From gradual trends to major shifts, our operating environment continues to evolve in ways that impact KPMG and our clients.
External challenges forcing agility and resilience
Businesses and societies are navigating rapidly emerging challenges, ranging from conflict and humanitarian crises to AI, digitalization, cyberthreats, economic pressures, social fragmentation, and climate change. In the Netherlands, we also faced the uncertainties of a caretaker cabinet and a shifting political landscape in neighboring countries.
In this dynamic environment, the ability to be agile and resilient is essential. Organizations must adapt quickly to change, recover from disruptions, and continuously evolve to stay relevant. At the same time, innovations such as AI present significant opportunities for efficiency and growth, with success depending on skills development, responsible use, critical thinking and reliable data. In a complex, polarized world, organizations need clear direction and scenarios to get there, effective management of geopolitical risks, and the ability to quickly embrace new perspectives to move forward.
In KPMG’s GeoPulse research, 70% of senior executives at Dutch companies indicate that their organizations are actively taking measures to manage the risks of geopolitical instability. They postpone decisions and investments and prepare for various scenarios in order to better deal with uncertainties and to manage them more effectively. Many organizations are increasingly investing in more robust cybersecurity, partly due to the rise in digital threats: 67% of these executives report that the current situation is influencing their cybersecurity policies. In addition, they are increasingly striving to reduce their reliance on US (cloud) services. At the same time, European companies in particular continue on their sustainability path, responding to high energy challenges and societal expectations from consumers and employees.
Talent in our sector
Improving trust in our sector can help to ease the pressure caused by the ongoing skills shortage in professional services. Attracting and retaining talented people with the skills we need at KPMG remains both a key priority and critical for our growth. While entry-level recruitment continues to be strong, the market for experienced Advisory professionals is highly competitive, especially in areas such as technology, financial services, and the public sector. For Assurance, digitalization, AI, and regulatory changes such as Omnibus have reduced hiring needs in some areas; nonetheless, maintaining a balanced experience mix remains essential. AI adoption does change workflows, thereby diminishing some tasks but enhancing others.
In this, keeping the right humans in the loop - with expertise and focus on quality - remains essential. Looking ahead, the availability of qualified professionals is expected to remain tight, underscoring the need to foster a work environment where individuals can develop and contribute meaningfully. As a new generation enters the labor market, organizations must consider how to support purposeful work and societal relevance alongside professional development.
Grounding AI in trust
AI is becoming increasingly embedded in our personal and professional lives. It provides opportunities to transform industries, reshapes business models, and unlocks new sources of value. However, in addition to its potential value, its limitations and risks must also be addressed, as well as the potential for unforeseen societal friction caused by the widespread adoption of AI.
According to KPMG's AI Trust Monitor research in the Netherlands,[1] overall trust in AI remains low. This was also underscored in KPMG’s global study into the public’s trust, use, and attitudes toward AI to date, led by the University of Melbourne. The study covered 48,000 respondents.
The findings reveal that “the intelligent age” has arrived, with 66% of people indicating that they use AI regularly, and 83% that they believe the use of AI will result in a wide range of benefits. However, only 46% of people globally are willing to trust AI systems. People using AI report relying on AI output without evaluating its accuracy (66%) and, as a result, making mistakes in their work due to AI (56%). There is a strong public mandate for national and international AI regulation, with 70% of respondents believing that regulation is needed.
The challenge lies in grounding AI in trust, governing it responsibly, and complementing it with human insight. At KPMG, we strongly advocate for the implementation of trusted AI processes, governance, systems, and AI literacy training to enable the ethical, responsible, and safe use of AI. Through KPMG’s Trusted AI Framework, our Advisory and Assurance experts help clients navigate their AI journeys with confidence.
Change in the regulatory landscape
We saw several notable regulatory developments during the year. In early 2025, the European Commission published its Omnibus proposal, aimed at simplifying the requirements of the Corporate Sustainability Reporting Directive (CSRD) by making the reporting standards more accessible and easier to implement, as well as greatly reducing the number of organizations obliged to comply. The anticipated scaling back of reporting requirements received a mixed response and required significant agility from both the business and policy communities. To prepare for the challenge ahead, we had anticipated that a higher proportion of our clients would fall in scope this reporting year, so we had to make significant adjustments following the announced changes. Nevertheless, client demand shifted from reporting requirements to sustainable investment, supporting technology, Double Materiality Assessments (DMAs), and supply chain management changes – resulting in growth for the need for advice from our advisory experts.
