ESG Talk: Accelerating Global Trust with Stakeholders ft. Rob Fisher, KPMG

Key Takeaways

Join the conversation with Rob Fisher, KPMG’s US IMPACT leader and global lead for ESG Transformation and reporting, as he and host Mandi McReynolds discuss the legacy and impact of ESG, the 2020 KPMG Survey of Sustainability Reporting, and stakeholder engagement and trust.

 

 

S1 Episode 6: ESG Talk | Transcript

 

Mandi McReynolds  

Hello, and welcome to ESG Talk. We are so glad you're with us today. Whether you're listening on the go or at your work desk, we are delighted to spend the next 20 to 25 minutes with you. Remember, you're a part of the show and shaping it. So be sure to give us comments and ratings, as well as tell us what you think at ESG Talk on Twitter, or on LinkedIn. Today, I'm excited because we have Rob Fisher from KPMG. And here's two interesting facts about him that I think you will want to know. First things first he leads KPMG's US IMPACT division. He's taken over this role this past year with a 27 year history of building and delivering results at KPMG. He designs ESG into operations and investments as companies try to tackle environment, social, and governance. The other fun thing to know about him is that he was named in 2022 as a global leader in consulting by Consulting Magazine. Rob, congratulations on what an incredible honor. Awesome career. Welcome to the show.

 

Rob Fisher  

Thanks, Mando. Yeah, I'm not sure I recognize entirely that person you just described. But yeah, that's cool. I appreciate it. Thanks.

 

Mandi McReynolds  

We're so glad you're here. So we kick off this session with conversation starters. These are meant to be light hearted and fun to help myself and those listening into the discussion today. Get to know you. Fast, easy, and quick. Now, here's a little tip that I got from your team. They told me that you used to be in a college rock band or music band of some kind. Is that true? 

 

Rob Fisher  

Yeah. We've got a very musical family. So yeah, I did a lot of music stuff in college. I still go to music festivals and my daughter now, she's kind of the current rocker in the family. And out there has stuff out on iTunes and stuff. So it's pretty cool.

 

Mandi McReynolds  

That's fabulous. I could totally relate you there. My dad was a classical musician. So on the opposite spectrum, where I went to my preschool graduation, they asked what your favorite movie or video was, and I said, Tosca. Completely different spectrum. Totally understand the music family. So if you had intro music to today's show, what would that intro music be?

 

Rob Fisher  

Yeah, so I'm gonna go a little off the board. So there's a band I love called The Reverend Peyton's Big Damn Band, and they have a song called Music and Friends. And a big part of the chorus is, "I just want to make music and friends everywhere that I go." Been that way since I was 12 years old. And I just love. I've always played music. I've always listened to music and it's an amazing way to make friendships and to connect with people. So that sounds kind of a throwback to like old time blues, really old school, blues and rock and that kind of be I think I'd go with that.

 

Mandi McReynolds  

Yeah, future episode, we got to know what your theme song is for ESG very year like what do you listen to to pump you up? We're asking every guest on the show, especially as people who've been veterans in the field, to think about moments that have shaped them maybe a line of advice, or a critical conversation. We have found that it's not really, in this field, big onstage moments that define us. For you, particularly because your work deals so integral with trust. What was the conversation around trust that shaped your ESG belief, philosophy, or direction in your work?

 

Rob Fisher  

Yeah. And you know, as you said, there are some grizzled veterans in the field of ESG. And I'm not going to claim to be one of them. Luckily, KPMG has has been at this much longer than I have, but, you know, I was lucky enough to get asked to step in and lead just over a year ago now. But the conversation, you know, I mentioned my daughter from a music perspective, but she is an environmental sciences student at Colorado Boulder. She's very active in high school as well. I think she was voted like crunchiest kid at her school or something. But conversation with her honestly is what really shaped my view on trust to around this topic because she is so passionate. So many of her friends are so passionate about climate, for example, that they and social issues of the day like they have to live on this planet for a lot longer than I do. And so, you know, she doesn't trust that my generation is going to do enough. And 2030 is a bit of a, you know, an inflection point that we haven't done enough, they kind of have to live with a planet that doesn't look very exciting. Like, if you look at like one and a half degrees Celsius, temperature rise looks like that, that's not a great outcome either. And that's sort of the best we can hope for. So if we get the two if we get, you know, like, if we got to four, it would be pretty catastrophic. And so, you know, the trust that they have in our ability to make a difference is, is not high. And so I kind of hold that with me to say, hey, look, they're like my generation, as business leaders right here and now, like the trust. You know, we need to demonstrate and step up over the next, you know, seven to eight years before we go past a bit of an endpoint in terms of what we can do to bring things back.

