Sustainability governance

Our governance structure facilitates effective communication and decision-making regarding sustainability matters, enables timely adjustments, and ensures we remain on track to meet our sustainability goals. It also ensures that the Board of Management and Supervisory Board are actively engaged in setting and monitoring (respectively) our sustainability targets, considering trade-offs between different sustainability matters where relevant. This helps us continuously improve our sustainability performance.

Roles and responsibilities

The Board of Management, led by our Chief Executive Officer (CEO), is ultimately responsible for managing sustainability matters and ensuring the effective execution of sustainability initiatives. The Board is also accountable for integrating environmental, social, and governance (ESG) considerations into our business strategy, internal controls and operations, and for setting and achieving sustainability-related targets.

The Supervisory Board is responsible for overseeing the development of the sustainability strategy and monitoring progress, including the definition of policies and action plans, target-setting, and performance measurement. This supports us in consistently paying attention to, taking responsibility for, and being transparent about our sustainability performance.

Across all functions, a Leadership Team is appointed, chaired by the involved member of the Board of Management. Leadership teams translate the firm's strategy into actionable goals for communities, are actively engaged in leadership development programs and cultural initiatives (i.e, Values First) and monitor and report progress on strategic initiatives and financial performance. Regarding sustainability matters, the Leadership Teams monitor the status and support the Board of Management in aligning central functions.

The Board of Management consults regularly with the Works Council and other employee representation groups, such as the Young Board Now (a board composed of employees aged 31 or younger). Further information on employee representation and engagement can be found in “Social dialogue within our own workforce.”

Specific sustainability governance responsibilities are assigned to the appropriate functions, for example audit quality is a focus area of our Head of Assurance and data security of our Chief Operation Officer (COO). Our COO is responsible for environment-related matters, ensuring focused and effective decision-making to accelerate our climate transition and realize our Impact Plan ambitions. The COO, together with the Leadership Teams, monitors the status of our sustainability policies, objectives, and targets. Our Chief Financial Officer (CFO) and COO oversee external sustainability reporting, supported by our internal control team. Human Resources (HR) department, and Corporate Responsibility (CR) team, whose remit also includes sustainability reporting. The Chief Human Resources Officer (CHRO) is responsible for driving execution on social-related matters (i.e, employee retention, diversity and well-being) and reporting to the Board of Management on the progress, for example through GPS results.

To maintain accountability, the Board of Management provides quarterly reports to the Supervisory Board on the progress and performance of KPMG’s sustainability matters. These updates include insights on actions and investments aimed at steering sustainability performance, as well as insights into sustainability-related risks and internal controls, strengthening the internal control environment and improving the availability and data quality.

Sustainability experience

The Supervisory Board and the Board of Management possess a diverse range of experience and have access to expert advice and training programs, enabling them to effectively address and oversee relevant sustainability matters. Over the past three years, several members of the Supervisory Board have participated in external training sessions on ESG.

In particular, Linda Hovius and Sandra Berendsen attended various KPMG Raad events and roundtable discussions on CSRD and ESG in 2023 and 2024. Additionally, Linda is actively engaged with the Chapter Zero initiative. This knowledge and expertise equip the Boards to effectively oversee the material impacts, risks, and opportunities identified, such as climate-related risks, compliance with CSRD regulations, and reputational issues. In 2024/2025, CSRD and ESG were recurring topics during meetings of the Audit Quality Committee (AQC; a subcommittee of the Supervisory Board comprising all its members). Internal experts provided insights on the following topics: CSRD update, ESG implementation, including AI-related risks, risks of greenwashing in CSRD reporting, and risks of AI in CSRD reporting. The full Board of Management was present at each AQC meeting. Four members of the Supervisory Board (Linda Hovius, Sandra Berendsen, Pascal Visée, and Barbara Frohn) have been assigned ESG as a focus area, due to their previous experience with the topic.

Incentives and remuneration

Members of the Board of Management receive fixed compensation and are not eligible for variable pay. Members who are employees receive fixed pay and performance-based variable compensation, while equity partners receive a share of profits, to which a bonus or malus may be applied.

