Government leadership as a catalyst for success
Environmental, social and governance (ESG) has evolved from a collective term for an organisation’s impact and how this is managed into a critical strategic imperative for building long-term sustainability and improved economic, environmental, and societal outcomes.
Government and public sector organisations are now, more than ever, being held accountable for the impact they deliver. They are also uniquely placed to set expectations for the wider private and public sectors via their varied stakeholders. It is crucial to be able to clearly demonstrate how they are planning, contributing, and acting for the benefit of the public they serve.
How does ESG create value for government and the public sector?
Leaders are not only facing the unprecedented challenge of contributing to the achievement of net zero greenhouse gas emissions by 2050 in the UK, and 2045 in Scotland, but also the complexities of widening social inequalities, increasing inflationary pressures and complex regulatory requirements.
A robust ESG strategy correlates with tangible improvements in operations, finances, and organisational resilience, as well as increased employee, public, and stakeholder confidence.
“Now is the time for government and public sector organisations to transform their mindsets and consider ESG holistically as a cornerstone of their mission, strategy, and operations. Embracing leadership in ESG acts as a catalyst for governments’ own modernisation and transformation efforts and delivering more for society” Neil Hewitson, ESG Lead; Infrastructure, Government & Healthcare, KPMG in the UK
How can we help?
Building a robust ESG strategy requires a thorough, inclusive, and comprehensive approach. KPMG acts as an enabler to help government departments and public services map out and execute on their ESG journey successfully. Explore the different ways we can help below.
Explore our solutions to drive
Assurance
Prepare your organisation for regulatory and mandatory ESG reports and be accountable for the impact you deliver
Governance & Risk
Implement robust governance and create actionable ESG plans with confidence and transparency
Reporting
Get control of your ESG narrative and progress towards ESG goals with clear reporting
Climate Risk
Optimise your net zero pathway and maximise your long-term resilience
Decarbonisation
Take measures to reduce your carbon footprint and save costs
Strategy
Run an effective ESG strategy and reap all the benefits costs
Inclusion, diversity & equity
Run an effective ESG strategy and reap all the benefits costs
Supply Chain
Understand the contractual supply chain clauses and meet your ESG ambitions
Funding & Grants
Administer grants purposefully and drive meaningful change
Learning
Unlock the power of your workforce and drive ESG
What is it?
Independent assurance on ESG reporting requirements – both voluntary and mandatory – ranging from governance statements and remuneration reports to greenhouse gas targets and emissions.
Why does it matter?
Public sector bodies are expected to clearly demonstrate how they plan and act for the benefit of the public they serve and are held accountable for the impact they deliver.
Assurance has an important role in preparing organisations for regulatory requirements and mandatory reporting, enhancing credibility and transparency, driving improvement, and demonstrating value for money, as well as providing access to funding for initiatives.
How do we help
- KPMG-led workshops: Hosting workshops to provide an overview of ESG assurance and the current reporting landscape frameworks.
- KPMG Ready for Assurance: Determining whether the necessary preconditions to perform ESG assurance are present.
- Agreed Upon Procedures: Completing Agreed Upon Procedures, a set of explicit procedures and tests with factual reporting of results and findings over ESG KPIs.
- ISAE 3000 & 3410 Assurance: Providing external assurance in accordance with International Standards on Assurance Engagements (ISAE) 3000 / 3410. This includes formal opinions overreported ESG metrics and disclosures and supporting clients on compiling their Greenhouse Gas statements.
What is it?
Defining internal processes, controls, and structures to ensure confidence in ESG initiatives and transparency in how commitments are being met and monitored.
Why does it matter?
Good governance is needed to provide the much-needed oversight, structures, and accountability for converting ESG priorities and commitments into actionable change through implementation plans, monitoring, and reporting. Strong internal processes, controls, and structures provide a systematic and transparent approach to ensure initiatives are met.
How do we help
- Governance: Setting up the ESG foundations and understanding the maturity of your ESG through the ESG Maturity Assessment.
- Risk: Embedding ESG into the risk management landscape with KPMG’s Dynamic Risk Assessment.
- Reporting and Data Validation: Understanding the controls in place to support ESG reporting and validating the management of ESG calculations to increase reliance on reporting.
- Assurance: Reviewing key ESG processes, operationalising and embedding these through the organisation.
What is it?
Efficient, effective ESG data gathering and analysis with clear, comparable, and consistent reporting of material topics that demonstrate the commitment to, and progress towards, ESG goals.
Why does it matter?
The government public sectors play an important role in setting the required standard for reporting. With an increasing wave of scrutiny of ESG commitments, effective reporting is crucial to communicate the ESG narrative to investors and other stakeholders, to showcase compliance with relevant disclosures, as well as strengthen reputation and value.
