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25th CEO Survey—Canadian insights

Bold actions for sustained outcomes

How Canadian CEOs can navigate rising uncertainty while seizing new opportunities in a changing world

Key findings

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A complex environment for Canadian CEOs

The geopolitical landscape has changed dramatically since we surveyed chief executive officers around the globe in the fall of 2021. At the time, CEOs, including the 452 Canadian respondents we surveyed, exhibited a very bright outlook on what the following year might bring in terms of global growth prospects. But there were also clear signs of worries about the impacts of key threats, such as cybersecurity, macroeconomic volatility, geopolitical uncertainty and health risks, on global economic growth. Leaders were also paying close attention to how disruptive global mega trends—like climate change, social inequality and declining trust—could affect their organizations. If anything, recent developments have only served to amplify the level of concern about many of these threats and risks.

While Canadian CEO optimism has continued to rise, leaders are paying close attention to key threats to growth

  • Canada
  • Global

2018

Tier 1: 72%
Tier 2: 57%

2019

Tier 1: 38%
Tier 2: 42%

2020

Tier 1: 14%
Tier 2: 22%

2021

Tier 1: 72%
Tier 2: 76%

2022

Tier 1: 77%
Tier 2: 77%

 

  • Canada
  • Global
Cyber risks
53%
49%
Macroeconomic volatility
42%
43%
Health risks
40%
48%
Climate change
29%
33%
Geopolitical conflict
25%
32%
Social inequality
13%
18%

Looking beyond the short term to embrace sustained outcomes for all

What explains the high optimism when CEOs are navigating key threats and disruption? One possibility is Canadian CEOs were focusing on their near-term prospects, which arguably looked good when the focus was on pre-February 2022 economic signals and the continued reopening of the economy. But at a time of renewed concern about growth and changing expectations around trust, transparency and performance on environmental, social and governance (ESG) matters, leaders need to take decisive action to address issues that are clearly having long-term consequences. And with macroeconomic and geopolitical volatility continuing to deepen, the imperative for CEOs to reimagine their organizations will only grow.

In this report, we explore the path forward for Canadian CEOs. More than anything, our survey highlights why an agenda focused on building trust with a broader range of stakeholders is critical to navigating today’s rising threats and sometimes conflicting forces of change. Whether organizations are looking to attract and retain employees at a time of fierce competition for talent, accelerate transformation or deepen their relationships with their customers, trust has become a critical ingredient to managing through change and uncertainty. But while some organizations are seizing the opportunity to embrace the power of trust by rethinking the outcomes that matter most, many Canadian respondents have yet to realign their priorities for an evolving world. This means taking bolder steps to address the significant threats facing their organizations in the next 12 months and prioritizing key trust issues, like ESG matters, on which Canadian respondents tend to lag their global peers. It’s also imperative to adopt more effective approaches to another critical trust driver—cybersecurity—that has been a priority for some time but continues to present new challenges in our increasingly volatile world.

The challenge now is for CEOs to look beyond the short term by putting sustained outcomes at the heart of everything they do. Explore below to learn about solutions that can help you navigate the threats and uncertainty and position your organization for long-term growth.

Turning the net-zero challenge into long-term opportunities

A key part of an organization’s path to sustained outcomes will be the course it sets towards decarbonization and reducing greenhouse gas emissions to net zero. This is an area where survey responses from Canadian CEOs suggest their organizations need to catch up to their global counterparts even as it’s clear they recognize the risks of not taking action and the opportunities created by moving more quickly.

When asked about the impacts of climate change in the next 12 months, Canadian CEOs acknowledged the significance of this threat, with 51% of those very or extremely concerned about it saying it could inhibit their ability to sell products and services. And organizations that are leading the way by making carbon-neutral or net-zero commitments are acting at least in part in response to this recognition: 62% said meeting customer expectations was an extremely or very influential factor behind their organization’s carbon-neutral or net-zero goal. They’re also focusing on one of the biggest concerns for Canadian organizations right now: the shortage of talent and skills. Attracting and retaining employees was an extremely or very influential factor for 59% of Canadian CEOs making these commitments. This compares to 48% for global CEOs in our survey.

