The above illustrates why it is of the utmost importance that companies start today to gain a deep and thorough understanding of the environmental and societal risks associated with their activities. So what to do?
1. Prepare for upcoming regulations now
The EU regulations primarily will drive further disclosure requirements that urge for timely preparation. This entails understanding the requirements, interpreting these for the company's activities and – most importantly – to design and implement these into systems and processes in order to deliver data that can be relied upon. We recommend to watch the developments and start considering the consequences immediately. KPMG is on top the developments and has developed methodologies already to apply the EU Taxonomy for example.
This may already be applicable to your 2021 financial statements when the EU taxonomy is concerned.
2. Redesign your ESG strategy
The developments do not only come with risks. The opportunities lie in developing an even more integrated strategy, to redefine the value you want to create with related ambitions, targets and indicators that drive the business value. As pioneers in ESG at KPMG since 1992, we have been leading the space for a few decades now and would be ready to assess your strategy against the external developments and requirements – be it from a risk or impact perspective.
3. Take a longer term and unconventional risk mindset
The climate crisis as the most urgent example requires an unconventional risk mindset, moving away from traditional risk management and with more dynamic and long-term assessments. Scenario analysis can make a valuable contribution to understanding and then managing these risks for different uncertain pathways to future states.
The structured approach that KPMG has developed for this purpose helps our clients to ultimately be more future-proof and to think about 'business not-so-usual'. Our experience as a member of the TCFD has been translated into science-based, data driven insights that informs strategic decisions.