 

Mandi McReynolds  

And I think that's an interesting dialogue, as we think about the work of legacy, right? There's some of us in the field who who are thinking about legacy, like you articulated. And then we're being pushed by investors and consumers. And I really appreciate KPMG's focus what what you articulated so well, when you were thinking about this legacy work is your impact. And really thinking about your ESG insights as enabling people and professionals around the planet to tap into the latest insights. Tell us a little bit more about the journey to create the insights, you as a leader working around that initiative, and why that was so critical to drive a legacy impact.

 

Rob Fisher  

Yeah. Great question, Mandi. So I'm lucky in that KPMG, more broadly, has been at this a while I would say we in the US had a practice in sustainability for 15 or more years, and then you go all the way back, our Dutch practice actually has been at this for over 30 years. And so, you know, that's been incredibly helpful. You know, we have this legacy, we've been doing a Net Zero Readiness Index for many years. We've been doing a survey on sustainability reporting for many years. So, you know, while things have really, you know, turbocharged in the last year, I would say, I mean, it's incredibly investor focused, in particular, there's really driven, so much activity, and now we're seeing the sort of the regulatory side of things follow. You know, it's great that we have this base of studying the market for well over a decade to say, Okay, how have things been moving? And, you know, as we look at last year's Net Zero Readiness Index, we can piggyback it off of 5, 8, 10 years of studies to see, you know, how are we moving the needle, and then we just, you know, we like others. You know, I think we, we've been fairly public, you know, about a billion and a half of investment, over the next three years. Investing in things like our decarbonization and climate change hub that's led by a guy named Mike Hayes at Ireland, just bringing incredible insights and thought leadership to the market. So it's great that we've done that, because if we were starting from a standing start, like a year ago, I don't think we'd be able to bring nearly as much value to the market.

 

Mandi McReynolds  

That's right. And I think that, we'll put in the shownotes, a link to that hub into the Insight center, particularly as people try to grapple with some research. And I love that you recommended it a decade of experience. That's what drew me into Workiva was that they had been in technology around corporate social responsibility reporting for over a decade. And to your point, there's a lot of noise in the market. But those of us that have been in the work for the decade, or companies that have been there, there's so much insight, customer understanding, and the ability to really meet the needs. In fact, one of those surveys and we'll again, put this in the show notes for those listening into the discussion today that I appreciated from KPMG was the over a decade of research around the survey of the sustainability report. And really thinking about how companies are disclosing that, as you think about that particular sleeve of research. What are the takeaways for ESG leaders, C-suite, and boards as they consider 2022?

 

Rob Fisher  

Yeah, so well, maybe this is my roundabout way of getting you to ask me back, I guess because, you know, we do that survey every two years. And actually the survey has just gone out pretty much now to get the insights. So as soon as I have the 2022 survey, Mandi, you know, you'll be the first to know and it'll be me shilling to get back on the show, I guess. Yeah. So, you know, just but it's interesting, even if you look at like the 2020 survey, which was the last thing you think about some of the things that have happened so even in 2020 right, 80% of companies were reporting on sustainability and kind of shockingly to me, North America had the highest participation rate about 90% of the bigger public companies are reporting on sustainability. And then we, the report always goes after the 100 largest companies in like 52 different countries. So it's really wide range. And like 40% of those companies were disclosing something around climate in their actual financial disclosures. But obviously, as we now have, like required climate disclosure, things like you know, that's going to dramatically go up. But I thought it was interesting that 40% were acknowledging, and that was like 15%, higher than the survey two years before, but only one in five, the time were disclosing in accordance with TCFD. And so now, I think that number would have ticked up and now you've got the ISSB, the SEC, and the EU all with a we'll call it TCFD inspired requirements out there in some draft state waiting for comments and then a finalization. Unfortunately, we certainly wish they were all a little more closely aligned, each have gone their own path in terms of the depth or the breadth of what exactly they're looking for, from disclosure. The other thing is, we saw that, you know, the majority do have a target in place. So more often than not, and that have certainly gone up. And people have linked, you know, this, this trend of linking not only saying what's the impact on my business, but what's the impact on my business on the world, and aligning to a science based target. Certainly, we've seen that as a growing trend. And I think when we do the 2022 results, we'll see a huge uptick, again, in terms of having targets and linking both, you know, getting a science based target validated, for example.