This shift reflects a broader understanding that, even if the official requirements have been reduced, full, clear, and transparent ESG reporting helps companies achieve their ambitions, stand out in the market, and strengthen their reputation among different stakeholder groups.
In November 2025, the European Parliament agreed on its position to reduce sustainability reporting and has proposed to reduce the number of companies in scope of the CSRD to only the largest companies. While these changes aim to ease compliance for smaller businesses, we, together with our clients, will monitor negotiations closely and prepare for adjustments as the legislative process continues.
We are also monitoring developments and requirements related to the EU’s AI Act, which entered into force in 2024 as part of the EU Digital Decade policy program that guides Europe's digital transformation. Following a risk-based approach, the AI Act aims to ensure a well-functioning internal market for AI systems, where both benefits and risks are adequately addressed and many new rules apply, especially to high-risk AI systems.
The AI Act will be implemented in phases, with most provisions applying from August 2, 2026. Several provisions took effect in 2025, including those on prohibited AI, AI literacy, and general-purpose AI models. We have concluded that no prohibited AI is used within KPMG and that the obligations regarding general-purpose AI models do not currently affect our firm (as we are not a provider of such models). We also expect that KPMG will meet the required standard on AI literacy. We will continue to take the necessary steps to ensure timely preparation for the AI Act. On 19 November 2025, the European Commission published its Digital Omnibus proposal aiming to simplify certain AI Act obligations and extend some application deadlines, including for high-risk AI systems. As the legislative process is still at an early stage it remains uncertain whether the proposal will be adopted. We will continue to monitor developments closely.
Elsewhere in the regulatory domain, despite the dissolution of the Dutch government in 2025, forthcoming changes to audit-related legislation remained on the agenda. The Quartermasters’ 2023 report emphasized the need for sustained external pressure to maintain a high-quality audit sector in the future, as well as introducing new requirements concerning firms’ AQIs. For more information on how we address audit quality and implement recommendations from the Quartermasters’ report, see the Governance chapter of our Sustainability Statement.
External reviews, inspections, and interactions with regulators
External reviews and inspections of KPMG contribute to public trust in our work. We maintained a constructive relationship with the Authority for the Financial Markets (AFM) throughout the year, engaging with the regulator on relevant topics such as sector developments, audit quality, and our organizational culture.
In 2024/2025, the AFM, our main regulator in the Netherlands, lifted enhanced supervision of our firm as KPMG demonstrated sufficient urgency, focus and commitment throughout the process. Sufficient resources were allocated to the enhanced supervision activities, leadership was actively engaged and external expertise was utilized in key elements of the process - providing comprehensive insights into behavioral and cultural factors. Looking ahead, KPMG will maintain its focus and responsibility to continue remediation and prevention as part of our SoQM. Our approach includes active monitoring, horizon scanning, and embedding clarity on integrity and a speak-up mindset into our processes and behaviors.
The AFM finalized one thematic inspection on “Quality of audit procedures that address assessed fraud risks” (refer to the Governance chapter in our Sustainability Statement for more details on the results). This year, the AFM conducted seven thematic inspections on the following topics: (1) fraud risk analysis in the audit, (2) assurance on CSRD reporting, (3) design and application of reward system, (4) information security, (5) quality management and audit procedures of cash flow statement, (6) audit tooling and impact of tooling on audit quality and (7) system of internal audit quality inspections (QPR).
The inspections on fraud risk analysis (1) and reward system (3) have been concluded without significant findings. The other inspections have not yet been finalized.
During the PCAOB inspection, the PCAOB did not identify any engagement-level deficiencies that indicated insufficient audit evidence to support our audit opinions. The PCAOB found no issues that would call into question the basis of our audit opinions for three inspected engagements. In the results, reported in 2024/2025, it reported potential non-compliance with independence rules. These matters had already been identified by KPMG and reported to the PCAOB, and had been remediated in the regular course of business. KPMG reported one independence incident to the AFM during 2024/2025 (2023/2024: seven).