How do we help
With the International Public Sector Accounting Standards Board (IPSASB) only expected to release its initial guidance by the end of 2023, we can support you to get ahead of the reporting requirements being mandated, regardless of what stage you are at with your ESG reporting journey.
- Stabilise: Implementing end-to-end reporting solutions through Tactical Reports Solutions, Process & Controls Diagnostic, and Reporting compliance review and peer analysis.
- Strategise: Identifying and assessing ESG reporting progress through Materiality Assessment Review, ESG Reporting Gap Assessment, and Develop Methodology Statements.
- Design: Designing a future proof and robust reporting system through ESG Reporting Process & Controls, ESG Report Development Support, and ESG Reporting Governance Framework.
- Transform: Facilitating the transformation journey with Delivery Partner Support, Data Model & Modelling Implementation Support, and ESG Reporting Training.
What is it?
Understanding and modelling exposure to climate risk, as well as the development of policies and strategies to mitigate the impacts of climate change, while strengthening the resilience of critical infrastructure and services.
Why does it matter?
Early action is essential to enable government, infrastructure, and healthcare organisations to deliver an optimised pathway to net zero that minimises decarbonisation costs and maximises resilience long term. Delayed action will lead to more future emissions and an increase in climate damage costs. Exposed infrastructure will drive operational cost growth and higher future retrofit or adaptation costs.
How do we help
- Carbon emission reductions (mitigation): Measuring carbon emissions, and initiatives for reducing emissions, across asset portfolios and organisational activities. Emissions quantification enables target setting (e.g. net zero), and levers for decarbonisation (e.g. internal carbon pricing).
- Resilience opportunities & risks (adaptation): Managing opportunities and risks around value creation for businesses and public sector bodies, driven by the transition to a low carbon economy or climate changes, including climate risk assessment, modelling, scenario analysis, TCFD, NAO, and adaptation reporting.
- Nature & biodiversity: Understanding, measuring, and reducing impacts on biodiversity and nature (in line with DEFRA’s policy statements on the critical importance of biodiversity), including water, soil, air, and mineral depletion to improve operational and supply chain resilience.
- Circular economy: Capitalising on innovative and cost-effective approaches to improve material and product footprint through systematic reuse, recycling, and refurbishment, as well as integrating circularity into infrastructure design and link to net zero goals.
What is it?
Understanding what climate risks mean to your organisations and taking various measures to reduce your carbon footprint and accelerate your decarbonisation plans to control and reduce the impact of your activities on the climate.
Why does it matter?
The government has introduced strict rules around carbon for high-value public sector contracts. Failing to demonstrate your organisation’s carbon capabilities will be a missed opportunity. Government departments and public sector organisations are increasingly seeing a correlation between a reduction in carbon emissions and a decline in costs. A clear and robust path toward decarbonising will help the IGH sector to save costs and fuel growth.
How do we help
Our IGH decarbonisation team have a range of service offerings to facilitate your decarbonisation journey:
- Strategy & business case development: Decarbonisation / net zero Strategy development; Climate Risk & Resilience Assessments; Delivery plan development; Business Case development (internal / HMT Green Book).
- Operational transformation: Performance benchmarking; Process transformation and optimisation; Cost-out; Insights-led performance and carbon improvement; Technology innovation and trialling support.
- Funding & financing solutions: Market analysis and solutions identification; Options appraisal; Investment prioritisation; Development of new and innovative financing solutions; Design & execution of deals.
- People & culture: Zero skills development and training; net zero Leadership Academy; Carbon Governance design and implementation.
- Strategic procurement: Commercial / strategic due diligence on new investment opportunities; supply chain transformation; Decarbonisation in contracts.
- Asset management transformation: Asset management process optimisation; TOTEX optimisation; Assessment of opportunities for digital innovation in the asset management lifecycle.
What is it?
ESG has become a key trigger for business and portfolio transformations. Running an effective and enhanced ESG strategy is intertwined with clear benefits including higher margins, more access to resources, and better brand equity.
Why does it matter?
The IGH sector is uniquely placed to set expectations for the wider public and private sectors through its varied stakeholders. IGH should consider ESG in various sectors including Transport and Infrastructure; Government, Justice and Defence; Health and Human Services; Education, Skills and Productivity.
