KPMG: What Does ESG Practise & Reporting Look Like?
As the urgency of climate change accelerates, so does the pressure to accurately report on sustainability. However, these can be challenging to keep up with, and maintain alongside sustainability initiatives. So, how are the world leading companies doing?
Global consultancy KPMG interviewed 50 Chief Sustainability Officers from 10 countries and territories to explore how ESG reporting is impacting sustainability in some of the world’s largest countries. The report, titled Anchoring ESG in Governance, found that companies are having to adopt a flexible approach to ESG strategy to be able to adapt to the evolving regulatory landscape.
“Businesses have the opportunity to embed robust ESG and suitability governance by ensuring effective connectivity between functions — from finance to internal operations and supply chains –- which can both help to (RC) enable compliance with reporting requirements and the identification of sustainable value creation opportunities through enhanced operational transparency and data driven insights,” shares John McCalla-Leacy, Global Head of ESG at KPMG, which operates in 143 countries and territories with more than 265,000 partners and employees working in member firms around the world.
“As one respondent put it in this survey- ‘if we want to exist as a company in 10 or 20 years from now, we need to transform’”.
Prioritising ESG reporting and action
KPMG’s report found that around half of the companies interviewed view sustainability as a strategic issue that is embedded in core business operations. Many institutions are prioritising decarbonisation and achieving net zero, keen to have quantifiable targets for stakeholders. A quarter of the companies interviewed have a board level sustainability committee, with a further fifth discussing sustainability in other committees, most commonly the audit committee. Almost half of the organisations in the report see their CEO as responsible for sustainability, with others stating their dedicated CSO, but overall a wide variety of leaders taking command of the topic.
“Sustainability is growing in strategic importance for companies, with increasing reporting requirements on environmental, social and governance (ESG) as well as other demands on the organisation regarding sustainability,” says Nadine-Lan Hönighaus, Global ESG Governance Lead, KPMG International.
“This creates challenges for the group sustainability units within organisations charged with ESG work. On one hand, such units must produce more material than they did 10 years ago while strategically developing and implementing work on a wide range of topics from climate to human rights. On the other hand, the framework conditions for this work have become much more complex and the standards for implementation, reporting, mandatory auditing and governance requirements increasingly require a robust approach.
“KPMG’s research highlights that companies should (RC) start developing a clear analysis of the characteristics, strengths and weaknesses of their existing sustainability-focused organisation and how effectively it supports their (A) ESG strategy, performance and reporting.”
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