1.8  Material IROs and their interaction with strategy and business model

Material IROs

The outcome of our DMA is shown in table 1, which presents our material IROs (also referred to as “sustainability matters”) per relevant topical ESRS. In the following chapters of our sustainability statement, we address these sustainability matters by “material theme,” aggregating topics that are interconnected or related to the same strategies and/or policies. Our material themes have been developed to group our material sustainability matters (that is, ESRS topics, sub-topics, and sub-sub-topics) into similar categories based how we manage and report on these key matters.

Concluding whether a given matter was an impact, a risk, or an opportunity was challenging, particularly in the social domain. We found that almost all our sustainability matters include elements of impact as well as financial risks or opportunities. We acknowledge that if we perform well on negative impacts, we can prevent financial risks; on the other hand, if an impact is addressed well, it might turn into a financial opportunity. Where sustainability matters were deemed to have a material impact, we assessed both the current and anticipated financial effects of its material risks and opportunities on our financial position, performance, and cash flows. We anticipate future feedback from stakeholders, peer insights, regulatory developments, and further ESRS implementation guidance to alter the DMA outcome in future.

We summarize our material topics and sustainability matters in table 1.

Sustainability matter

Type of IRO

IRO description

Value chain

Time horizon

Impact materiality

Financial materiality

Positive

Negative

Oppty

Risk

E1 Climate change

Our impact on climate

  

GHG emissions scope 1, 2 and 3

Although we are not heavily involved in high-emission-intensity activities, we acknowledge the negative impact of Scope 1, 2, and 3 GHG emissions – mainly resulting from the negative effects of our buildings, fleet, and air travel on the environment by contributing to global warming.

ST, MT, LT

  

S1 Own workforce

Working conditions

Adequate wages for our own employees

We operate in a market with intense competition for talent; therefore, being unable to offer adequate wages to attract and retain skilled professionals poses a significant risk to our present and future success.

ST, MT

Employee attraction and retention

Attracting and retaining employees, as well as developing top talent, offers significant opportunities for our present and future success. It supports our employees to deliver high-quality services to our clients, boosts productivity and innovation, and ultimately leads to long-term financial benefits for our firm.

ST, MT

Training and education for our own workforce

Training and education for our own workforce includes the education programs and resources through which our people can improve their knowledge, abilities, and job performance. This can positively impact individuals by increasing their job satisfaction, earning potential, and employability.

ST, MT

Well-being and engagement

Social dialogue within our own workforce

Ensuring effective social dialogue with our own workforce on topics such as employee well-being can lead to increased productivity, better working conditions, and increased turnover. Given our strong focus on employee engagement, social dialogue – referring to the communication and cooperation between employers and employees – was identified as a material opportunity for us.

ST, MT

Work-life balance for our own workforce

Given our high-performance and dynamic working environment, a poor work-life balance could lead to burnout, stress, staff turnover and other negative impacts.

ST, MT

Mental health and safety for our own workforce

Our people operate in a high-performance and dynamic working environment, which, if not properly managed, can lead to negative impacts on employees’ mental health due to stress and anxiety.

ST, MT

Privacy for our own workforce

Privacy is about protecting the personal information and individual rights of our people, including their personal data, online activities, and physical movements. We attach great importance to preventing negative impacts that occur when privacy is not sufficiently protected.

ST, MT

Non-discrimination within our own workforce

We are committed to reducing all forms of discrimination within our own workforce. We acknowledge that discrimination can contribute to negative impacts for our workforce and we endeavor to ensure fair treatment and opportunities for all our people, regardless of their gender, race, age, or other characteristics.

ST, MT

Inclusion, diversity, and equity (IDE)

Diversity within our own workforce

An environment that does not foster IDE can cause negative impacts for our employees. IDE forms an important pillar within our business. We strive to create a psychologically safe environment that is diverse and inclusive, providing equal access to opportunities for all our employees.

ST, MT

Gender equality and equal pay for work of equal value

Gender equality and equal pay for work of equal value ensures that men and women are treated fairly in the workplace in terms of pay, benefits, and opportunities for advancement. We view gender equality and equal pay for work of equal value as pivotal to ensure that everyone is treated fairly in the workplace. We are continuing to focus on maintaining gender parity in pay and acknowledge that not being able to do so will negatively impact our employees by promoting inequality and increasing discrimination, leading to less-motivated and dissatisfied employees.

