From Ms. Montgomery’s perspective, it allows business leaders who actually espouse these values to be rewarded by the marketplace. “Consumers really want to buy this stuff, they really want to invest in it, they really want to work for sustainable companies … they can now find the companies that are actually doing something.”
KPMG’s Mr. Telem agrees. He says there’s a general understanding among companies looking 10 to 15 years into the future that businesses actively lowering their emissions and undertaking socially responsible decisions will be valued higher than their non-engaged industry peers.
“I think you’ll see less talk about it, but the internal investment is going to continue to be there,” Mr. Telem says. “And I think it’ll actually continue to rise, because again, companies are now concerned with their long-term sustainability.”
Greater scrutiny of ESG policies in the United States has had a trickle-down effect in Canada, driving businesses to rethink how they share their values. Many remain quietly committed to their goals, especially the suppliers further down the chain.
“For the vast majority of clients we work with, firms that were interested in sustainability were doing sustainability reporting and doing the right things well before any regulations came into place,” says Todd Craigen, chief operating officer and president of Edmonton-based PCL Construction, Canada’s largest contracting company.
“Climate-conscious firms continue to drive sustainability targets and reporting on sustainability just as a way of doing business, and we haven’t seen that change in the last number of months.”
For some industries, sustainability is inseparable from the process: It’s there in the suppliers, whether they’re providing takeout containers or building design.
“We’re constantly looking at ways that we can develop efficiencies, provide better solutions, and better material product selections to our clients that ultimately translate into sustainably designed buildings and [reduce] operating costs,” Mr. Craigen says.
“That’s the main goal of all this … the financial payback that everybody in this business is looking for and that goes along with the goals of sustainable design – it’s good for business.”