Even so, Canadian respondents have some way to go in taking the actions required. For example, just 33% say they’ve explicitly factored climate change into their strategic risk management activities, while Canadian respondents are generally behind their global counterparts in making decarbonization commitments. Only 12% of Canadian CEOs say their organization has made a commitment to net-zero emissions, with the same percentage having committed to carbon neutrality. This compares to 22% and 26%, respectively, for all global CEOs.


Canadian CEOs are concerned about climate change impacts, but few are taking the key actions required
  • 51%

    of CEOs who are concerned about climate change risks believe this threat could impact their ability to sell products or services,
    but only

  • 33%

    have explicitly factored climate change into their strategic risk-management activities


Overcoming the challenges

The gap in commitments reflects—at least in part—the higher proportion of small- and medium-sized organizations among Canadian CEOs surveyed, with 59%—versus 38% globally—having revenues of less than US$100 million. Just 11% of Canadian respondents in this revenue category said their organization had made a carbon-neutral or net-zero commitment, compared to 39% of CEOs of organizations with revenues exceeding US$1 billion. There were similar gaps by size among global CEOs, although Canadian respondents showed less ambition across all revenue categories.


Canadian respondents lag their global counterparts in decarbonization commitments regardless of organizational size

Canada

 

Global

11%

Less than US$100 million in revenue
16%

15%

Revenues between US$100 million and US$1 billion
25%

39%

More than US$1 billion in revenue
54%

Proportion of CEOs saying their organization has committed to net zero or carbon neutrality


Our survey reflects how challenging decarbonization can be for Canadian organizations, particularly for small- and medium-sized players that are the backbone of our economy. But with these organizations playing such an important role in our ongoing recovery and long-term prosperity, Canada will need to make sure it’s equipping them with the resources and capabilities to take decisive action on ESG matters like climate change. Small organizations, in turn, need to recognize that progress on decarbonization will be key to ensuring sustained outcomes given the recognition by Canadian CEOs that changing societal expectations will continue to amplify the differences between those ready to move into the future and those holding on to the past.

Three key actions for Canadian CEOs

1. Become a climate leader

Accelerating your decarbonization agenda starts with strategy, and that requires CEOs to lead the way forward in prioritizing climate change issues and taking accountability for making progress.

CEOs also play an important role in ensuring unified senior leadership around environmental matters, which is key to breaking down silos between teams responsible for ESG issues. Taking a strong hand in advancing decarbonization will be critical for CEOs, who can expect this to be an increasingly important factor in evaluations of their performance not only by boards but also by other important stakeholders.

2. Invest in your data

Data is a significant challenge for Canadian organizations when it comes to taking action on decarbonization. This was the top reason given for not making a commitment, with 61% (versus 55% globally) saying their organization doesn’t have the capabilities to measure their greenhouse gas emissions. 

Now is the time to make it easier for everyone to access valuable insights into your ESG performance through tools and technology that will help you make better decisions and drive improvements throughout the organization.

3. Reimagine collaboration

Addressing climate change calls for an unprecedented level of cooperation among business leaders, governments, investors and non-governmental organizations. Collaboration will be especially important for smaller organizations that may lack key resources, like data capabilities, to advance decarbonization.  

How organizations can build on their agility advantage to sharpen their digital strategy

Navigating ESG performance and other big challenges facing CEOs will require them to act boldly and decisively in delivering transformations that tap the power of human-led and technology-enabled solutions to create sustained outcomes for their organizations. But while Canadian CEOs acknowledge the importance of data and technology in addressing key issues like climate change, they’re behind their global counterparts in making digitization a strategic priority. Just 40% said their organization includes automation and digital goals in its long-term corporate strategy, which compares to 54% for global respondents. 