ST, MT

S4 Consumers and end-users

Impact on society

Impact on sustainability performance in society through our Assurance and Advisory services

We consider it very important to have a positive impact on the acceleration of society’s sustainability transition through our Assurance and Advisory services (economic activities). The ESG transformation facing our clients comes with significant challenges, and sustainability is becoming an important element in everything we do, for our advisors and auditors alike. By addressing this well, we create a positive impact.

ST, MT

G1 Governance

Audit quality

(Audit) Quality focus (including AQIs)

As a leading audit firm, we see the quality of our audit services as our license to operate. If not properly maintained, this might lead to a loss of public trust, reputational damage, legal costs, penalties from regulators, and claims from clients.

ST, MT

Corporate culture

Corporate culture (including organizational ethics and integrity)

Our business as an assurance and advisory firm is built on trust, meaning that ethics and integrity are of the utmost importance. We are committed to upholding these principles and having the right measures in place to address issues related to this topic. Our proactive approach allows us to create positive impacts, both on our own governance and in dealing with our suppliers and clients.

ST, MT

Failure to reach high standards in these areas will result in financial risks in the form of penalties, legal costs, and reputational damage.

Protection of whistleblowers

Protection of whistleblowers is crucial for fostering a culture of transparency and accountability within our organization.

ST, MT

By ensuring that we have the right policies, channels, and processes in place, we create a safe environment for individuals to report any unethical or unlawful practices.

However, there is also a potential risk if whistleblowers' reports are not handled appropriately: damaging trust, discouraging future reporting, undermining our reputation, and exposing us to regulatory and reputational risks. Ensuring robust whistleblower protections is therefore essential to maintaining trust and mitigating risks.

Compliance with regulations

Compliance with regulations is fundamental to maintaining our credibility and upholding our reputation as a trusted professional services organization. By adhering to regulatory requirements, we strengthen our client confidence, mitigate legal risks, and ensure sustainable business practices, creating a positive impact on our stakeholders.

ST, MT

Compliance is also a risk if we fail to adhere to regulations and could expose the organization to penalties if misinterpretations or lapses occur. Maintaining robust compliance processes is therefore essential to balance these benefits and challenges effectively.

Data security

Data security

We deal with significant volumes of (physical and digital) data on a day-to-day basis, including clients’ sensitive and confidential information makingdata (and cyber) security is of paramount importance for us. However, the potential risks associated with data breaches or cyber threats could compromise confidential information. This could lead to claims from clients, penalties and reputational damage.

ST, MT

Table 1

The current and anticipated effects of our sustainability matters have been thoroughly evaluated. All our sustainability matters are integrated into KPMG N.V.’s strategy, business model, and decision-making, which focuses on enhancing workplace diversity and equality, upholding stringent governance practices, and reducing our environmental footprint. We do not yet have a complete view of the current and expected financial effects of our sustainability matters. We are continuously embedding the implications of new laws and regulations into our strategy and business model, devoting resources to integrating legal and regulatory changes into our services, and enabling our people to deliver their services accordingly – giving us our license to operate. We consider our strategy and business model to be resilient and well equipped to manage identified risks while capitalizing on opportunities, ensuring sustainable growth over the long term.

There have been no significant changes to KPMG N.V.’s sustainability matters compared to the previous reporting period. Our 2023/2024 DMA, conducted in alignment with the ESRS, reaffirmed the relevance of the previously identified sustainability matters. We have therefore maintained our strategic focus and initiatives without requiring substantial revisions to our business model or operational strategies. This consistency reflects the stability and ongoing relevance of our risk and opportunity landscape.

To deliver our strategy and business model, we adequately address and prioritize our sustainability matters related to our own workforce, since our people are vital in meeting the needs of our clients and society through our services. Negative impacts on our own workforce are mainly related to individuals and our positive impacts are managed throughout our own operations by our policies and actions to support our workforce. Based on the natue of our business, we do not consider these negative impacts to differ across our operations or services. Having considered the diversity of our own workforce in the context of our operations within our DMA, we determined that there are no higher risks faced by a particular group within our workforce. 

KPMG N.V. has aligned the disclosure of our sustainability matters with the requirements of the ESRS. Besides ESRS-related sustainability matters, we also report on two entity-specific sustainability matters: audit quality focus (including AQIs) and data security. While not explicitly covered by the ESRS, these are part of our license to operate and critical to our long-term sustainability performance.