kpmg.com/us/blc
The ESG journey: 
Lessons from 
the boardroom 
and C-suite

© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

The ESG journey    1
It is now widely recognized that environmental, social, 
and governance (ESG) issues factor into corporate 
performance and can no longer be seen as “soft” 
reputational issues to be handled by public relations or 
marketing. Indeed, investors are recognizing that poor ESG 
practices pose environmental, legal, and reputation risks 
that can damage the company and the bottom line and that 
positive ESG practices can contribute to improved company 
performance.
The US SIF Foundation (the Forum for Sustainable and 
Responsible Investment) estimates that $12 trillion, or 
one-fourth, of all professionally managed assets in the 
United States incorporated ESG factors at the beginning of 
2018, up 38 percent in two years.1 Investors increasingly 
are aware that companies with strong ESG performance 
have a better brand image, a more loyal and stable customer 
and employee base, lower cost of capital, better access to 
financing and, ultimately, a greater focus on long-term value 
creation. 
ESG issues also matter to an ever-broadening swath 
of stakeholders, including millennials and iGens—who 
are increasingly influential and discerning consumers and 
employees—and, of course, many of the world’s largest 
investment managers. In a recent petition to the U.S. 
Securities and Exchange Commission (SEC), a consortium 
of investors representing over $5 trillion in assets under 
management requested that the SEC initiates rulemaking  
on a comprehensive framework for ESG-related disclosures 
for public-reporting companies.2 
trillion (26%) of 
U.S.-domiciled
assets 
are managed using sustainability criteria. 
US SIF, 2018$12.0
1  US SIF Foundation, Report on US Sustainable, Responsible and Impact Investing 
Trends, 2018.
2  Cynthia A. Williams, Jill E. Fish, Petition to SEC for Rulemaking on Environmental, Social, 
and Governance Disclosure, October 2018.
3  Larry Fink’s Annual Letter to CEOs, BlackRock, 2018.
4  Martin Lipton, Engagement—Succeeding in the New Paradigm for Corporate 
Governance, 2018.
Leadership by the world’s largest asset managers—
BlackRock, Vanguard, and State Street, among others—
on matters such as climate change, workplace diversity, 
executive compensation, and even board composition 
has placed traditional ESG factors front and center. In his 
2018 letter to CEOs, BlackRock’s Larry Fink emphasized 
sustainability and a more expansive view of governance and 
accountability, “Without a sense of purpose, no company, 
either public or private, can achieve its full potential. It will 
ultimately lose the license to operate from key stakeholders. 
It will succumb to short-term pressures to distribute earnings 
and, in the process, sacrifice investments in employee 
development, innovation, and capital expenditures that are 
necessary for long-term growth.”3 
Martin Lipton of Wachtell Lipton said that Fink’s letter 
“sets out the type of engagement between corporations 
and their shareholders that BlackRock expects in order to 
secure its support against activist pressure… [and] needs 
to be carefully considered in developing investor relations 
engagement practices.”4
continued on page 3
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

2    The ESG journey
Detailed descriptions of these framework elements are included in ESG, strategy and  
the long view. To download the full framework, visit kpmg.com/us/esgframework.
1. Level setting 
Agree on definition of ESG  
and its importance to the 
company.
3. Integration 
Encourage integration  
of strategically significant  
issues into the business 
strategy.
2. Assessment 
Determine which ESG risks  
and opportunities are of 
strategic significance to  
the company.
ESG, strategy, and the long view:  
Five-step framework
5. Board oversight 
Ensure that the board has  
the right composition,  
structure, and processes to oversee ESG  
in the context of strategy and long-term  
value creation. 
4. Stakeholder  
communications 
Shape the company’s  
key ESG messages to investors and other 
stakeholders in the context of strategy  
and long-term value creation. 
Each company will have its own mix of ESG issues, but for purposes of this paper, “ESG” encompasses  
those that are prominent on investors’ and other stakeholders’ agendas today and commonly cited in 
corporate responsibility and sustainability reporting:
• Climate change impacts
• Water and waste management
• Natural resource scarcity
• Product and worker safety
• Supply chain management
• Workplace diversity and inclusion
• Talent management 
• Employee relations
• Human rights
• Health
• Labor practices
• Executive compensation
• Political contributions
• Board independence, 
composition, and renewal
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

The ESG journey    3
Given the importance of these issues, in October 
2017 the KPMG Board Leadership Center published 
ESG, strategy and the long view, which offers a five-
part framework for boards to consider as they help guide 
their companies in addressing ESG issues as a strategic 
imperative for long-term performance. In subsequent 
months, we conducted a series of one-on-one interviews 
with directors and officers of major corporations—all 
recognized leaders in addressing ESG and sustainability 
issues. As we found in these interviews, even for 
conscientious CEOs and boards, integrating ESG into 
corporate strategy isn’t easy. ESG often means different 
things to different people. Transforming it from an 
ancillary issue siloed in a distant corner of the enterprise 
to a broad core competency requires significant and 
sustained effort. And there’s no single model for 
organizations to follow. 
Conducted under Chatham House rules, our 
interviews with directors and officers of companies 
that are well along their ESG journeys revealed important 
insights about their efforts to define and assess, 
integrate, and communicate their ESG activities to 
investors and other stakeholders. Following are highlights 
from the interviews—as well as insights we’ve  
gathered from conversations with other directors and 
business leaders.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

4    The ESG journey
Level setting: How issues are framed 
impacts our understanding of why they matter 
and how we address them. By agreeing 
on a definition of ESG and its importance, 
managements and boards can set the stage 
for progress. And by framing the discussion in 
business terms—risk, opportunity, efficiency, 
and financial performance—they can help 
short-circuit preconceptions, politics and 
personal views.
of investment firms 
say governance
                                                                                    
 has the greatest impact on investment decisions  
(among ESG factors).   Russell Investments 2018 ESG Survey
91%
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