But Canadian organizations, especially smaller ones, do have a key advantage in delivering transformation: agility. When we asked CEOs about how long it takes to approve and fund new initiatives, the responses showed Canadian organizations are able to move quickly. For example, 51% of Canadian CEOs (compared to 42% globally) say it typically takes up to three months to approve major initiatives, with another 30% taking four to six months to do so and just 14% giving approval within seven to twelve months. And smaller Canadian organizations are able to move particularly fast, with 55% of those with less than US$100 million in revenue saying it takes up to three months to approve new initiatives. This compares to 36% of Canadian respondents whose revenues exceed US$1 billion.


Canadian organizations have an agility advantage over their global counterparts
  • 51%

    (42% globally) say it takes up to three months to approve new initiatives

  • 38%

    (29% globally) say it takes up to three months to commit resources to major initiatives


Why it’s important to go beyond digital

While agility in launching new initiatives and making digital goals a strategic priority are very important parts of the transformation journey, the reality is that digitization is no longer enough. Despite investing heavily in technology, some Canadian organizations haven’t achieved the results they were hoping for because, as we’ve increasingly seen, delivering truly sustained outcomes requires a sharper, more deliberate approach to change. For leaders, it’s important to first take a broader look at the organization’s purpose to identify the capabilities that will truly differentiate it from the competition and then align your investments, portfolio and initiatives accordingly.

This is key to ensuring you have the focus, capacity and resources to shift to more innovative business models, but as our survey found, Canadian organizations have some way to go in adopting a more strategic approach. For example, just 9% trim low-performing large businesses at least twice a year, compared to 17% globally. And while they’re more in line with their global counterparts when it comes to investing in high-potential projects that frequently, the number of Canadian respondents saying they do so was just 29%.

Canadian organizations lag their global counterparts in strategically aligning their investments on a regular basis
icon

37% of Canadian CEOs say their organization initiates investments in new projects at least twice a year, compared to 41% for global respondents.

icon

36% stop low-potential or non-aligned projects at least twice a year, the same proportion as global CEOs.

icon

29% invest in high-potential projects at least twice a year, compared to 32% globally

icon

16% scale up high-performing small businesses at least twice a year, versus 23% globally

icon

9% trim low-performing large businesses at least twice a year, compared to 17% globally.


Three key actions for Canadian CEOs

1. Build industry-leading capabilities

As a leader, you play a critical role in defining a clear purpose rooted in how your organization creates value, and for whom, in the digital age. This is key to determining the differentiating capabilities that will help you create sustained outcomes through your transformation journey. It will also help you develop the right data and technology strategy to support your capabilities as well as make strategic cost and investment decisions based on how you plan to differentiate your organization.

2. Maximize human potential

Successful transformations require organizations to develop a modern workplace in which people and technology work hand in hand. Create a workforce strategy focused on key investments in upskilling, digital solutions and real estate transformation that will engage your people in the change journey. Help them understand their role in shaping the organization’s future and give them the tools, time and resources to contribute to building your differentiating capabilities.

3. Discover new levers to create value

Explore mergers and acquisitions (M&A) as a way to focus on the most promising investment opportunities and better align your portfolio with your long-term strategy. Divestitures will be another key tool for organizations looking to be even nimbler and prioritize their core operations.

But with valuations high and uncertainty around key issues—like inflation, interest rates and increased regulation—that can impact a deal, a value creation mindset enabled by data, industry insights and technology will be critical. Consider how key levers of value creation—strategic positioning, performance improvement and asset optimization—as well as putting an ESG lens on your deals, can help you create sustained outcomes.

Harnessing the power of trust

At a time of disruptive forces and shifting expectations, trust is becoming an even more critical ingredient of enabling change and longer-term, sustained outcomes. Canadian CEO responses acknowledged the importance of trust in a number of key areas, with executives concerned about the impacts of trust-related issues like cybersecurity and ESG performance as well as broader questions of transparency and accountability on their relationships with their customers and their ability to attract and retain talent.