 

Mandi McReynolds  

And I think that's really critical. Because as we think about trust, Workiva just released a survey as well. And there's just show about it, where we talk through, people are unlocking business value drivers, the ones that have been reporting that have a designated infrastructure that have a staff, but even with all of the unlocking of business value, the reporting and building the framework, there's still a level of confidence that is lacking or trust that okay, everything I report is completely accurate. How can the people think about that? Because like you said, the regulations disparate. It's a growing and dynamic field. It's actually young, right? Like, it hasn't been around as much as people like to say. Financial reporting, 100 plus years to get it right. ESG reporting, not so much. So how can people really start to have confidence in their reporting?

 

Rob Fisher  

Yeah, it's a great question. Certainly Workiva is positioned really in a really unique spot in that regard, I think to be helpful. As you've already seen, that you'd look at it, and you say, okay, CSR reporting, reporting in line with voluntary frameworks. And I was talking to head of sustainability earlier, really large US company here just this morning, and it was the same conversation around, boy, the current process is Excel, email, you know, working in spreadsheets, a shared  site, where files are getting exchanged, and that's just really not going to be sustainable, no pun intended, going forward. Especially where, you know, there's requirements now, right. I mean, in the US, if the climate proposal passes, as is, there will be new financial disclosures, I mean, that's SOX 404 right there. Like that's going to be, you know, need to be at that level of rigor, but everything else that goes into management report will be subject to 302 disclosure controls and procedures. So the level of rigor you need there is dramatically stepped up. So we're seeing, you know, ESG controller, a new title, is coming about, right, where somebody in the organization, typically in finance, not necessarily in sustainability, is, you know, now getting responsibility for the process, that control, the governance, over the underlying data. So the sustainability team still absolutely responsible for what are the right things to be in there? And what is our strategy and what are we doing about setting targets and monitoring. But the actual reporting, really seeing that move to finance and getting that level of rigor. And certainly people are saying, well, gosh, I use Workiva, for example, for my SEC reporting. Now, there's this non financial reporting and Workiva has been on the front end of supporting voluntary frameworks, but now, I'm sure you're going to be pivoting the product very quickly to be able to address you know, what's in the SEC requirements? What's in the EU requirements, and certainly the controls piece as well, right, the Sarbanes Oxley like full rigor that's going to come in that organizations are looking at. You're gonna need a platform as well to be able to identify those controls, test those controls, and make sure that everything's working as one would hope.

 

Mandi McReynolds  

And I appreciate how you said it's a team sport, and we're seeing new and evolving jobs happen in the market, and over 7,000 plus ESG jobs were listed last year. And I think that's really key, is what's so important is I tell people, like stop fighting over what department right look like, what department does this belong in, or, you know, it's like it's a team sport, it is going to take really talented finance upskilling, strong ESG upskilling. And it's collaborative across the business to drive value, as well as data accuracy, to build for future assurance, but also forward looking projections to set your strategy. And that's going to take all of us together doing that work. And to really think about the future of the work in that way. One of the things that I would love to hear more about as you formed together The Trusted Imperative. Tell us how important do you think trust is going to be to the stakeholders?