As to the people driving ESG, “I think it 
is both top down and bottom up. From 
the top, a founder or CEO recognizes 
the mutuality principle and determines 
that the purpose of the company 
is to create mutuality of services 
and benefits for all stakeholders—
shareholders, employees, customers, 
and suppliers. Basically, the founder 
or CEO believes that we can only be 
successful in the long term if everybody 
we touch is also being successful. This 
is core to the company’s strategy; we 
can only be successful in the long term 
if we are taking care of the people in 
our supply chain, our customers, our 
employees, and the environment. So 
it’s not altruism—it’s business and it’s a 
win-win.”
“The bottom up piece comes from a 
number of passionate individuals who 
have seen the light over the past 10 
or 15 years and have been working 
out what the mutuality principle really 
means for us and how we live up to our 
responsibilities. What is the right target 
for us on carbon? What is the right 
target for us on water? And how should 
we think about human rights? Talented 
and passionate individuals often at mid 
levels of management have wrestled 
with and grasped different pieces 
of this puzzle and made sense of it. 
And that then has led to targets and 
programs.”
“I would identify ERM and industry 
disruption as two of the driving forces. 
ERM helps you focus on key risks of 
strategic importance to the company, 
and some of these risks are ESG-
related. In effect, ERM serves as a 
catalyst for getting the conversation 
going around ESG issues. And industry 
disruption is what gets people thinking 
a lot more about trends, what’s 
happening in society, and the need for 
innovation. This focus on industries 
experiencing a lot of disruption—such 
as consumer products, oil and gas, 
and automotive industries—forces 
the board and management to take 
a hard look at strategy and the ESG 
issues critical to that strategy. And so I 
think that the combination of ERM and 
industry disruption has really spurred 
this ESG conversation in a lot  
of industries.”
How difficult is it to get buy-in from the 
board and management on ERM? “This 
is not about doing good for the world. 
This is about business strategy. So 
you get buy-in when you can present a 
business case for the investment. And 
that business case is made up of cost 
savings, cost avoidance, growth, and 
reputation. In general, you’re not going 
to get a good ROI if you only look at the 
first three or five years; The returns are 
typically in the 5- to 15-year range. So if 
you’re guided by short-term horizons, 
you likely won’t focus on ESG.”
“One of the biggest challenges to 
getting buy-in on ESG is when a 
company is going through a major 
turnaround and you’re focusing on day-
to-day survival. Many ESG issues tend 
to be more long term in nature. When a 
company is in survival mode, the short 
term becomes more of the focus and 
some long term issues such as ESG 
take a back seat. There are times in a 
company’s history when certain ESG 
issues do need to take a back seat to 
short-term day-to-day survival issues.”
The ESG journey    5
Q. What has 
been the driving 
force behind 
the company’s 
decision to focus so 
intensely on these 
environmental, 
social, and 
governance issues?
KPMG observation: 
The catalyst behind the 
company’s decision to 
focus so intensely on 
ESG issues is generally 
some combination of (i) 
people understanding the 
importance of ESG and 
driving the company’s 
focus; (ii) an increasingly 
intense focus by the board 
and management on 
enterprise risk management 
(ERM) and strategy, which 
has opened people’s eyes 
to the strategic importance 
of ESG issues, both as a 
risk and as an opportunity; 
and (iii) expectations of 
investors, customers, and 
employees.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

“Once the material ESG issues are 
identified, they become an accepted 
part of the metrics and scorecards. 
But the highly strategic ESG issues 
will also become part of strategy and 
risk discussions. You need to clearly 
understand your most important 
strategic vulnerabilities, and if you don’t, 
an activist or analyst will. Increasingly 
embedded in ESG, depending on the 
industry, are highly strategic issues. 
And they deserve far more agenda 
time, whether it’s climate change if 
you are an energy company or talent 
management if you are a service 
business.” 
“And it’s not always so clear what 
the critical strategic issue is. When 
we started on the ESG journey at 
my company, we wanted to better 
understand our carbon footprint, 
which we thought was our truck 
fleet. But when we mapped it out, it 
wasn’t the truck fleet but was power 
consumption in electronic devices 
we deployed in homes. That changed 
the whole discussion. But again, it’s 
all so dynamic. Things that weren’t 
strategic before all of a sudden become 
strategic.”
“ESG issues are not static—they 
evolve. And if you look at our 
sustainability committee agendas, 
you will find that it’s been a totally 
evolutionary process. The implications 
of climate change for our strategy, 
including fuel efficiency and our carbon 
footprint, have been on the board and 
committee agendas for some time. But 
with industry disruption, the agendas 
have evolved to include the impact of 
new technologies on human capital 
and skill set needs and the need for 
innovation.”
“I think you have to parse ESG. For 
most boards, the G, or governance, is 
handled by the nominating/governance 
committee and the committee should 
have a pretty clear idea of what best 
practices are and where they’re 
coming up short from a governance 
benchmarking standpoint. As to the 
E, or environmental issues, in some 
industries this is highly strategic and a 
key priority for management and the 
board. For companies in industries 
where it’s not so strategic, it’s pretty 
easy to identify material environmental 
issues and benchmark your progress. 
The Sustainability Accounting Standards 
Board (SASB) and other standard 
setters have provided good guidance. 
So, at most companies, the E gets 
addressed.”
nearly doubled to
Incorporation of ESG factors into the 
investment decision-making process
Callan Institute, 2018 
ESG Survey of 89 unique 
institutional U.S. funds
43%
in 2018.
6    The ESG journey
Q. How 
did the board and 
senior management 
determine which 
environmental, 
social, and 
governance issues 
to focus on? Was it 
obvious or was there 
a significant effort to 
identify issues that 
were of strategic 
significance? 
KPMG observation: 
Recognizing that the 
strategically significant ESG 
risks and opportunities will 
vary by industry and sector, 
most companies undertake 
an inventory to identify 
and assess all ESG issues 
material to the business, 
such as environmental 
degradation, product 
and worker safety, waste 
generation, etc., that could 
affect the business or its 
stakeholders. From this list, 
they then identify the two 
or three ESG issues that 
are core to the business 
strategy and key to the long-
term health and viability of 
the business. 
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

The ESG journey    7
“But I think the one wild card is the S 
or social, and that is difficult for most 
companies. What do you mean by 
social? Does it include culture and 
talent management? What do your 
employees and customers think it 
means? Is it your profile on social 
media? The boards of some of the 
social media companies probably had 
a different view of the S issues two or 
three years ago than they do today. And 
with artificial intelligence and big data, 
the privacy and other social issues are 
going to increase in importance in the 
coming years.”
“I think boards have to do a better job 
and be better educated about how to 
think about the social piece of ESG 
because it is going to be increasingly 
important. And more and more 
happens on social media. How good 
are we at monitoring social media 
and figuring out what to do about 
it? Social media is a whole new area 
that deserves and warrants more 
understanding and discussion and  
focus by boards.”
Assessment: A roadmap is essential to a 
productive strategy. After identifying ESG 
risks and opportunities material to their 
business, companies will want to focus on 
the two or three that are most strategically 
significant—which will vary from company to 
company. At companies competing on the 
basis of differentiation and strong brands, for 
example, boards may find their time best spent 
monitoring issues that impact brand value.  
At companies competing on price, they  
may wish to focus on factors that impact  
cost structure. 
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

8    The ESG journey
Q. ESG initiatives 
are often disconnected 
from the core business 
strategy and don’t 
directly contribute to 
competitive advantage. 
How did or does your 
company integrate its 
major ESG initiatives 
into its strategy? 
KPMG observation:  
Integrating the company’s one, 
two, or three major ESG initiatives 
into strategy is important 
because it enables the board 
and management to bring the 
same focus and discipline to the 
management and oversight of 
these initiatives as they do for 
other strategic initiatives aimed 
at creating long-term value. 
How to achieve that integration, 
however, is complex and will 
vary from company to company. 
But two broad areas of focus 
include employee selection 
and behavior—including talent, 
compensation, and employee 
empowerment—as well as 
organizational processes and 
routines, such as ESG metrics and 
targets, performance monitoring, 
capital allocation decisions, as 
well as consideration of ESG 
issues when making marketing, 
financing, and investment 
decisions.
Integration: Too often, ESG initiatives 
remain peripheral to core corporate 
activities and so do not contribute directly 
to a company’s competitive advantage. By 
integrating ESG programs into business 
strategy and the incentive programs driving 
it, companies can bring the same focus 
and discipline to them as they do to other 
strategic initiatives. Integration efforts 
should include two broad areas: employee 
selection and behavior, and organizational 
processes and routines. 
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