Sustainability-related topics are included in the target-setting process for the Board of Management, as well as for responsible Partners and Directors. Performance against these targets is taken into account during annual performance reviews.

Due diligence

KPMG’s sustainability due diligence process (hereafter referred to as “due diligence”) is an ongoing process through which we identify, prevent, mitigate, and account for how we address actual and potential negative and positive impacts on the environment and people connected to our business, as well as the actual and potential risks and opportunities that often result from such impacts. This process informs our assessment of our IROs by providing a structured basis for identifying the material environmental and social impacts and by highlighting the associated risks and opportunities that requiring disclosure under the ESRS.

We integrate the core elements of due diligence for people and the environment into our firm’s governance, strategy, and business model. For more information on the due diligence processes carried out in relation to the identification and assessment of potential sustainability matters in 2024/2025, see “Our material IROs” and “Stakeholder views and interests.” In Table 1, we map the elements of our due diligence process to the relevant section of our sustainability statement.

Table 1

Risk management and internal controls over sustainability reporting

Our sustainability reporting is exposed to the risk of material misstatement due to error or fraud. To address this risk, we have implemented several internal control processes to ensure that all relevant sustainability information is captured and accurately represented in our sustainability statement. Our key measures include:

• Internal controls: We apply controls to support the reliability of sustainability information, which was collected from several departments including Finance, Corporate Responsibility (CR), HR, and Procurement. While some controls are automated, many remain manual and are often not formally documented or embedded in standard procedures. In 2024/2025, data collection is partly supported by a centralized data platform, but this platform is still under development and not yet rolled out across all domains. Governance structures have been reinforced through the introduction of KPMG’s Data Governance Policy and the implementation of Informatica for automated data quality checks. Automated data checks using Informatica currently apply only the onboarded domains: financial, operational, and HR and focus primarily on data completeness rather than all quality dimensions. We acknowledge that our internal control framework for non-financial information is still maturing. Manual control remains prevalent and often lacks formalization, and further integration into standard processes is required. While we have started a broader improvement strategy to enhance data quality and ensure compliance with CSRD and ESG reporting, these efforts are still underway and do not yet constitute a fully strenghtened control framework.

• Alignment with financial reporting: To ensure consistent and coherent financial and sustainability data, we integrate our sustainability reporting process with our financial reporting framework where possible and applicable. This enables a unified approach to reporting and risk management.

• Risk identification and assessment: We identify and assess risks that could affect the quality of our sustainability reporting. This includes evaluating potential risks related to data integrity and compliance with ESG reporting standards.

• Systems: We have made progress in centralizing our data landscape. Currently, a large part of our sustainability data is processed through our data platform, where it is stored, transmitted, and monitored in a single location. The platform currently supports automated checks and structured monitoring for the financial, operational, and HR data domains. The implementation of these checks is part of our data governance and is still ongoing, while the monitoring of data flow completeness is active for all data domains. As part of this progress, we are implementing a future-proof approach that is scalable to regulatory changes, and designed to reduce manual interventions through automation to enhance the management and reporting of sustainability-related information. These activities present specific challenges for data collection systems. One of the key challenges is our aim to transition all data flows to an automated process rather than relying on file-based submissions. This requires external data providers to adapt their processes and deliver data directly through a connection, which is not yet supported in their current systems.

Currently, our processes rely on a combination of platform-driven workflows and manual procedures. While certain sustainability data points are already collected via our centralized data platform, many still require manual input and review. We have launched projects focused on improving data collection and quality, ensuring that new solutions will support effective management of our sustainability performance in the years ahead.

While reporting remains a priority, we recognize that embedding innovative, automated solutions across the organization will take time. Nevertheless, integrating sustainability reporting into our centralized data platform represents a crucial step forward in improving reliability and efficiency.

As part of this process, we plan to implement additional non-financial elements, such as ESG-indicators (e.g. Diversity, Governance). In doing so, we aim to increase efficiency, reduce the risks of errors and ultimately enhance our ability to consistently and efficiently report on our sustainability performance.