Operating environment

In 2023/2024, as every year, we kept a close eye on the external trends and developments – both positive and negative – shaping the world around us, particularly those with a significant impact on KPMG N.V. and our clients.

Our sector

Trust remains a pivotal topic in the assurance and advisory world. In a 2024 survey, trust in professional services businesses to do what is right was rated at 64% (+1% versus 2023), indicating that the sector is trusted (source: Edelman Trust Barometer 2024). Trust in professional services cannot be separated from quality, but it is also earned – and, more importantly, maintained – through the ethical and behavioral integrity of firms like ours. At the time of reporting, the reputational implications of answer sharing in our sector are still underway, with several investigations still to be concluded.

Meanwhile, the skills shortage in the professional services sector is ongoing and expected to continue in the years ahead, particularly when it comes to auditing and technology roles. This makes investing in improving trust in the sector – and therefore attracting people to professional services careers – crucial for our growth. With more study options and career paths available than ever before, the pressure is on to attract talented people with the specific skills needed. At the same time, jobseekers (especially in the younger generations) are increasingly seeking out work they see as personally fulfilling and socially meaningful. This requires companies to adapt their ways of working, from leadership, processes, and management to working environments, culture, listening mechanisms, and even branding – to not only attract but also, crucially, retain the talent they need.

We operate in a highly regulated environment, at the national, EU, and global level. While the new Dutch government’s interest in and impact on the sector remain to be seen, developments in our sector’s regulatory landscape include CSRD coming into force for the 2024 reporting year and the EU’s AI Act and Accessibility Act on the horizon. In the Netherlands, meanwhile, the Quartermasters’ report was published in late 2023, recommending that continued external pressure is necessary to ensure a high-quality audit sector in the future, as well as setting out new requirements relating to firms’ audit quality indicators (AQIs). For more information on audit quality, see Spotlight on audit quality (new window).

The bigger picture

The effects of the climate crisis, and efforts to counter them, are being felt all around the world. This not only creates risks for businesses – including resource scarcity and supply chain disruption – but also requires them to adapt their operations, whether to ensure resilience or to comply with climate-related regulations. In parallel, reporting requirements are shifting up a gear. CSRD, for example, calls for more transparent and comparable corporate reporting on the environmental performance of large companies and the impact of climate change on their business. For many companies, however, improving their environmental footprint also brings opportunities to secure business continuity, reputational gains, and market differentiation – all of which can boost (sustainable) growth.

Many of the transformation challenges of climate change are intertwined with another major global transition: digitalization. The reach and capabilities of digital technologies – including big data, the cloud, and (generative) AI – are growing all the time. Companies that fail to adopt and adapt to the latest digital developments run the risk of being left behind. Accordingly, take-up of innovative tools, and the benefits thereof, is growing: adoption of AI by European businesses rose to 33% in 2023 (2022: 25%), while 75% of businesses claim that using AI has increased their revenue.[1] However, while the advantages range from greater time and cost efficiencies to an improved employee experience, digitalization also brings challenges and risks. Across the globe, the public and private sectors are wrestling with digital-related issues including cyber security, data privacy, energy consumption, skills shortages, a lack of trust, and ethical concerns.

Investment in digital technology is taking place against a challenging economic and geopolitical backdrop. Regional conflicts in Europe, the Middle East, and elsewhere are not only causing devastating humanitarian crises but also leading to market uncertainty and supply chain disruption. In the EU, after the mild recession of late 2023, the economy began growing in early 2024. Here in the Netherlands, inflation remained high (although lower than in the previous year) and the economic outlook broadly negative. All these factors mean the cost pressures that have been felt across sectors and society in recent years are yet to ease.

Our society itself continues to change, in terms of attitudes and lifestyles as well as demographically and economically. The increasing internationalization of the working population in the Netherlands, for instance, brings benefits for organizations, where awareness of the importance and impact of inclusion, diversity, and equity (IDE) is growing. At the same time, businesses need to anticipate and lead the conversation around potential cultural issues related to inclusion and communication, especially in the context of regional conflicts. Similarly, political polarization on migration – and other key topics, such as the environment – persists. Furthermore, while the number of employees working beyond the retirement age of 67 doubled between 2013 and 2023 and is expected to keep growing,[2] the digital natives of Generation Z are also entering the workforce. Companies must recognize and respond to generational differences among their people, including their potentially differing views and expectations around work and the employee proposition.