We are living in a time of significant change and challenge – and also rapidly growing momentum to address key issues around environmental, social and governance (ESG) issues. For all the difficulties societies and businesses have faced due to the COVID-19 pandemic and its knock-on effects, we are now operating in a period of enormous potential.
The collective will to address climate change along with broader societal issues is clear. The COP26 conference in Glasgow in November 2021 has focused minds and, I hope, inspired new levels of action that can bear fruit as we move through the decade.
The ESG ‘watermark’
Certainly this is the case at KPMG firms, where the global ESG strategy has become a central focal point for KPMG professionals. ESG is the ‘watermark’ that should run through every aspect of the work. To meet the challenge, KPMG firms are planning to spend more than US $1.5 billion over the next three years to address ESG issues and enable KPMG professionals to support their clients in meeting ESG aspirations.
ESG assurance essential for trust
ESG assurance is a key area of investment. Only if the information that businesses report is robust and independently assured can it gain the trust of investors, stakeholders and the wider public. That trust is essential. Without it, there’s no way of being sure of meaningful progress and change as the world battles to help secure a better future.
As a result, KPMG firms are highly conscious of their responsibility in striving to deliver that assurance. The obligation is clear: to deliver ESG assurance that can serve the public interest. That is the mission and one that KPMG professionals are aiming to achieve.
Moving ‘at light speed’
This is set to be a fast-moving area as new ESG reporting standards and requirements are developed. It was a tremendous moment when, during COP26, the IFRS Foundation announced the creation of the International Sustainability Standards Board (ISSB) which will focus specifically on developing reporting standards for climate and sustainability related matters. It’s a major step in the journey for the profession and KPMG firms fully welcome it, just as it has been widely welcomed by securities commissions around the world and other influential bodies.
One can expect the ISSB to move things forward at some pace, with the likely prospect of its first Exposure Drafts (EDs) for ESG reporting standards coming out early in 2022.
Making a difference
Organizations should aim to get to a place where ESG reporting is everything that financial reporting is to the capital markets today. Assurance is key to that. KPMG professionals are already providing it for many clients, but now it’s truly set to expand, and with it the responsibilities to the public interest. Currently the standards under which assurance should be provided are yet to fully reflect what is expected to become a much more complex task. The International Auditing and Assurance Standards Board (IAASB) is already looking at how to enhance the relevant standards, frameworks and guidance to meet the needs of the rapid developments in corporate reporting. This is a space to watch over the coming months.
I’m excited about the expanding responsibilities of the profession – just as my colleagues across KPMG firms are. There’s a real desire to make a difference, to add value and to use professional knowledge for the public good – and providing assurance over ESG can help do all those things. It makes this profession all the more relevant and therefore attractive as a career.
KPMG professionals are eager to contribute to this historic period of progressive renewal and change.
If you have any views, please get in touch.