KPMG Expands ESG Services | Accounting today
KPMG has stepped up its efforts to provide environmental, social and governance services to its clients through a new initiative called KPMG Impact.
The team will help clients improve their ESG performance while meeting KPMG’s ESG commitments. Last year, KPMG US worked with other companies, investors, standard setters, non-governmental organizations and international organizations as part of the World Economic Forum to create a set of 21 core indicators for companies to report on their progress in ESG domains of people, of the planet. , prosperity and governance. KPMG has adopted these same metrics to guide its actions and measure and report on its progress.
The move comes as more and more accounting firms engage in providing ESG reporting and assurance services to clients. ESG funds have become a popular vehicle for investors, and the Securities and Exchange Commission assesses climate risk disclosure requirements by companies. At the same time, at the global level, securities regulators around the world are pushing for greater consistency in the communication of ESG measures, encouraging standard setters to more closely align their different standards and frameworks. The International Financial Reporting Standards Foundation worked to create an International Sustainability Standards Board project that it would oversee alongside the International Accounting Standards Board. Directors of the IFRS Foundation explained how the structure would work during a webinar on Wednesday.
KPMG has already been working for years on this move towards increased reporting and sustainability assurance, but it has become more urgent as climate change risks appear to have increased with rising temperatures seen in the United States and around the world. .
“At the highest level for us, the backdrop to the rise of ESG is a matter of trust,” said Rob Fisher, leader of KPMG Impact. “You see people who see companies as an ethical and effective leader in bringing ESG aspirations to life, and the recent drop in trust that we see in institutions such as government and the media etc. affects our ability to come together and solve problems. This is why the focus on organizations that are successful in the environmental, social and governance dimensions can really build the confidence of customers, employees, investors, regulators and all stakeholders. We believe that ESG engagement will improve businesses by unleashing new value, building resilience and driving profitable and measurable growth today and tomorrow.
He has worked with clients on adopting individual approaches to ESG reporting. “When I think of the specific conversations with clients that I have, it’s that every company in all industries follows a unique ESG journey that reflects their stakeholders, challenges and opportunities,” said Fisher. “Effective engagement really needs to be built into the overall strategy and operations of a business. Many of the clients we work with are actually industry leaders in areas such as climate, environment, social justice, etc. improve.”
ESG encompasses not only the environment, but also social initiatives such as diversity, equity and inclusion, and the firm also assists its clients in these efforts. This includes the provision of insurance services.
“There are four big jobs that we do for customers,” Fisher said. “First, we help clients develop a broader ESG strategy, and the second part is how to operationalize that strategy. We see a lot of exciting opportunities around transformation opportunities and the ability to create value, and we really see financial institutions and private equity firms leaning in because of that. There is a ton of investor demand in this regard. The fourth part is to help companies figure out how to measure, report and insure it. There are certainly a number of different standards and frameworks and measures for reporting ESG data, and we really work with clients to help them understand, perhaps depending on the specific interests of particular investors or the industry. in which they operate, executives will have the most sense to help them develop capacities to measure their return on their ESG [efforts]. You want it to be specific and appropriate for the type of disclosure report.
Last month, KPMG submitted a comment letter to the SEC in response to the SEC’s request for public comment on the climate change disclosures. “Ours is really a modular approach at a high level,” said Fisher. “We support a global benchmark. Then there would be additional standards to meet the specific needs of jurisdictions. I think the importance of some kind of consistency globally is that if we don’t have that, the disclosures will be less consistent and comparable. Registrants operate in multiple jurisdictions and their supply chains and customer base are sure to be global. We really think it has to start with a baseline and then any additional disclosures that would be necessary in the US context.
Becker Professional Education has seen increasing demand for its continuing professional education courses on ESG, with Tim Gearty, National Director and Editor-in-Chief at Becker, running 40-50 sessions per month on ESG for companies of all sizes. sectors.
“Europe seems to be taking the lead on this,” Gearty said. “We in the United States are catching up quickly, but the European Union has clearly taken the lead on this, and they are moving forward. We’re still in a catch-up mode, but we have a lot of great thought leaders who are working very diligently to ensure that our standards are ultimately measurable and that assurance can be given to them. One of the critical elements is that we must be able to measure these standards both qualitatively and quantitatively before assurance can be given. “
Groups like the American Institute of CPAs, the Institute of Management Accountants, the International Federation of Accountants, and the Association of Chartered Certified Accountants have encouraged their members to get involved in ESG reporting. The ACCA released a new report on Wednesday, “Rethinking the risk for the future, ” examine the role of the accounting profession in effectively managing risk amid the crises presented by climate change, the COVID-19 pandemic and the resulting economic turmoil. The report explains how accountants can help organizations not only to detect and better understand the emerging risks and opportunities they face, but also to cultivate the mindset necessary to think in a longer-term perspective.
The IFRS Foundation aims to establish the draft International Sustainability Standards Board by November, in time for the United Nations Climate Change Conference COP26 in Scotland, having recently received the endorsement of the Finance Ministers of the G- 7 and the International Organization of Securities Commissions. “There is a timeline that we are working on,” IFRS Foundation vice president Larry Leva said during Wednesday’s webinar. “There are now less than four months until the COP26 conference in November. … We still have a lot of work ahead of us, but we remain on track to make a final decision ahead of the COP26 meeting in Glasgow. We have received a lot of support and goodwill for this work, and there is a real determination to make it happen. “
“This is an area our profession is best suited to work on, whether it’s reporting internally or working externally to provide assurance on this,” Gearty said. “We understand the demand because the demand for ESG comes from the SEC, national trade councils, the World Economic Forum, AICPA, the Global Reporting Initiative, the European Union and of course managers of assets for these funds. These are all demanding standards, so whether it is a sustainability fund or just a report published by a company, they can ultimately be verifiable so that individuals in the public can rest assured that the information is accurate and not manipulated.