Over the next three years and beyond, governments across the world will increase the legislation around sustainability reporting, impacting a vast number of businesses.
Jerwin Tholen, Partner ESG Advisory at KPMG (one of the globe’s most experienced and expansive audit, tax, and advisory firms) believes that this demand will not only increase demand for ESG reporting and assurance, but will drive the demand for advisory services, too.
With 150 years in business, and offering sustainability services since 1992, KPMG is well equipped to support businesses needing to meet legislation, whilst pioneering and innovating its service offering.
“My vision for sustainability at KPMG is that we create our biggest impact through the professional services we provide,” shared Jerwin, who joined the firm in 2002 and now leads on ESG strategy services in the Netherlands. “We help clients share and execute their ESG strategy, support in CSRD reporting, and our subject matter experts work on the assurance of sustainability reports. Next to that ESG runs as a watermark through our entire advisory portfolio” to manage risk and drive top and bottom line growth”, Jerwin adds.
Whilst the business focus remains on how KPMG can better it’s clients operations and reporting, KPMG also drive sustainability from within – walking the walk, and talking the talk, with a focus on Governance, People, Planet and Prosperity.
“Just as our clients, we conduct Double Materiality Analysis, apply international reporting standards like the CSRD in Europe, and use ‘supplier codes of conduct’ for strong ESG Governance,” explained Jerwin, “We recognise people are our biggest asset and we seriously invest in upskilling our people in digital capabilities and in ESG topics. Diversity, Equity & Inclusion is another key pillar in our strategy,”.
Additionally, KPMG is on a mission to net zero as part of its ‘Planet’ pillar. In 2023 the business reduced its emissions globally by 22% compared to 2019, and reached 81% renewable energy consumption.
“We are investing into nature based solutions and have published our first global Climate Risk Report aligned with the Taskforce on Climate-related Financial Disclosures (TCFD). In addition to our own climate risk resilience the report focuses on how we support our clients with moving to a low-carbon net zero economy,” added Jerwin.
Finally, under its prosperity pillar, KPMG has helped economically empower 1 million disadvantaged young people.
What is clear when speaking with Jerwin at KPMG, is the importance of aligning its work with the true needs of its clients, ensuring clients have an opportunity to grow from initiatives implemented.
“Typically, three types of transformation take place as a result of the CSRD reporting requirements and Double Materiality Assessment”, he says. A reporting transformation where the focus quickly shifts from “what to report” to “how report” at lower cost over time and with higher accuracy. Secondly, the sustainable business transformation to reduce adverse impacts on people and environment, manage risks related to climate change, human rights and biodiversity loss, and drive business opportunities. Business opportunities surface in the shape of new products, circular business models, lower energy cost or a competitive advantage. Thirdly, the entire approach to data and technology has to change to create visibility across the value chain, facilitate better reporting and drive sustainable change”. KPMG has a role to play in each transformation.
“Aligned with our ambition to help our clients transform to sustainable businesses, we established the ESG Innovation Institute together with the University of Nyenrode,” Jerwin shared.
The Institute has enabled More than 60 C-level clients alongside their KPMG counterparts to undertake three sustainability modules.
“Many of them either had limited exposure to ESG before, were new in their roles as Chief Sustainability Officers or wanted to better understand ESG transformation in their roles in supervisory boards. Meanwhile, the KPMG partners were often new to the topic. This led to a whole new community of people that became confident in driving sustainable growth,” he added.
Whilst Jerwin highlighted that the successful sustainability initiatives he has been involved with at KPMG are countless, one which he is particularly proud of is the CSR risk assessment it has created on behalf of the Netherlands’ Government .
This assessment enables the government to identify highly exposed sectors and their respective international risks related to working conditions, human rights and the environment. This has led to 10 covenants between the government, NGOs and exposed sectors to date.
“We still apply some of the methodologies developed in this project. Especially with the new Corporate Supply Chain Due Diligence Directive (CS DDD) this has become extremely relevant”.