“It’s critical that you connect your 
finance organization with your 
sustainability organization when 
developing metrics because almost 
every ESG metric needs to come back 
to a financial metric, even attrition. Yes 
there is a cost, a productivity cost, of 
employee turnover and attrition. The 
data and analytics tend to fall within 
your finance organization, and finance is 
the one with the street cred. Your chief 
sustainability officer (CSO) and chief 
financial officer need to be joined at 
the hip in developing these metrics so 
that you can monitor performance over 
the short and long term and measure 
continuous improvement.” 
“The ESG language needs to be 
translated to the financial language 
or else you’re just talking to the wall. 
We all need to be speaking the same 
language, and it’s the language of 
finance. It’s the language used in 
business cases, setting goals and 
metrics, and capital allocation and 
investment decisions.” 
“Your CSO needs to be ‘empowered’ 
and reporting to the CEO and not buried 
within the organization. The CSO needs 
to be involved in strategy, risk, capital 
allocation, and M&A decisions across 
business lines.”
“And that’s one of our biggest 
challenges, deciding what we are going 
to measure. What are going to be our 
goals? Who are we going to partner 
with because, in some cases, you’re 
partnering with entities that are experts 
in this? What third-party entities, 
including suppliers, are we going to 
get to help us in this process? Those 
became the nitty-gritty, which is what 
I call the ‘execution part,’ once you 
identify the strategic ESG issues that 
you want to focus on.”
“And you’ve got to recruit executives 
and managers who believe that ESG is 
important—managers who buy into it—
because you’re not going to get where 
you have to get if you don’t have that. 
Managers who are more traditional or 
old school may not be able to grow into 
this. And so it’s really, really important 
that you recruit people—at all levels 
of the organization—who want the 
company to have an impact on society 
and who see value for the bottom line. 
But your traditional old boys’ club may 
not really buy into these things.”
“Making a sustainability program 
successful requires a business mind 
set, partnering with operating groups, 
and real governance. When we 
started, we had to find projects that 
made financial sense—easy wins. 
The sustainability group became an 
opportunity partner for the operating 
groups as opposed to compliance. We 
find ideas that we think might work for 
them, do the homework and the math, 
and they get to decide whether to go 
forward. If the ROI is high, they keep 
the savings.”
“When these issues go before the 
chairman and CEO, the sustainability 
group doesn’t make the presentation. 
Each operating group details their 
projects and their savings. Most 
projects come to the board now. 
And many of these operating groups 
are empowered, previously toiling in 
obscurity. They get the exposure and 
the recognition. They take ownership 
and want the projects.”
of directors surveyed 
by KPMG
                                                            at the 2018 NACD 
Global Board Leaders’ Summit said ESG is directly linked 
to corporate strategy.
22%
The ESG journey    9
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

10    The ESG journey
Q. Employees, 
consumers, regulators, 
and investors all seek 
information about 
the company’s ESG 
efforts—and they 
all have somewhat 
different information 
needs. How does your 
company communicate 
to investors and other 
stakeholders about ESG? 
KPMG observation:  
The first step in crafting ESG messages that resonate 
is understanding the varying information needs of 
the company’s stakeholders. Employees, consumers, 
communities, regulators, and investors will frequently 
seek different ESG information. For example, the 
information in an annual “corporate citizenship” report 
addressing issues such as employee engagement and 
diversity and corporate philanthropy may appropriately 
address the concerns of employees, consumers, 
and communities, but it may not fully address the 
information demands of regulators, such as the SEC,  
or the needs of investors focusing on the impact of  
ESG on the company’s long-term performance—and 
how the company is managing key ESG risks or 
capitalizing on related opportunities.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

“On earnings calls—which most of 
our directors listen in on—one of the 
things that is very apparent to me 
is that [the calls] really don’t touch 
on ESG issues. I’ve never heard a 
question about an ESG issue. So 
the only way that we’re going to be 
able to communicate effectively with 
stakeholders is going to be outside of 
formal earnings communications. One 
way is through a sustainability report. 
But I think more important than these 
reports are the meetings that take place 
between institutional investors and 
our management team. I think these 
meetings are essential. And I also  
think that it’s an excellent exercise to 
have board dinners where you invite 
some institutional investors to meet 
with the board, and it gives you the 
chance to talk about issues that are not 
ever covered in earnings calls.”
“It’s not enough to provide only the 
ESG information that is required 
in securities filings. What other 
information do our stakeholders want? 
What metrics do they want to see? 
Do they want the information in public 
filings or on the company website?  
And how is management answering 
these questions?”
“What I find with the two boards I 
serve on is that companies want to 
communicate in a very factual way. 
They don’t want to get ahead of 
themselves. They’re not interested in 
just stating goals. They’re interested in 
delivering the performance and then 
communicating, which is probably why 
you find the disclosures conservative or 
less robust than you might expect. But 
they do know that our customers are 
asking for the information.”
The ESG journey    11
                of CFA 
Institute members 
surveyed believe 
independent 
verification of 
ESG information 
should be similar 
to an audit.
2017 ESG Survey, CFA Institute
50%
Stakeholder communications: Shaping the company’s key ESG 
messages in the context of strategy and long-term value creation can 
reinforce the connection between ESG and corporate performance. 
Although no single framework has emerged for reporting ESG 
information, boards should understand how management decides what 
to disclose and how its accuracy is verified—and ensure that progress 
updates, results, linkage to strategy, and an explanation of how ESG 
initiatives benefit the company and its stakeholders become part of the 
company’s communications. Keeping ESG front and center is particularly 
important in competing for talent because it matters to employees—from 
rank-and-file workers to senior executives.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

12    The ESG journey
Q. What is 
the board’s role 
in overseeing the 
company’s ESG 
activities? How does 
it oversee ESG?  
KPMG observation:  
The structure and processes 
a board creates to oversee 
ESG issues will vary based 
on a number of factors, such 
as the size and complexity 
of the company’s operations 
(including its supply chain 
and whether operations are 
international), its industry, the 
magnitude of the company’s 
ESG risks and opportunities, 
the degree to which these 
issues are central to the 
company’s strategy, and the 
level of director expertise 
regarding relevant issues. 
But boards of companies 
dealing with truly strategic 
ESG issues have learned two 
critical lessons. First, the board 
needs the right composition to 
understand the ESG risks and 
opportunities and to oversee 
management’s handling of 
these issues. Second, the board 
needs to assess the adequacy 
of its structure and oversight 
processes. 
Board oversight: Make sure there’s a “home” 
for ESG oversight, whether it’s the governance 
committee, an ESG committee, or somewhere  
else in the board structure. Effective oversight  
hinges on having the right people in the boardroom, 
supported with quality information to enable 
appropriate oversight.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