 

Rob Fisher  

Yeah, I mean, really before we really made some of the big announcements around our plans for investing in ESG was that if we were really on this topic of trust more broadly, right, and just the importance of in a place where, when you look at studies on trust, people don't trust government, the way they used to, they certainly don't trust the media, the way they used to, but their trust in business has been growing. So business has become this, you know, sort of bellwether for trust that people are turning to. But yet, it's hard in a very digitized world. And COVID, you know, made us more and more comfortable doing everything remote and an interacting via our phone, with almost the entire world and companies. And so you have this interesting dynamic where it's really important to get it right in terms of security and privacy, and following rules and regulations that are out there, as well as things like ESG, and showing your impact in the community and in the world. You're concerned for your employees, you're concerned about customer preferences. So all these things are legs of of trust, right. And so we've really oriented around that idea that risk and regulation, cyber, ESG, they're not just costs of doing business or risk to be managed, but their value creation levers. And that more trust equals more growth. Being able to innovate more confidently, retaining customers, things like that right. All those will be benefits you gain from being trusted. And the thing about trust is it takes kind of a lifetime to earn it. And it can be lost in a moment. And so you know, the other part of trust is people's ability, your company's ability to respond in the moment, like everyone's going to suffer a cyber breach at some point, but how you respond to how you talk to your customers, how you take care of them. And you reassure investors, you talk to employees about what you're doing in those things. How you respond in the moment are going to decide whether people continue to trust you, or whether you experience that loss of trust. And correspondingly a loss of customers, maybe workers going out the door, investors pulling capital, all those kinds of negative consequences of not being trusted. 

 

Mandi McReynolds  

Well, I think that's an important part too. And we take and unpack risk scenario testing, right is that a lot of times people hyper focus on the physical risk and the rest of your business. And with trust, there is a huge dynamic of stakeholder engagement. And in a future show, we're going to unpack simplifying risk scenario testing. And if you're not looking at it from all the angles you articulated, the regulation angle, your investor angle, your employee angle, the public reputation angle, you're you're not really doing quality risk scenario testing, you're you're sort of just checking one box of an exercise. And that's where the preparedness of risk testing can drive value for your company. Because you're not responding in the moment, you've actually thoughtfully with a collective team holistically considered all your stakeholders. And that's where the future is. It is hard to believe that our 20 minutes have gone that fast. I think Rob, you're right, we're gonna have to have a future show where we can unpack more together. I want to wrap this up with one question. So practical advice from you for companies on a quest to become trusted in their organization? What is one thing they can do in the next six months?

 

Rob Fisher  

Yeah, well, I think you kind of already started to give that answer. You mentioned stakeholder engagement, right? It is, I think, doing more to focus on what do the various stakeholders want. So that may take the form of customer surveys and focus groups, your employee surveys are treasure troves of data about how much they trust you. I think the focus has generally been on investors and regulators. But, you know, I think you have to look through those different lenses. I think from a investor and even a community perspective, you can look at things like ESG ratings, for example, and dig in there. And the rating agencies have a long way to go in terms of a bit more consistency. The way we're used to in credit markets, but you can pull those apart and really start to understand, Okay, what's, where am I struggling from an E, an S, and/or a G perspective relative to peers, and relative to general market expectations. And are there opportunities so you start to form a view of yourself kind of an outside in view of how trusted you are by those different stakeholder groups, and then you can start to set action plans. You know, you probably want to integrate that with your enterprise risk management program and identify where you have some top trust risks, and then set action plans to say, okay, we need to devote dollars, time, etc, moving the needle on this.

 

Mandi McReynolds  

I appreciate that you went there with stakeholder engagement, that Workiva survey that we had The Chat on prior to this show, we really talked about that the frequency of materiality and stakeholder engagement has increased. You know, it used to be three or four years ago, biannual pulse check, and now it's every year. Look at it, review it, consider holes and opportunity. We even saw some initial companies moving to biannual and quarterly. And I think that frequency is going to become more real time as we head into the next three years because we really are going to see the need to pulse and understand the stakeholder groups better. And so it'll be fun to see how innovation keeps up with that. It'll be fun to see how companies approach that. So great takeaway stakeholder engagement. And for us in the discussion stay on that. We really want to invite everybody who joined us today to connect with Rob on LinkedIn, Rob Fisher. We'll also put in the show notes again, the KPMG hub, ESG insights, the survey. Check out the results. We are so thankful that Rob, you joined us today. Everybody stay tuned. Our next episode will be with Sarah Chapman, Chief Global Strategic Sustainability Officer at manual life. It'll be an interesting conversation around impact and value that just builds on the discussion Rob and I had today. We'll talk soon everyone.