Ensuring governance in the ESG environment

The relevance of sustainability has risen sharply in recent years and has become a decisive factor for corporate success. In order to meet the demands of society as well as advancing regulation, companies must maintain a holistic governance concept.

The reporting requirements of the CSRD lead to unprecedented transparency regarding consumption data as well as the actual social and environmental conditions in the supply chain. In addition to the CSRD, the EU Green Deal has created further regulations aimed at meeting the 1.5-degree target, reducing or offsetting CO2 consumption and reducing the consumption of natural resources in the manufacture of products.

The topic of sustainability is therefore moving further into the focus of investors, competitors, consumers, customers and employees. Companies cannot avoid aligning their goals, structures and processes with the new requirements of the ESG triad "Environment, Social, Governance" in order to ensure long-term economic success. Financing instruments, tendering conditions and market preferences all use information on social and environmental factors when making decisions. Given the wide range of initiatives and opportunities, companies will need to prioritise the planning, control and targeted management of all ESG measures.

Companies, authorities and organisations are operating in a political environment in which regulations are generally becoming increasingly strict. The Supply Chain Due Diligence Act, the EU Taxonomy, the Act to Strengthen Financial Market Integrity, the EU General Data Protection Regulation, the ongoing efforts in the area of money laundering prevention at EU level and the Whistleblower Protection Act confirm this development.

However, ESG goes further and starts in the DNA of the company. It is about successfully and credibly establishing successful value management and a sustainable and ethical corporate management and culture ("G" for governance), the "E" for a company's environmental awareness and the "S" for social factors.

Only if rules and processes that are relevant for compliance with responsibilities and standards in the context of sustainability are clearly and effectively formulated and implemented can sustainable management be guaranteed.

The requirements relating to social factors and sustainability are leading to new facets of white-collar crime. For example, companies face challenges such as green or carbon washing, falsification of environmental certificates, unjustified climate and environmental protection claims on products, misappropriation of funds, corruption in connection with environmental approval procedures or requirements, but also violations of human rights as well as rainbow and purple washing, which must be countered preventively and proactively.

KPMG actively supports clients in the implementation of a holistic ESG governance model in order to implement current and future regulatory requirements, including those arising from the EU Green Deal, and thus avoid both liability risks (e.g. greenwashing) and unnecessary implementation costs.

KPMG offers you a multi-dimensional approach and also has interdisciplinary forensic and ESG specialists who carry out special investigations, gap analyses, risk assessments and prevention projects in the ESG environment. Please do not hesitate to contact us.