Ultimately, “the board will determine 
whether ESG is a sideshow or a 
strategic, mainstream issue. And it 
will only be treated as strategic and 
mainstream if the board has directors 
who understand the company’s ESG 
issues and are committed to making 
the company have a positive impact  
on society in a way that creates  
long-term value.” 
“At the boards that I’m on, the lead 
directors are much more empowered 
and active today than they were 10 
years ago. And they are particularly 
active in facilitating a dialogue about the 
board agenda, and whether the agenda 
is properly focused on ESG issues or 
priorities that directors may be worried 
about, want to talk about in more depth, 
or want management to come back 
with more information.” 
“It’s really important who you have 
on your board—and the skill sets 
and the mentality. If you’re a board 
that’s targeting somebody with deep 
financial expertise and that person’s 
financial expertise is embedded in more 
traditional valuation models where ESG 
wasn’t even taken into account, that’s 
a problem. It’s going to be harder to get 
that person to realize that when they’re 
thinking about strategy, there may be 
an ESG issue that the company can 
address in a way that adds real value—
where there is going to be a multiplier 
effect in synergies. So, unfortunately, 
sometimes the skill sets that we’re 
looking for are not always compatible 
with the skill sets or mentality required 
to understand the value of ESG. I 
think that as board composition keeps 
evolving, there’s a certain amount of 
generational turnover, attrition, more 
diversity; I think that will help.” 
“From the board’s perspective, I think 
there are two things the board can do 
to gain proper insight and oversight 
of ESG issues. As President Reagan 
used to say, ‘trust, but verify.’ So we 
don’t just trust management to be 
doing what they should be doing. We 
really are, as a committee and as a 
board, demanding accountability. And 
that means agreeing on ESG goals and 
metrics, monitoring performance, and 
compensating based on performance.”
As to whether the board should 
establish a separate committee to 
assist the board in the oversight of 
ESG, there is some difference of 
opinion. “I can’t imagine ESG—such 
an important strategic issue for the 
company—getting the attention that it 
needs without there being a designated 
committee assisting the board in 
providing oversight.” On the other 
hand, “it’s easy for ESG to become 
compartmentalized and separated from 
strategy discussions if it is buried in a 
committee. If ESG is a core strategic 
issue, it requires the attention of the  
full board.”
“Key to board oversight of ESG is to 
ask questions, probe, and listen—really 
listen. Ask the CEO and CSO what’s 
on their worry list. Almost always, 
there is an item on the list that is highly 
strategic. A strategic ESG issue can 
often be picked up that way.”
“You have to make it real, and by 
making it real, the board can become 
highly engaged and help build the ESG 
plan. I remember a board meeting 
several years ago when I spoke for 
the first time about our extended 
global supply chain. I took into the 
boardroom a map of the world and 
showed the board that we sourced 
all our raw materials from 30 to 40 
underdeveloped countries where 
some one million workers were at the 
start of our supply chain. And many of 
these workers lived in extreme poverty, 
making less than $1 a day. And there 
was just silence in the boardroom. And 
then many discussions followed about 
how to address the problem and make 
our supply chain sustainable. We’ve 
since made progress.” 
“But this made it real. When the worker 
is living in extreme poverty, he has no 
loyalty to you. So we have no security 
in the supply chain. And I would argue 
this is true for many industries.” 
“We also made it real in terms of 
carbon. Once we got our arms around 
our carbon footprint—the size of a small 
country like Panama—we had many 
more board conversations about what 
to do about it. And by making it real, 
the board became highly engaged and 
helped build the plan.”
The ESG journey    13
companies
                                                            in the  
S&P 500 have a board-level sustainability  
or responsibility committee.  Bloomberg LP
123
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

14    The ESG journey
Acknowledgments
The KPMG Board Leadership Center would like to thank the following directors and officers for their time and 
the perspectives they shared:
Kimberly Casiano 
Director 
Ford Motor Company
Tanuja Dehne 
Senior Advisor 
The B Team  
Director 
Advanced Disposal Services,  
Granite Point Mortgage Trust Inc.
Robert Hanson 
CEO 
John Hardy USA Inc. 
Director 
Urban Outfitters, Inc.,  
Constellation Brands, Inc.
Robert Herz 
Director 
Morgan Stanley, Fannie Mae,  
Workiva Inc., The SASB Foundation
Barry Parkin 
Chief Sustainability Officer 
Mars, Incorporated
Sandra Peterson 
Director 
Microsoft Corp.
Curtis Ravenel 
Global Head, Sustainable Business  
& Finance 
Bloomberg LP
Grant Reid 
CEO 
Mars, Incorporated
David Seaton 
Chairman and CEO 
Fluor 
Director 
The Mosaic Company
Michael White 
Director 
Bank of America Merrill Lynch,  
Whirlpool Corporation,  
Kimberly-Clark Corporation
Justin Whitmore 
EVP Corporate Strategy and  
Chief Sustainability Officer 
Tysons Foods, Inc.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

A framework for board oversight*
ESG, strategy, and 
the long view: 
The ESG journey    15
*Excerpted from ESG, strategy and the long view, KPMG Board Leadership Center, 2017,  
developed in collaboration with Professor George Serafeim of Harvard Business School.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

16    The ESG journey
The role of the corporation in society is an abstract, 
politically polarizing question that is not high on the 
priority list of most boards. Yet, embedded in this question 
are strategic and operational issues critical to long-term value 
creation. And these issues are attracting heightened attention 
from investors, consumers, and other stakeholders.
From our perspective, many of these issues fall 
under the broad rubric of environmental, social, and 
governance (ESG), from climate change impacts and worker 
safety to workplace diversity, executive compensation, 
and board composition. Given the significant opportunities 
and risks associated with ESG, companies that excel at 
identifying and incorporating these issues into their strategy 
enjoy a competitive advantage in the marketplace and among 
institutional investors. It is increasingly clear that ESG and 
ROI are connected.1
So why isn’t ESG top of mind in every boardroom? 
Too often, the pressures of short-termism—from quarterly 
earnings reports to investment vehicles valued daily or 
monthly to management compensation incentives—cause 
companies to neglect ESG issues, which, by their nature, 
tend to be more long term-oriented in the context of strategy 
and performance. Language can also present barriers, and 
the subject is often difficult to define. Is it corporate social 
responsibility (CSR)? Shared value? Conscious capitalism? 
Triple bottom line? Responsible business? Corporate 
citizenship? Sustainability?
And context matters. How ESG issues are framed for 
discussion in the boardroom—and across the company—
will influence whether they are viewed as business issues 
that are essential to long-term value creation or soft topics 
that are more marketing and brand/reputation-driven. For 
example, a company’s approach to the topic of “climate 
change” might be considered politically fraught and relevant 
primarily to the company’s reputation. But a discussion of 
how long-term risks to manufacturing operations and the 
supply chain created by severe weather patterns is likely to 
be more meaningful and productive.
In addition to the challenges of short-term pressures and 
finding a common language, there is no cookie-cutter 
approach to ESG. The strategic importance of specific 
ESG issues can vary widely by company and by industry. 
A company’s ESG profile may change as the company’s 
business changes, and a company’s philanthropic activities 
captured in a glossy report can create the perception (and 
complacency) that ESG is being addressed—that the 
company is “doing its part.” In fact, addressing ESG as the 
long-term strategic issue that it has become and embedding 
it into the company’s core business activities (strategy, 
operations, risk management, and corporate culture) is a 
formidable challenge—requiring an understanding of why 
ESG matters to the company’s long-term performance, a 
clear commitment and strong leadership from the top, and 
enterprise-wide buy-in. 
Companies—and boardroom discussions—are moving 
at different speeds in addressing ESG issues today. 
But wherever a company is on this journey, the board can 
help lead the organization forward by focusing on the big 
picture. Which ESG issues are of strategic significance to the 
company? How is the company managing ESG-related risks 
and opportunities and embedding ESG into the strategy and 
culture to drive long-term performance? How is the company 
telling its “ESG story” to investors and other stakeholders?
To help boards understand and shape the total impact of 
the company’s strategy and operations externally—on the 
environment, the company’s consumers and employees, the 
communities in which it operates, and other stakeholders—
and internally, on the company’s performance, this paper 
presents a five-part framework:
– Level setting: Agree on definition of ESG and its 
importance to the company.
– Assessment: Determine which ESG risks and opportunities 
are of strategic significance to the company.
– Integration: Encourage integration of strategically 
significant ESG issues into the business strategy.
– Stakeholder communications: Shape the company’s key 
ESG messages to investors and other stakeholders in the 
context of strategy and long-term value creation.
– Board oversight: Ensure that the board has the right 
composition, structure, and processes to oversee ESG in 
the context of strategy and long-term value creation. 1
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

The ESG journey    17
Level setting
Agree on definition of ESG and its importance to 
the company.
While we use the term “ESG” to cover the broad range 
of environmental, social, and governance issues that are 
meaningful to investors, employees, customers, and other 
stakeholders, others may use terms like CSR, sustainability, 
or corporate citizenship. These terms often mean different 
things to different people, even those who believe they are 
speaking a common language. An important first step is for 
the board to reach an understanding with management not 
only on language but also what that language means as a 
practical matter. A case in point: Companies often conflate 
ESG and charitable giving, but giving is just a narrow aspect 
of the much larger, strategic ESG equation.
How ESG issues are framed and discussed has a big impact 
on understanding why they matter to the business and 
how to address them. Given the pitfalls and barriers that 
ESG language can create, it is important to (re)frame the 
discussion in business terms—particularly risk, opportunity, 
efficiency, and financial performance. As in our earlier 
example, “climate change” can be framed as a discussion 
about the risks water shortages and droughts pose to a 
beverage company’s manufacturing operations, the potential 
financial impact these risks pose, and how the company 
might mitigate these risks in a way that improves bottom-line 
performance. This strategic approach can help short-circuit 
preconceptions, politics, and personal views while setting the 
discussion on the right course at the outset.
Importance of ESG to corporate performance
ESG issues continue to rise on investor agendas for good 
reason. Poor ESG practices or ignoring ESG issues pose 
environmental, legal, and reputation risks that can damage 
the company and have a lasting impact on the bottom line. 
By contrast, firms with strong ESG performance tend to have 
a more stable and loyal investor base, lower cost of capital, 
and better access to financing, as numerous research papers 
have now documented.2 For example:
— Calvert Research and Management’s 2017 paper, “The 
Financial and Societal Benefits of ESG Integration: Focus 
on Materiality,” found that material ESG issues impact 
a company’s financials in terms of revenues, costs, and 
the cost of capital.3 Because ESG data is slow to be 
incorporated into stock prices, investors who accurately 
understand ESG implications typically have time to take 
advantage of opportunities and generate alpha.
— Bank of America Merrill Lynch’s June 2017 paper, “ESG 
Part II: A Deeper Dive,” found that ESG investing would 
have offered long-term equity investors benefits in 
mitigating price and earnings risks and avoiding 90 percent 
of bankruptcies in the period studied (2002–2015).4 The 
paper found that ESG attributes “have been a better signal 
of future earnings volatility more than any other measure 
we have observed at a market level.”
continued on next page
Each company will have its own mix of ESG issues, but for purposes of this paper, “ESG” 
encompasses those that are prominent on investors’ and other stakeholders’ agendas today 
and commonly cited in corporate responsibility and sustainability reporting:
• Climate change impacts
• Water and waste management
• Natural resource scarcity
• Product and worker safety
• Supply chain management
• Workplace diversity and 
inclusion
• Talent management 
• Employee relations
• Human rights
• Health
• Labor practices
• Executive compensation
• Political contributions
• Board independence, 
composition, and renewal
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

