Private companies: stay focused on sustainability to gain competitive advantage

Staying the course on sustainability can help Canada’s private companies gain resilience, agility and long-term value.

In brief

• Canada’s private businesses that remain focused on sustainability — regardless of broader uncertainty — can create business value over the long term.
• Proactively managing key sustainability risks now can help businesses succeed during volatile times and into the future.

A well-planned sustainability journey directly supports long-term value creation. That remains true even as the environment seemingly changes by the day. In fact, continuing to proactively address sustainability risks through a thoughtful enterprise risk management (ERM) approach may help private businesses carve out a competitive edge in this dynamic market. Doing so also creates pathways to a wide range of sustainability-driven opportunities — from new markets and reduced costs to novel product offerings.

Effectively managing sustainability risks and capitalizing on opportunities builds momentum for private companies

Regulation on sustainability matters is a bit of a moving target right now. Investor-grade sustainability reporting is gaining momentum globally, with a number of countries adopting the International Financial Reporting Standards (IFRS) S1 and S2.

Here in Canada, voluntary reporting has already begun. In December 2024, the Canadian Sustainability Standards Board (CSSB) launched landmark sustainability disclosure standards  aligned with global reporting baselines.

This follows on similarly big moves in the European Union, where companies have been required to disclose information related to their impact on people and the environment as well as financial effects over the short, medium and long term across the value chain. The scope of companies and the content of what they are required to report, however, is in flux.

That to say: compliance will continue to be important. But sustainability reporting is bigger than compliance alone. Addressed strategically, effective management of sustainability risk creates business value and opportunity.

By the numbers, EY research from 2023  showed that the perceived trade-off between delivering on environmental goals and meeting business objectives is often a false choice. In fact, a value-led sustainability approach can drive actual financial impacts:

• Seven in 10 survey respondents said they achieved higher than expected financial value from doubling down on ESG matters.
• Companies leading on action take a broader approach to ESG — and they’re 2.4 times more likely to report significantly higher financial value than expected.

In today’s context, those numbers become even more relevant. The economic system is noisy right now. The longstanding principles that shaped trade and business for decades have changed. Managing risk well in the face of uncertainty like this becomes even more important. And doing so while remaining relentlessly focused on aligning risk management to business plans can help enhance your bottom line.

Case in point: proactively managing a physical plant’s exposure to flooding or wildfires is always helpful, no matter what’s going on in the geopolitical world. Investing in renewable energy sources may reduce operating costs at sites across your network, even if the market is evolving.

These concepts are constant even in the face of unpredictability. Take that thinking further, and the way you manage sustainability risks may very well open the door to growth.

Consider the progress or momentum you may have already built in sustainability risk management over the years. Think about the investments made, governance frameworks refined and the multitude of ways you’ve already woven sustainability into your broader ERM model. All of this makes your business future ready — no matter what happens next on the trade, economic or geopolitical front.

If you’re looking to diversify supply chains, reimagine operating models or expand into other markets in light of current trade uncertainty, you must be ready to comply in those new jurisdictions. The same goes for attracting capital or investors from abroad.

Organizations that have invested in and built out sustainability strategies and related governance frameworks may be better positioned to jump on international opportunities like these more quickly than their competitors.

That’s agility. It bolsters business resilience and supports long-term growth. And it’s remarkably valuable in the face of economic ambiguity at home and abroad.

How can private businesses continue generating value from sustainability strategies?

Continuing to embrace and strengthen core risk management principles can reinforce your sustainability approach even when the world around us feels complicated. Doing so now can help your private company pivot, seize opportunities or attract capital and shape the future.

We recommend concentrating on key sustainability risk management priorities to seize opportunities now: