Environmental, social, and governance (often referred to as 'ESG') commitments have become familiar to many of us. Over time, sustainability has evolved from overused catchphrases and general information points to specific requirements, translating into tangible actions and quantifiable results.
KPMG: Our journey towards sustainability
Reflecting on the steps that KPMG has already taken in its transformation towards sustainability, in October 2021 the KPMG network announced its global ESG strategy, including a commitment to invest more than USD 1.5 billion over the next three years to further develop ESG capabilities and provide vital solutions to clients to support them on their journey.
In recognition of the need to play our part in contributing to environmental and social aspects, our dedication is to embed ESG into our daily practice, so that ESG runs as a watermark through everything we do, both through our global network as well as through each KPMG member firm. To this effect, we have already rolled out ESG training to all our KPMG staff here in Malta.
KPMG's ESG commitments can also be found under our umbrella Impact Plan, which outlines our goals on the four categories of Planet, People, Prosperity, and Governance, aligned with the metrics established by the World Economic Forum's (WEF) International Business Council.
Our Planet commitments include a target to achieve net-zero CO2 emissions by 2030; locally we have been calculating our carbon emissions since 2019 and are currently working on a plan to decarbonise our local operations. Under the People pillar, we strive to foster an inclusive and diverse culture, where we aim to provide equal opportunities to everyone. We are proud to report that we already have a 49% female participation rate in our management roles in Malta. We are also committed to continuous learning and put the well-being and health of our people first, including by offering opportunities for hybrid and flexible working.
Our Prosperity commitments stem from our belief that our work for our clients should also be good for our people and the world. We achieve this by working objectively, independently, ethically and with integrity. Through our audit, advisory and tax services, we aim to help businesses run more effectively, fairly, and transparently. These commitments also tie into our Governance purpose, as we commit to act in the public interest, act lawfully and ethically.
Recent Regulatory Developments in ESG
Within the ESG regulatory context, the European Commission has consistently made efforts to drive the sustainability agenda. The European Green Deal (EGD) was developed to tackle challenges arising from climate change and environmental degradation and will be financed by the NextGenerationEU Recovery Plan and the EU's seven-year budget. EGD targets are translated into actions across specific sectors such as Energy, Transport, Climate, and other sectors.
With the expected introduction of the Corporate Sustainability Reporting Directive (CSRD), companies will be required to look beyond their internal processes and think about their impact on the environment and society. The CSRD will apply to all large companies meeting at least two out of three of the following criteria: (i) more than 250 employees, (ii) more than EUR 40 million turnover, and (iii) more than EUR 20 million total assets, as well as all listed companies (except microenterprises). Such companies will be required to report on various environmental, social and governance metrics as part of their management report, with assurance of the data being required.
The European Commission has recently also published a proposal for a Corporate Sustainability Due Diligence Directive, which will apply to large EU limited liability companies as well as non-EU companies active in the EU meeting certain turnover thresholds. The Directive aims to improve human rights and reduce environmental impacts (including climate impacts) in the company's own operations, its subsidiaries and value chains.
Looking closer to home and the significant actions that have taken place in Malta, late last year the Ministry for Energy, Enterprise and Sustainable Development launched an ESG Platform, designed to improve transparency among companies and unlock a flow of investment into sustainable companies and projects. Currently, the Platform's database contains simple ESG metrics for 17 entities, most of whom are listed on the Malta Stock Exchange. Any company wishing to list on the Platform is free to submit the relevant information through the website.
Moreover, the Malta Stock Exchange (MSE) is promoting ESG investments by stimulating the listing of Green Bonds. Issuers wishing to raise funds for green projects qualify for discounted listing fees if they meet the MSE's Green List eligibility criteria. For companies to qualify, investment must be made into environmental projects such as climate change mitigation, climate change adaptation, pollution prevention, sustainable use of water and marine resources and other projects. Entities issuing green bonds in Malta can benefit from a 50% discount on MSE listing fees and use up to 25% of the proceeds for their own operations.
It is evident that ESG is fast becoming, not only an important consideration for organisations, but an essential part of doing business. Companies that lead on ESG can tap into opportunities to future-proof their organisations and help make the world a better place.
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