18    The ESG journey
— A 2012 Deutsche Bank review of more than 100 academic 
studies of sustainable investing around the world found 
that ESG factors are correlated with superior risk-adjusted 
returns at a securities level.5
And the benefits that accrue to these companies are not 
limited to favorable capital markets. Studies also show 
benefits in terms of employee engagement and customer 
purchasing behavior—both of which are vital to competitive 
advantage and long-term performance.6
For many years, investors have focused on the “G” in ESG—
governance issues, such as executive compensation, board 
leadership and composition, and the ability of shareholders 
to include their director candidates on management’s proxy 
card. But institutional investors are increasingly turning their 
attention to a range of environmental and social issues that 
they view as critical to the long-term financial health of the 
company.
According to Gibson Dunn,7 over 40 percent of the 827 
shareholder proposals submitted in 2017 dealt with 
environmental and social issues, making it the largest 
category of shareholder proposals during the 2017 proxy 
season. (This included 201 social proposals—up from 160 
in 2016—related primarily to diversity, discrimination, and 
gender pay gap issues; and 144 environmental proposals—
up from 139 in 2016). The level of shareholder support for 
environmental issues was notable, with climate change 
proposals receiving majority support at large-cap companies 
ExxonMobil, Occidental Petroleum, and PPL, and climate 
change proposals generally garnering one-third of votes cast.
The 2017 proxy results are perhaps not surprising, given that 
a number of the largest institutional investors—including 
BlackRock and State Street—have been so outspoken in 
emphasizing the importance of environmental and social 
issues (along with governance issues) in corporate strategy 
and generating long-term value.
In his recent letters to CEOs of Fortune 500 companies, 
Larry Fink, chairman of BlackRock,8 asked them to lay out 
for shareholders a strategic framework for long-term value 
creation and emphasized that over the long term, ESG 
issues—ranging from climate change to diversity to board 
effectiveness—have real and quantifiable financial impacts 
and can provide essential insights into management’s 
effectiveness and thus a company’s long-term prospects. In 
its engagement priorities for 2017–2018, BlackRock identified 
“climate risk disclosures” as one of its five engagement 
priorities and emphasized the importance of a “climate 
competent board” for companies that are significantly 
exposed to climate risk. BlackRock also stated that “we will 
engage companies to better understand their progress on 
improving gender balance…If there is no progress within 
a reasonable time-frame, we will hold nominating and/or 
governance committees accountable for an apparent lack of 
commitment to board effectiveness.”9
In its January letter to directors, State Street Global Advisors 
emphasized the importance of sustainability in long-
term corporate strategy and stated, “In 2017, we will be 
increasingly focused on board oversight of environmental and 
social sustainability in areas such as climate change, water 
management, supply chain management, safety issues, 
workplace diversity and talent management, some or all of 
which may impact long-term value.” State Street attached a 
framework to its letter to help boards focus on ESG issues, 
including a list of questions that boards can use as a starting 
point to begin work with management to incorporate a 
sustainability lens into long-term strategy.10
In 2017, Vanguard updated its proxy voting guidelines, stating 
that it will evaluate each environmental and social proposal 
on its merits and may support those with a demonstrable link 
to long-term shareholder value. Subsequently, in connection 
with negotiating the withdrawal of a climate change 
shareholder proposal submitted to certain of Vanguard’s own 
funds, Vanguard announced that it had prioritized climate risk 
on its engagement agenda, noting: “It is crucial to our fund 
investors that market participants have access to consistently 
comparable information to incorporate these risks and 
opportunities into market prices.”11 And Fidelity Investments 
revised its proxy voting guidelines to say it may support 
shareholder proposals calling for reports on sustainability, 
renewable energy, and environmental impact issues and 
may also “support proposals on issues such as equal 
employment, and board and workforce diversity.”12
Activists, too, are sharpening their focus on ESG factors. 
While activist investors have largely focused on board/
governance issues in recent years (board composition, 
executive pay, and proxy access), social and environmental 
issues are featuring more prominently in the investment 
process. For example, in its recently revised policy 
statement, Trian Partners notes that environmental and social 
issues “can have an impact on a company’s culture and 
long-term performance and that companies can implement 
appropriate ESG initiatives that increase their sales and 
earnings.” Trian also indicates that it “will report periodically 
on the progress on ESG matters at our portfolio companies in 
communications with our investors.”13
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

The ESG journey    19
Taken together, 2017 ESG proxy season results and recent 
pronouncements from major institutional investors and 
activists send a clear message to directors that ESG issues 
are a priority for investors and should be a priority for 
companies.
As we look to 2018 and beyond, we expect these issues will 
remain a priority and perhaps even grow in importance as the 
Trump administration’s pullback on environmental and social 
issues may cause investors to step in to fill a perceived void.
Corporate America appears to be listening. Some of the 
largest U.S. corporations are publicly emphasizing the 
strategic importance of ESG to their businesses, and the 
Business Roundtable (an association of CEOs of leading 
companies14) addressed the importance of ESG in its 
Principles of Corporate Governance 2016.15
—“Companies should strive to be…responsible stewards 
of the environment and to consider other relevant 
sustainability issues in operating their businesses. Failure 
to meet these obligations can result in damage to the 
company, both in immediate economic terms and in its 
longer-term reputation. Because sustainability issues 
affect so many aspects of a company’s business, from 
financial performance to risk management, incorporating 
sustainability into the business in a meaningful way is 
integral to a company’s long-term viability.”
— “A company should conduct its business with meaningful 
regard for environmental, health, safety and other 
sustainability issues relevant to its operations. The 
board should be cognizant of developments relating to 
economic, social and environmental sustainability issues 
and should understand which issues are most important 
to the company’s business and to its shareholders.”
Other leading organizations—including CECP (the “CEO 
Force for Good”) and its Strategic Investor Initiative, the 
Committee on Economic Development, and the Organisation 
for Economic Co-operation and Development—are also 
sharpening their focus on, and advocacy for, ESG as a critical 
factor in long-term corporate performance and the long-term 
health and sustainability of capitalism. 1 
Assessment
Determine which ESG risks and opportunities 
are of strategic significance to the company.
Identifying the strategically significant ESG risks and 
opportunities for a company is complex, as they vary by 
industry and sector, and even within industries. Generally, 
however, a two-step process is helpful:
Identify and assess all the ESG issues that are material 
to the business, such as environmental degradation, product 
and worker safety, waste generation, etc.—issues that could 
materially affect the business or its stakeholders. Part of 
the identification and assessment process should involve 
analyzing the likelihood and magnitude of ESG risks and 
opportunities, knowing that these variables may shift and 
thus need to be revisited.
From the broad inventory of material ESG issues, 
identify the two or three ESG issues that are strategically 
significant. Which ESG issues are truly core to the business 
strategy and key to the long-term health and viability of the 
company? In addition to internal assessment and dialogue, 
which ESG issues do customers, suppliers, and other 
external stakeholders view as key to the company’s long-
term strategy? While it is common to coalesce around six 
to eight issues that could affect the operating efficiency of 
the company, in most cases, only two or three issues will 
affect the company’s strategic advantage. The board should 
concentrate on these topics as they fundamentally affect 
a company’s ability to remain competitive. For example, 
companies that compete on the basis of differentiation and 
strong brands should focus on issues that would affect the 
brand value of the firm. For companies competing on the 
basis of price, the emphasis should be on factors that have 
the potential to further decrease the cost structure or to 
prevent any unexpected cost increases. Other companies 
identify one overarching ESG initiative—for example, 
to generate X percent of new product revenues from 
environmentally friendly product materials—which serves as 
the basis for various business units and functional groups to 
develop supporting ESG goals and initiatives. In short, when 
deciding which ESG issues to focus on in the boardroom, 
less is more.
Indeed, making the distinction between strategically 
significant ESG issues and other material ESG issues is 
important to bring discipline and structure to how these ESG 
issues should be governed. While management needs to 
focus on all ESG issues, the board should focus its limited 
time on the most strategically important ESG issues. 
continued on next page
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

