Tag: KPMG

What ESG backlash? KPMG survey finds companies plan to increase spending on ESG

ESG backlash notwithstanding, a recent global survey conducted by KPMG of 550 company directors and members of management showed that the vast majority of global organizations plan to increase spending on sustainability initiatives over the next three years. Why?  KPMG’s US ESG Audit Leader told Bloomberg that the “key reason” at the moment for the increased interest in ESG “‘is really regulatory pressure.’ Regulations are forcing companies to ‘inject the same level of rigor into [their] sustainability reporting that is required of financial reporting….Historically, sustainability reporting has sat with a very small group of under-resourced people,’ [she said]. Now as requirements evolve, ‘the amount of effort and rigor that needs to go into reporting has changed substantially.’” But these expenditures are not designed purely for compliance, KPMG concluded; they are also considered “a valuable tool for enhancing financial performance both now and in the future.” Nevertheless, “organizations are facing real challenges in delivering against this objective”; as KPMG observed, there seems to a “a disconnect between perception and preparedness.”

How do CEOs view ESG?

KPMG has recently posted its 2022 CEO Outlook. With inflation raging and a possible recession looming, KPMG found that CEOs were “ready and prepared to weather current geopolitical and economic challenges while still anticipating long-term global growth.” According to the survey, confidence in economic growth over the next three years has risen to 71%. Of particular interest were the survey results related to ESG.  According to KPMG, “ESG has gone from a nice-to-have to integral to long-term financial success.” But will a potential recession curtail their enthusiasm?

What do the public comments on the SEC’s climate disclosure proposal tell us?

In this July report, Responses to the SEC’s Climate Proposal, KPMG discusses various themes and observations that it gleaned from its review of comment letters on the SEC’s 510-page comprehensive and stunningly detailed climate disclosure proposal issued in March.  As you probably recall, the proposal was designed to require disclosure of “consistent, comparable, and reliable—and therefore decision-useful—information to investors to enable them to make informed judgments about the impact of climate-related risks on current and potential investments.”  KPMG found that the sentiment about climate standard-setting as a general concept was favorable, with 29% of those commenting very supportive and 50% supportive of the concept. Only 21% had a negative response—12% very unsupportive and 9% generally unsupportive.  But that positive attitude toward the general concept did not necessarily translate to support for the specific proposal from the SEC.

In light of the recent fraud charges against audit firm partners and the PCAOB, what questions should audit committees ask their outside auditors?

Recent civil and criminal fraud charges against partners at KPMG and staffers at the PCAOB, arising out of “their participation in a scheme to misappropriate and use confidential information relating to the PCAOB’s planned inspections of KPMG,” have led some managements and audit committee members to consider whether there is more they should be doing to ensure that their outside audit firms are not plagued by similar concerns. This article from Compliance Week sifts through a speech by Helen Munter, PCAOB director of inspections and registration, to assemble a series of questions that, in light of these recent charges, may be appropriate for audit committee members to pose to their outside audit firms.

SEC files charges against former PCAOB staff and former KPMG partners—collateral impact?

Yesterday, the SEC filed charges against six CPAs, including former staffers at the PCAOB and former partners of KPMG, arising out of “their participation in a scheme to misappropriate and use confidential information relating to the PCAOB’s planned inspections of KPMG.”  All have now been separated from KPMG or the PCAOB, and the U.S. Attorney’s Office for the SDNY has filed criminal charges.  Here is the press release, which advises that the “SEC stands ready to work with issuers to ensure that collateral effects, if any, to issuers and, in particular, their shareholders are minimized.”