KPMG’s partnership with Osapiens, a leader in ESG technology, helps to provide companies with the technology and data to support this due diligence, guiding KPMG’s clients in the risk assessments, required follow-up and the implementation of the tools.
“This leads to more insights into risks, better controls and in the longer run will improve the lives of millions of workers in currently opaque supply chains,” said Jerwin.
The firm’s relationship with Osapiens leverages KPMG’s deep expertise in ESG and regulatory matters, combined with Osapiens’ cutting-edge cloud-based AI and automation tools, which are specifically designed to navigate the complexities of the ESG environment.
KPMG and Osapiens offer a powerful combination of services that not only support efficient and legally compliant sustainability reporting but also enable organisations to achieve their broader ESG goals.
By integrating the Osapiens HUB, a sophisticated cloud technology platform, with KPMG’s vast experience in sustainability, auditing, and consulting, KPMG ensures that companies can centralise and manage high-quality ESG data effectively.
“This integration allows for the digitalisation, automation, and analysis of sustainability processes, helping clients to meet emerging ESG obligations with efficiency and accuracy while optimising their overall business processes and increasing supply chain transparency,” explained Jerwin.
Next to working with companies to transform their own business and value chains, the firm works with organisations that do this at scale, such as Cascale. Cascale is a membership organisation in the apparel sector with their value chain due diligence tools used globally to create more sustainable supply chains.
The mission of Cascale is to drive collective action toward creating an equitable and restorative consumer goods industry, aiming to achieve this by aligning its global community around shared objectives, collaboratively developing and executing solutions, and leading impactful initiatives with strategic partners.
One of its key initiatives is the development of the Higg Index, a comprehensive suite of tools designed for the standardised measurement of sustainability across the value chain. The primary aim of the Higg Index is to empower brands, retailers, and manufacturers with verified data to assess, enhance, and transparently share their environmental and social performance.
“We have not only helped them to review their tools, but also to strengthen the cooperation with other organisations and now support them in educating their members on the implications of the CSRD. By implementing this type of projects we impact many companies in parallel,” Jerwin shared.
Alongside its work with Osapiens and Cascale, KPMG has found that clients are more and more requesting ESG or CSRD reporting implementations using KPMG’s partner, Workiva.
Faced with the challenges of increasingly comprehensive and complex reporting, Workiva’s reporting platform solution provides auditable and scalable solutions for integrated financial and non-financial reporting, helping organisations to optimise their reporting requirements.
The cloud platform offers new ways of networking and collaboration for a transparent approach. Workiva enables the connection of a wide variety of data sources, which can be transformed and then summarised in a report. By automating data connection and further processing, the reporting process can be simplified and accelerated.
“Our advisory teams have the required functional experience and are very familiar with working directly with Workiva. This offers clients the opportunity to work with a multidisciplinary team that brings a wealth of business practice and technical experience,” said Jerwin.
“The advantage of working both with and at a company like KPMG is that you have access to a strong network of colleagues globally and great alliance partners to tackle the complexity of the emerging body sustainability reporting and performance requirements,” Jerwin added.
With the use of AI and machine learning being increasingly integrated into businesses, what does the future look like for sustainability auditing and advisory?
“Wow, this is a field of expertise in itself,” said Jerwin in his conversation with Business Enquirer.
Jerwin highlighted that KPMG has established teams which focus on the application of AI within its clients.
“These teams work together with our sustainability teams to automate and improve the search for relevant sustainability regulations and their applicability for the client or improve the data and analytics processes to find areas for improvement in energy management,” he explained, “Some of our clients use AI to answer the enormous amount of questions they get from customers and stakeholders on their ESG performance,”.
Of course, he highlighted, with the rise of AI there are both challenges and risks, such as data breaches and the risk of discrimination by algorithms.
“Next to using AI to improve sustainability, the integrity of AI will become a material sustainability topic by itself for more and more companies,” he said.