20    The ESG journey
Once the strategically significant issues are identified, the 
board should work with management to establish metrics 
and key performance indicators (KPIs) that enable the board 
to monitor management’s performance against goals. 
At the same time, the board should monitor stakeholder 
communications that address these strategically significant 
issues in the context of strategy and long-term value creation. 
Other material ESG issues that may well be ancillary to 
strategy must still be managed by the company and its ESG 
team, as these issues will also be the subject of stakeholder 
communications—both mandatory Securities and Exchange 
Commission (SEC) filings as well as voluntary disclosure 
that may be of interest to investors, employees, customers, 
and other stakeholders. (See more on this in Stakeholder 
communications). And regardless of whether ESG issues 
are categorized as material or strategically significant, they 
all should be appropriately addressed in the company’s risk 
management processes—about which the board should 
receive regular briefings.
Oversight of management’s assessment process
Boards need to understand and oversee management’s 
identification and assessment process. A broad and inclusive 
process that includes key stakeholder perspectives is 
valuable in several respects, including the following:
— Ensuring that management of the ESG issues is 
embedded in wider business processes
— Identifying issues and trends on the horizon—such as 
technological disruption, scarcity of water and other 
natural resources, or changing weather patterns—that 
could significantly impact the company’s ability to create 
long-term value
— Enabling different functions of the business to be ready to 
take advantage of opportunities to develop new products 
or services and stay ahead of competitors
— Prioritizing resources for the ESG issues most important to 
the company
— Helping to identify where the company is creating, or 
reducing, value to society.
There is no standard approach for inventorying and assessing 
material ESG risks and opportunities—or for condensing this 
broad assessment to a short-list of strategically significant 
ESG issues. However, the Sustainability Accounting 
Standards Board’s (SASB) provisional sustainability accounting 
standards may be a helpful reference. SASB currently 
maintains provisional standards for 79 industries in 11 sectors. 
The standards focus on industry-specific sustainability factors 
that are reasonably likely to have material impacts. The 
SASB Materiality Map, an interactive tool that identifies and 
compares likely material sustainability issues across different 
industries and sectors, may also be helpful.16
An important caveat: Many ESG efforts inside companies 
start with a process focused on ESG issues as risks. In fact, 
many of the leading companies embed the ESG inventory 
and assessment process into enterprise risk management 
or other existing processes. While this can be an efficient 
process and a good starting point, it is important to avoid 
focusing only on risk, as this may cause the organization 
to miss the “opportunity train.” The board should also 
encourage management to focus on the potential for 
innovation, disruption, and value creation posed by ESG 
activities and demands in the marketplace, such as:
— Solutions for a low-carbon world, including energy storage, 
energy efficiency, and renewable energy generation
— Access to education, affordable housing, and financial 
services to decrease inequality
— Health and well-being, including healthy food 
consumption, activity services, and healthy lifestyle 
choices
— Infrastructure in cities to support increasing levels of 
urbanization
— Technologies that accelerate the sharing economy. 1
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

The ESG journey    21
Integration
Encourage integration of strategically significant 
ESG issues into the business strategy.
While many companies have developed ESG initiatives, they 
are often disconnected from the core business strategy 
and remain peripheral corporate activities that don’t directly 
contribute to the company’s competitive advantage.
Companies that recognize the strategic importance of ESG 
are embedding these issues—particularly those aligned with 
the company’s business interests and long-term viability—
into their strategy and how they think about long-term 
performance. 
Indeed, by integrating strategically significant ESG issues into 
the strategy, management and the board will bring the same 
focus and discipline to the management and oversight of 
these ESG initiatives as they do to other strategic initiatives 
aimed at creating long-term value. How best to achieve 
such integration, however, is complex and will likely vary by 
company based on business models and strategy processes. 
From our perspective, integration efforts should include 
two broad areas—employee selection and behavior and 
organizational processes and routines.
Employee selection and behavior
— Are we hiring the right talent and is our selection process 
compatible with building an inclusive and talented 
workforce that reflects our business needs?
— Do we tie compensation and promotion decisions to the 
metrics that advance performance on the critical ESG 
issues that we face?
— Are we empowering people and giving decision rights to 
teams that can make decisions by taking into account ESG 
information reflecting local knowledge?
— Is our culture promoting employee behaviors that are 
consistent with our priorities rather than providing 
perverse incentives that could actually deter employees 
from exhibiting the behavior management and the board 
hope to see? 
Organizational processes and routines
— Do we have the right ESG metrics to monitor 
performance, set targets, and incentivize action? 
— Are the metrics reliable, comparable over time, and 
credible for decision making? What are the mechanisms 
to help ensure these qualities?
— Have we integrated these metrics into capital allocation 
decisions to help determine which projects to invest in?
— Are corporate functions considering ESG issues when 
making marketing, procurement, hiring, financing, and 
investment decisions? Are business unit leaders aligned 
with the corporate vision? 
— How are we achieving harmonization of ESG practices 
across a diverse set of geographies while at the same 
time adapting to local culture and laws?
Effective integration of ESG into strategy and operations 
will also hinge on ensuring that the entire C-suite—not only 
the chief diversity/sustainability officer, head of marketing, 
and chief risk officer, but also the CEO, CFO, COO, head of 
human resources, investor relations, and other key players—
understands the importance of ESG to the company’s 
strategy and long-term performance, and how ESG issues 
impact their respective functions and areas of responsibility. 
ESG is an enterprise-wide issue, and enterprise-wide buy-in 
is essential.
Of course, the board has a pivotal role to play in the 
integration process. For example, Nike’s board provides 
guidance to management on ESG impacts and “the 
integration of these impacts into Nike’s business, including 
innovation, product design, manufacturing and sourcing, 
and operations.”17 Moreover, recognizing the strategic 
importance of brand and human capital, the board “provides 
guidance regarding the involvement of significant corporate 
responsibility issues in major business decisions to protect 
Nike’s valuable goodwill and human and intellectual capital.”18 
Similarly, Coca-Cola’s Public Issues and Diversity Review 
Committee provides guidance on the three issues the 
company has identified as critical competitive drivers: 
women, the vast majority of buyers of the company’s 
products; water, a key ingredient of the products; and well-
being, an important competitive attribute given the shift 
towards healthier lifestyles.19 1 
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

