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Strategy & value creation

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Our business environment

We operate in a business environment that is changing rapidly – we are seeing immense social and economic change, due in part to the Covid-19 pandemic.

In our industry, we have seen:

  • A growing shortage of skills – particularly in high-tech areas like digital and data analytics

  • The emergence of ‘new ways of working’ – with greater flexibility and less time spent in the office

  • Increased use of digital technologies – which, in turn, has meant more emphasis on data & IT security

  • Greater awareness of social issues during the pandemic, especially inequality and diversity – alongside the urgent need to tackle climate change

  • Changes to industry regulations, with further reform in the Netherlands and the phasing-in of ISQM 1[1], a new international standard on audit quality

There is also a new reality for KPMG clients. Covid-19 led to severe disruption in many sectors. Globally, among the hardest hit were aviation & travel, hospitality, leisure & entertainment and retail. Meanwhile, the EU has continued to extend its rules on sustainability reporting – its new Corporate Sustainability Reporting Directive will come into operation in 2023.

  • 1 International Standard on Quality Management 1. ISQM 1 will replace the current ISQC 1 standard. ISQM 1 is due to come into force in December 2022.

Our strategy

We’ve called our strategy Trust & Growth: trust, because trust is the foundation of our business, and growth because we want to continue expanding both our assurance and advisory businesses. This year – given the changes we’re seeing in our industry – our strategy operated under the theme: Winning in the new reality.

Trust & Growth was launched in 2018 – we have just completed the first three-year phase. The second phase, now beginning, will take us through to 2024.

Our strategy is based on the idea of ‘People-driven Progress’ – which is central to our brand. It has five focus areas:

We set out annual priorities in each area – these five areas provide the basis for both business planning and personal goal-setting throughout the firm.

Materiality

Every year, we make an assessment of our operating environment. With this assessment, we can identify our ‘material topics’ – in other words, those areas where we believe we can create the most value for stakeholders and society. These topics are then mapped to our five focus areas to ensure our strategy remains relevant. The assessment also provides the basis for continued engagement with our clients, employees, business partners, regulators and other stakeholders. Our latest assessment identified twelve material topics:

Strategic focus area

Material topic

Public trust

  • Integrity & independence (including ethics, implementation of GDPR[1], reputable conduct)

  • Quality & transparency (quality standards, culture and improvement)

  • Societal impact (environmental footprint, ‘giving back to the community’)

People

  • Being a good employer (including employee engagement, well-being, vitality, remuneration)

  • Inclusion & diversity (gender, cultural diversity, unbiased processes, safe place to work etc.)

  • Talent development (training & education, career advancement, attraction and retention)

Clients

  • Client satisfaction (including client experience, growth areas, selected propositions)

Digital & innovation

  • Vision & thought leadership (‘leading the debate’, including on proposed audit reform in the Netherlands)

  • Innovation (culture of innovation, development of new business models)

  • Partnerships & alliances (key partnerships in IT, workflow, sales etc.)

Financial strength

  • Sustainable profit (including supply chain and procurement, financial performance)

  • Regulatory changes (ISQM 1, and additional reporting rules for clients)

  • 1 The EU’s General Data Protection Regulation, introduced in 2018.