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Canada’s economy is no stranger to these challenges, but the interplay of Canada’s economy, government policy emphasizing sustainability, and volatility in global markets is creating a uniquely Canadian challenge.
In a recent EY study of 1,200 CEOs globally, participating Canadian executives revealed the following themes:
Lingering impacts of the pandemic
Canadian CEOs are expecting and planning for a severe and drawn-out economic downturn relative to their global peers, suggesting a tougher business environment in the near term. Globally, this downturn is expected to differ from past slowdowns, primarily due to lingering uncertainties relating to supply chain disruptions, talent shortages and the ongoing impact of COVID-19.
However, only 47% of Canadian CEOs share this global view and express greater confidence in navigating these challenges. They believe they may be somewhat more insulated from geopolitical tensions and energy insecurity than other countries. For 33% of Canadian respondents, pandemic-related issues were the main geopolitical driver for changes to strategic investment plans such as delaying planned investments and exiting certain markets.
Geopolitical challenges
The Canadian economy, due to its strong exports in commodities, goods and services, experiences greater exposure to macroeconomic trends requiring additional considerations from businesses in navigating global slowdowns.
To hedge against geopolitical uncertainty and risks in currency and commodity markets, 60% of Canadian leaders are prioritizing corporate finance, treasury and balance sheet management. Additionally, all Canadian CEOs indicated they are considering optimizing net working capital to provide further cushioning for their companies’ continued operations.
Experienced leadership
While global uncertainty is elevated, 53% of CEOs expressed a lack of confidence and/or comfort in their senior leadership to navigate an economic downturn. Canadian CEOs were more confident in comparison, as only 39% of respondents indicated this concern. However, confidence in Canada’s fiscal and policy decisions is low, with only 47% agreeing with measures taken, compared to 58% globally.
Opportunities in ESG
Canadian businesses are much more proactive when it comes to climate change impacts and building sustainability compared to their global peers, as 34% of Canadian CEOs reported this among their top risks, compared to 28% globally. As a result, 48% of Canadian CEOs plan to invest and lean in to ESG priorities to emerge from the downturn in a stronger position. In fact, 38% are expanding ESG/sustainability in the next six months as a core aspect of products and services offered to engage customers, meet regulatory requirements and improve ESG ratings.
Prioritizing people
A fifth (20%) of Canadian CEOs identified talent and workforce wellbeing as the primary investment area to emerge from the downturn stronger than their competitors, whereas only 14% of global respondents shared this view. Consequently, 34% of all Canadian CEOs are prioritizing adopting new working models and talent strategies to attract and retain employees in a historically tight labour market, compared to 29% globally.
Flexible work is increasingly seen as the tool to achieve that goal according to nearly 72% of Canadian CEOs. Additionally, while other organizations may be seeking a reduction in headcount, 56% of Canadian CEOs see this as an opportunity to attract talent to their own organization: 42% of Canadian leaders expressed interest in restructuring or reducing their employee base and training budgets, suggesting that different viewpoints prevail across the economy — and emphasizing the importance of sector-specific action plans.
Consumer-centricity
As an advanced economy, Canada benefits from a more developed services sector that keeps customer experience top of mind. Survey results show 38% of Canadian CEOs identified marketing and customer experience as their top two investment priorities to emerge stronger from the downturn, compared to 27% globally. To achieve these objectives, 36% are investing in technology in the next six months to optimize products and services to boost customer loyalty.