How do we help
KPMG ESG Strategy solution entails the Assess & Strategise stages:
Assess: Identify the current state of ESG and prioritise critical areas:
- ESG awareness and training: Provide the Board and Executive teams with training
- Ambition setting: Determine the organisation’s level of ambition for relevant ESG topics
- Materiality assessment: Evaluate material ESG topic areas for the business and stakeholders
- Maturity assessment: Baseline current emissions footprint, social metrics (e.g., inclusion, diversity & equity, ethical supply chain, etc.), and assess ESG performance relative to peers
Opportunity development: Create an ESG strategy that can be integrated into the enterprise-wide strategy, leading to value creation:
- Target-setting: Agree on disclosure frameworks to adopt specific targets that will guide ESG implementation
- Roadmap planning: Develop high-level plans to be operationalised and delivered
- Strategy execution: Determine the operation model requirements to successfully execute the ESG strategy
What is it?
For any public sector organisation, having a workforce that represents the citizens and communities it serves is key.
Why does it matter?
For any public sector organisation, having a workforce that represents the citizens and communities it serves is key. IGH organisations must establish IDE strategies that lead to the creation of a positive cultural change and take a holistic approach in demonstrating inclusivity and diversity in their workplace.
How do we help
We use our leading Inclusion IQTM diagnostic to measure and understand your starting point to build an inclusive culture that harnesses your unique organisational power. We support you through the end-to-end organisational transformation journey to create a unique and inclusive culture. Our strategy is underpinned by data and analytics to support you to truly move the dial on your EDI strategy and approach – in a lasting way.
What is it?
The expectations of committing to ESG rules are increasing but these commitments are not always captured in supply chain contracts. ESG-related commitments in existing supplier contracts need to be addressed and identified to control their impacts on an organisation’s ability to meet their ESG ambitions.
Why does it matter?
Organisations in the IGH sector must be aware of the ESG-related commitment in their supplier contractual clauses and how their resulting obligations, or lack of, may be exposing them to legal, financial and reputational risks. To create governance around this, they must be aware of the latest ESG laws, identify the suppliers that may pose a risk, and follow their contractual commitments.
How do we help
KPMG’s Contract Performance & Insight team gives you visibility into your ESG commitments.
- Discovery: We offer a Contract Portfolio Diagnostic Tool to increase the transparency and knowledge of your contract clauses.
- Compliance: We identify high risk relationships and conduct an audit to establish third party compliance with key ESG contractual requirements to increase transparency and understand how your suppliers are adhering to ESG related legislations.
- Management: We offer enhanced due diligence and risk assessments on the local political, regulatory, or operating environment in relation to ESG to identify and mitigate ESG reputational and regulatory risks.
- Optimisation: Our digital solutions and tools help to identify the risks across supply chains and review procurement activities to support ambitions. This provides understanding of the risks and opportunities, an acceleration to supply chain decarbonisation plans, and a sustainable business procurement model.
What is it?
Grants are one of the key methods for governments to create value and outcomes, drive innovation, and achieve goals. It is vital that grants are allocated and administered appropriately and used for their intended purpose to achieve meaningful change.
Why does it matter?
Supporting the Government to effectively and efficiently design, distribute, and manage their social funding and grants sustainably is crucial to achieving ESG plans. Navigating the complex scale and streamlining the end-to-end grant administration process will ensure public sector and government organisations achieve better outcomes without posing a risk to their contractual commitments.
How do we help
KPMG Powered Grants offers a suite of services to support the end-to-end grant management process.
- Advise: Our advisory offering is underpinned by a team of professionals and leading practices that can provide you with guidance to help manage your grant program risks, establish appropriate design and continuous improvement, as well as capture insights and outcomes.
- Enable: This solution collates and interrogates various sources of information, helping to transform efficiencies and real-time insights into outcomes across organisations, programs, and geographies. Our technology solution and built-in controls assist you in capturing all the information you need to help support robust decision-making, promote compliance, and provide traceability and assurance.
- Administer: Designing and administering grants on your behalf, with options and pre-configured grant processes tailored to your specific needs, as well as underpinned by bespoke reporting and insights, will provide you with the confidence that your grants are being administered appropriately.
What is it?
Learning plays a huge role in empowering everyone to integrate ESG priorities into their agenda by enabling individuals to make sustainable and inclusive decisions.
Why does it matter?
The urgency of embedding ESG into public services is clear, but how can we actually do it? Capability building, upskilling, retraining, and embedding new behaviours across all areas of an organisation is critical for public services in order to drive holistic transformation towards ESG priorities.
How do we help
KPMG’s approach to the development of our ESG learning curriculum focuses on developing content for all layers in an organisation, including foundational, functional, and strategic learning. We utilise KPMG ESG and learning specialists to develop action-focused learning, with behaviour change weaved throughout, that maps directly to the Government’s sustainability priorities. Our experts act as a strategic learning partner across the following:
1. Strategic Consultancy Support, 2. Content Development and Curation, 3. Learning Delivery and Manager Services, 4. Learning Technology