For example, 63% of Canadian CEOs who are extremely or very worried about cyber risks said this threat could inhibit their ability to sell their products and services in the next 12 months. And 60% said their customers choose their products and services primarily because of their organization’s values, highlighting why a clear commitment to purpose focused on positive impacts for your stakeholders is more important than ever. CEOs whose organizations have committed or are working on committing to net-zero emissions were significantly more likely than those not making such a commitment to say that about their customers.

At a time when employees show an increased willingness to leave organizations they don’t trust or join ones they do, Canadian CEOs recognize the implications for their talent strategies as well. Asked about the impacts of an important ESG matter and one of today’s key threats, social inequality, on their organizations, 73% of those very or extremely concerned about this cited impacts on their ability to attract and retain talent.

Why taking action on key trust issues is so important

Question: How do you believe your organization could be impacted by these threats over the next 12 months (showing only responses from Canadian CEOs who are very or extremely concerned about each threat)?

It could impact our ability to:

  • sell products/services
  • raise capital
  • attract and retain key skills/talent
  • innovate through technology or processes

Cyber risks

Tier 1: 63%
Tier 2: 19%
Tier 3: 16%
Tier 4: 52%

Climate change

Tier 1: 51%
Tier 2: 28%
Tier 3: 20%
Tier 4: 18%

Social inequality

Tier 1: 32%
Tier 2: 15%
Tier 3: 73%
Tier 4: 10%

The growing trust challenge for Canadian CEOs

These findings reinforce the power of trust: by leading the way forward transparently and accountably on the issues that matter most to their stakeholders, Canadian organizations are creating stronger bonds and seeing better outcomes as a result. But our survey also shows many organizations are struggling to address some of the key trust issues. For example:

  • Cybersecurity has been a top concern for Canadian CEOs for the last five years. While the level of concern about this was down slightly from last year, the fact that it has ranked as a top threat for so many years in a row shows how challenging this issue remains for organizations, especially when the cyber landscape continues to evolve as new risks emerge in a volatile world.

  • Compliance is a major challenge for Canadian respondents. Only 25% of Canadian CEOs described the regulatory environment they operate in as being at least moderately favourable to their ability to create financial value. While governments have an important role in addressing that challenge, there are also steps organizations can take to better manage their regulatory and compliance activities while building trust with their stakeholders. 

  • Many Canadian organizations have yet to refocus on non-financial outcomes that build trust with key stakeholders like their employees. For example, just 31% of Canadian respondents say their personal annual bonuses or long-term incentives include employee engagement metrics. And while a higher proportion of Canadian CEOs (55%) say their organization’s long-term strategy includes these metrics, this was still behind global respondents, at 62%. This shows a gap at a time when Canadian CEOs are increasingly focusing on key issues affecting employee engagement, like culture and well-being. At 63%, this was the second most important factor—just behind leadership transparency—cited by Canadian CEOs when asked about ways to increase trust with employees. 

Canadian respondents lag their global counterparts in prioritizing non-financial outcomes

Question: Are the following non-financial outcomes included in your:
a) organization’s long-term strategy;
b) personal annual bonus or long-term incentive plan?

Organization’s long-term strategy

  • Canada
  • Global
Employee engagement metrics
55%
62%
Gender representation rates
31%
38%
Race and ethnic representation rates
25%
23%
Greenhouse gas emission targets
20%
37%

Personal annual bonus/long-term incentive

  • Canada
  • Global
Employee engagement metrics
31%
36%
Gender representation rates
7%
11%
Race and ethnic representation rates
4%
8%
Greenhouse gas emission targets
6%
13%

At a time of declining trust and growing concerns about how to build and maintain it, it has never been more important for Canadian organizations to make this a top priority. CEOs will play a key role in the trust agenda by setting the right tone, demonstrating authentic leadership in living up to their commitments and being transparent about their organizations’ progress on the issues their stakeholders care about most.
 

