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Responding to Climate Change 2011

Home | Defining Business Commitment | KPMG Seizing business opportunities - here & now
 
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Seizing business opportunities –
here and now

KPMG

When it comes to whether business is sufficiently engaged in today’s climate change issues, a simple motivating factor is being overlooked: when corporates see clear opportunities, they grab them. And today, more are seizing on the fact that a concerted focus on climate change and sustainability issues creates opportunities for enhanced performance.

Within KPMG’s international network of member firms, its climate change and sustainability professionals deliver Audit, Tax and Advisory services to hundreds of global, multi-national and regional enterprises.

Through these work experiences, it is possible to see how organisations from a variety of industries and regions perceive and address their sustainability challenges. What are their actions communicating? Simply put, business is engaged with varying degrees of interest and sophistication. Importantly, the more progressive and successful enterprises are using sustainability as a strategic lens through which to drive long-term business value by:
improving key business processes;

  • enhancing risk management;
  • leveraging technology;
  • strengthening internal control;
  • reducing costs; and,
  • creating new products, services and businesses for enhanced growth.

A number of priority areas have been identified by businesses of various types. These examples provide a useful high-level look at how corporates are responding, and are drawn from the experiences of various KPMG member firms.

Driving competitive advantage

Leading companies are seeking a robust internal capability to evaluate specific sustainability-related risks and opportunities, and to assess and benchmark performance so as to drive competitive advantage. KPMG worked with an international airline to integrate its sustainability objectives into its business strategy, review the appropriateness of its sustainability key performance indicators, and embed sustainability into its decision-making processes.

KPMG also helped a global private equity house assess the sustainability performance of its portfolio businesses. KPMG professionals developed the tools to enable detailed benchmarking, identified the necessary metrics, and crafted a reporting protocol to allow the assessment to become part of business as usual.

Among the largest global companies, 73% have a sustainability strategy in place with stated objectives.

Source: KPMG International Survey on Corporate Responsibility Reporting (2008)

Obtaining clarity

Uncertain regulatory frameworks, including tax and carbon emission regimes, pose increasing challenges for business. KPMG assisted a food and beverage manufacturer to strengthen its knowledge of the emission trading schemes most relevant to its operations. In addition, it drew the company’s attention to both the impact of carbon price volatility and the availability of government assistance – knowledge it now utilises for competitive advantage.

KPMG worked with another food and beverage manufacturer to verify the cost of carbon in its supply chain, including its impact on the business model. The local firm’s input enabled the company to develop strategies to better manage the costs, while clarifying areas of vulnerability.

Capitalising on information

As legislation changes and business practices evolve, companies are looking to better understand the implications for carbon emissions, corporate social responsibility and rapidly-evolving changes within the commercial supply chain. KPMG’s work in this market space includes helping companies to ensure their information systems are aligned with external (e.g. investor) requirements and guidelines for reporting on sustainability programs and progress, while simultaneously informing proper management decisions.

KPMG helped a diversified industrial manufacturer to design and build an information system architecture that helps the enterprise feed its sustainability reporting needs with relevant business information. KPMG also worked with a large non-food retailer to enhance how the company monitors and assesses its suppliers’ corporate social responsibility performance – including labour conditions – as compared to the company’s own code of conduct. The resulting reports were used as the basis for further improvements in supplier behaviour.

As these experiences demonstrate, business is increasingly engaged. Many are using sustainability as a strategic lens to help drive long-term business value. Going forward, the challenge – and the opportunity – is to continue the journey by ensuring such engagement deepens and leads to sustainable business performance improvement.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or any KPMG member firm.

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