The Auditor General of Canada has identified Canada as the "worst performer" within the Group of Seven regarding emissions reduction - a status that warrants our attention.

As a member of the G7, representing some of the world's most advanced economies, there is an expectation for Canada to lead in tackling global issues, including climate change. Yet, it has been found to be significantly trailing the international community. The audit further suggests that, without considerable change, Canada is on track to miss its Greenhouse Gas reduction targets for 2030.

Canada's position as an engaged and accountable player in global environmental and sustainability efforts is at risk if it fails to meet these targets. This failure could strain diplomatic relations, particularly with countries that prioritize emissions reduction, such as the United Kingdom, France, and Germany.

Emissions targets and preparation 2030: SMEs require readiness

The year 2025, a critical juncture for evaluating Canada's progress against its 2030 goal to cut emissions by 40%-45% from 2005 levels, coincides with the possibility of the next federal election, which must be held by October 20th, 2025.

This convergence could create a perfect storm: Canada being labeled the G7's laggard, increased international scrutiny, strained trade relations with sustainability-focused countries, and an election that may catalyze stronger climate policies and commitments to address public concern.

For SMEs (Small and Medium Enterprises), a more aggressive approach to meeting targets could have profound effects. Despite Ottawa's recent suspension of its $1B green fund due to a whistleblower complaint, we can anticipate heightened support for sustainable businesses in 2024 to address Canada's action deficit. This shift could open new markets for green products and services and increase access to funding and incentives aimed at emissions reduction.

At a minimum, SMEs should prepare for regulatory changes like carbon pricing, enhanced energy efficiency standards, and more rigorous environmental reporting requirements. Businesses will likely need to reassess their supply chains, potentially leading to more sustainable sourcing and reduced carbon footprints in priority industries, including oil and gas, transport, and buildings.

SMEs, The road to sustainable success

For SMEs in Canada, the path forward brings both challenges and opportunities. The pressure for Canada to rectify its standing as a laggard in emissions reduction within the G7 can catalyze a transformative landscape for businesses. Sophisticated SMEs will be at the frontier of this transformation, poised to adapt to and benefit from the evolving regulatory environment and the shifting economic incentives.

The potential flood of support and funding for sustainable initiatives in the lead-up to the next federal election presents a strategic opportunity for SMEs to innovate, access new markets, and enhance their competitive edge. Those that proactively embrace sustainability may find themselves at an advantage, navigating a future where green practices are not just preferred but essential for future success.

SMEs should align their business models with the principles of sustainability, anticipate and plan for regulatory changes, and prepare to capitalize on the growing demand for environmentally responsible products and services. In doing so, they will contribute to Canada's climate goals and ensure their own resilience and success in a rapidly changing global economy.