“We have to walk the walk and make sure the money walks the walk, too. ESG policy and disclosure are increasingly important to investors, including linking ESG activities to executive compensation. That’s exactly what we’re doing. At the management team level, we are discussing different plans to make sure that compensation is aligned with not just our financial targets but also the targets that we have given ourselves on ESG, for example, around emissions reduction and gender diversity in the workforce. These outcomes are important, and they will be a bigger part of our executive and management compensation packages.”

Éric Martel, President and CEO of Bombardier Inc.

Three key actions for Canadian CEOs

1. Create a security-first mindset

Building trust is the foremost job of the CEO, and this includes taking an active role in cybersecurity. How can you do this? Based on our analysis, we see leading organizations embracing what we call the four Ps of cybersecurity:

Principle: Create a security-first mindset by framing cybersecurity as a foundational principle that’s critical to building trust and ensuring growth.

People: Attracting and developing the right talent will be key to establishing your organization as a cybersecurity leader. This includes hiring the right chief information security officer, empowering them and their security teams to create cross-functional units and giving them the resources to be effective.

Prioritization: CEOs can raise the priority of cybersecurity in two important ways: incorporating their commitment to cybersecurity into decision-making processes and making the organization easier to secure by reorganizing functions and ways of working and creating an integrated data governance framework.

Perception: You can’t secure what you can’t see. Uncover blind spots in your relationships and supply chains.

2. Turn trust into a competitive advantage

Even as organizations increasingly recognize trust as a source of competitive advantage, many have yet to embrace some of the opportunities to build it. Compliance, for example, is key to increasing trust and pursuing growth more confidently, but organizations still tend to view it as an obligatory cost of doing business.

This is where compliance transformation can help. Now is the time to rethink your compliance functions to prioritize your most critical risks and take a more proactive, streamlined, values-driven and digitally enabled approach.

Investing in the quality of your ESG practices is another key opportunity to build trust and competitive advantage. While ESG commitments are important, so is the robustness of your approach. Consider how you can raise the bar on ESG reporting and the growing need to have your performance independently verified.

3. Put culture at the heart of your talent strategy

With stress and burnout leading many employees to reconsider their futures, culture needs to be a high priority in your strategy to attract and retain talent. Consider the significant impacts of trust on your culture and how a growth mindset, empathy and a willingness to meaningfully engage with your employees on what matters most to them can help you attract and retain the people you need to deliver sustained outcomes. 

It’s also important to back up your commitments with authentic action. If your culture emphasizes well-being, for example, leaders need to live that in their own behaviours by avoiding practices—like sending emails late at night—that can be contradictory and breed mistrust.

The new equation for Canadian CEOs

A key challenge running through this year’s survey was the need for organizations to think and act differently by revisiting the outcomes that matter. But while many organizations have yet to truly broaden their focus to incorporate non-financial metrics to the degree our changing world requires, we do see leaders showing the way forward. These organizations recognize that taking a broader perspective centred on building trust and a clear agenda for how you create value for your stakeholders is not only the right thing to do to address society’s biggest challenges but is also the key to delivering on the traditional financial goals that aren’t going away. 

These shifts in thinking aren’t easy as CEOs manage competing priorities while navigating rising uncertainty and a system that has yet to bridge the gap between society’s evolving expectations and the current environment in which leaders are operating. But the momentum for change continues to grow as leading organizations show how bold actions now can turn today’s complex challenges into new opportunities to thrive.

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Nicolas Marcoux

Nicolas Marcoux

Chief Executive Officer, PwC Canada

Tel: +1 514 205 5302

Matthew Wetmore

Matthew Wetmore

National Managing Partner, Clients & Markets, PwC Canada

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