22    The ESG journey
A note on “purpose”
The board’s oversight of ESG would be incomplete without 
considering the importance of purpose, which adds an 
important dimension to the ESG/strategy discussion.
Many business leaders—Richard Branson (Virgin Group), 
Indra Nooyi (PepsiCo), Paul Polman (Unilever), and others—
have emphasized the role of purpose in business. Beyond 
defining and giving a company direction, the intangibles of 
a clear corporate purpose—motivation and commitment, 
quality and integrity, values, and culture—are all essential 
to long-term performance. In our own initiative to articulate 
KPMG’s purpose, nearly 95 percent of KPMG employees 
who told us their leaders discuss the firm’s “higher 
purpose” said KPMG “is a great place to work” and are 
“proud to work for KPMG” compared to about 65 percent 
among those whose leaders do not discuss purpose. Not 
surprisingly, we also found actual turnover among these two 
groups to be dramatically different—5.6 percent versus 9.1 
percent.20
Yet research has shown that most organizations today are 
struggling to create a sense of purpose throughout the 
organization—and to connect purpose with better future 
financial performance.21 Creating a purposeful organization 
where employees feel that they contribute to the mission 
of the organization and its positive impact on customers, 
communities, and other stakeholders is a challenging and 
often long-term undertaking.
We consider purpose to be a significant lever for fully and 
effectively using the five-part framework we’ve outlined 
in this paper. In organizations where employees feel a 
strong sense of purpose, developing a common language 
to talk about the company’s major ESG challenges and 
opportunities—and to focus squarely on those that are most 
strategically important—will be an easier task. Integrating 
these issues into the organizational processes of the 
company will also face fewer hurdles when employees 
share a common purpose.
Finally, clarity of purpose helps to drive consistent and 
compelling messaging from senior leadership and the 
boardroom about the strategic importance of ESG to the 
company’s long-term success.
Thinking long-term: ESG and strategy
Unilever
Global consumer products company Unilever, under CEO 
Paul Polman, has made “sustainable living” central to 
how the company operates, and the company says that 
its brands under that aegis grew 50 percent faster than 
the rest of the business and accounted for 60 percent of 
growth. Some examples of ESG-related strategic goals 
include cutting water use associated with its product use 
by 50 percent from 2010 to 2020; a goal of 100 percent 
sustainable sourcing of agricultural raw materials; and a 
50 percent reduction in waste associated with consumer 
product disposal and an even greater cut in manufacturing 
waste.22
Pfizer Inc.
In an industry that garners more than its fair share of critical 
press, pharmaceutical company Pfizer Inc. counts earning 
greater respect from society as a strategic imperative. The 
company views a commitment to corporate responsibility 
as central to earning that respect. Like many organizations 
that provide goods or services that are fundamental to 
human life, Pfizer sees an intrinsic connection between its 
core business activities and doing good for society—and it 
does not take that link for granted. As Caroline Roan, the 
company’s vice president of corporate responsibility and 
president of the Pfizer Foundation noted, “Our license to 
operate very much depends on our ability to build that trust 
and that respect with society.”23
Starbucks Corp.
For years, coffee retailer Starbucks Corp. has pursued 
corporate responsibility programs aimed at, among other 
things, helping coffee farmers sustain their businesses 
while simultaneously improving the resilience of Starbucks’s 
supply chain and ensuring the company a long-term supply 
of high-quality coffee beans. Starbucks has invested more 
than $70 million in such efforts. In 2008, amid the financial 
crisis—and despite sales slowing for the first time in its 
history and its net income and stock price each falling by 
more than half—the company stayed the course on its 
corporate responsibility programs, which it views as core 
to its long-term business strategy.24 From the end of 2008 
through November 30, 2016, Starbucks’s stock significantly 
outperformed the S&P 500 stock index. Notably, in May 
2016, the company issued a $500 million sustainability bond 
to enhance coffee supply chain management programs 
around the world. The company’s announcement stated 
that the move “demonstrates that sustainability is not just 
an add-on, but an integral part of Starbucks, including our 
strategy and finances.”25
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The ESG journey    23
Stakeholder communications
Shape the company’s key ESG messages to 
investors and other stakeholders in the context 
of strategy and long-term value creation.
Addressing the information needs of different 
stakeholders
The first step in crafting ESG messages that resonate is 
understanding the varying information needs of the company’s 
stakeholders. Employees, consumers, communities, regulators, 
and investors frequently seek different ESG information. For 
example, the information in an annual “corporate citizenship” 
report covering issues, such as employee engagement 
and diversity, corporate philanthropy, and reducing energy 
consumption, may appropriately address the concerns of 
employees, consumers, and communities, but it will not fully 
address the information demands of regulators, such as the 
SEC, or the needs of investors focusing on the impact of ESG 
on the company’s long-term performance—and the basic 
question of whether to invest.
The board’s role 
Investors expect directors to be competent in ESG matters 
and to help ensure that the company provides disclosure that 
translates ESG into the language of the portfolio manager—
finance, efficiency, risk, strategy, and long-term performance. 
Since an increasingly large number of investors view strong 
ESG performance as an indicator of a well-managed company, 
a board should ensure that the company’s disclosures 
proactively tell its ESG story.
In addition to disclosing strategically significant ESG matters, 
companies should disclose other material ESG issues and any 
additional information necessary to put material information 
in context. Progress, results, linkage to strategy, and an 
explanation of how ESG factors benefit the long-term interests 
of the company and its stakeholders should be part of the 
company’s communications—and reinforced in tone and 
communications by senior management and the board. GE, 
Goldman Sachs, Intel, and Unilever are among the companies 
that have been in the forefront in effectively communicating 
ESG messages.
The need to put information into context means that 
providing only the information required in public securities 
filings may not be enough. The board should work with 
management to determine whether additional disclosures 
are appropriate and whether such information should be in 
securities filings, annual sustainability reports, integrated 
reports that include both financial and nonfinancial 
information, the ESG section of the company’s website, 
or elsewhere. For example, if ESG metrics are included in 
SEC filings, they may be easier for investors to “scrape” and 
put into their models, but publicly filed information carries a 
greater litigation risk than information posted on a website.
As part of its oversight, the board should also understand 
the process management uses to determine the ESG 
information to be disclosed and how it verifies the accuracy 
of that information. In that regard, independent review or 
verification adds another level of rigor, accountability, and 
reliability to ESG reporting. Clorox, for example, obtains 
assurance from its auditor on certain nonfinancial ESG 
metrics included in its integrated reporting. Bristol-Myers 
Squibb uses third-party reviewers to assess its ESG program 
and the systems for collecting and reporting data from its 
worldwide facilities.26
Materiality and ESG standards 
“Materiality” is central to understanding the ESG information 
investors want, and there are clear reasons why. As we 
noted earlier, companies with good ratings on material ESG 
issues demonstrate less volatility, a lower cost of capital, and, 
according to some studies, significantly outperform firms 
with poor ratings on these issues.27 Moreover, immaterial 
ESG information is not correlated with superior performance28 
and may be dismissed by investors as “greenwashing.” That 
said, it is important to recognize that materiality can change 
over time; therefore, the assessment and determination of 
material versus nonmaterial issues should be an ongoing 
process.
Under U.S. securities laws, information is material if there 
is a substantial likelihood that a reasonable investor would 
consider it important in deciding how to vote or make an 
investment decision or, put another way, if a reasonable 
investor would view the information as significantly altering 
the total mix of information made available. Climate change 
is one of the ESG issues that has attracted the most 
attention from the SEC. Guidance provided by the SEC in 
201029 indicates that unless a company’s management can 
determine that known ESG uncertainties (such as changes 
in the severity of weather due to climate change) are not 
reasonably likely to have a material impact on its financial 
condition or operating performance, disclosure is required.
continued on next page
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24    The ESG journey
But providing material ESG information in a manner that 
allows comparisons among companies in the same industry 
and across industries has been elusive, and the quality of 
ESG disclosure to date has been weak. Approximately 82 
percent of the S&P 500 published corporate sustainability 
or responsibility reports in 2016, according to a 2016 
Governance and Accountability Institute report. However, the 
most common form of disclosure was generic boilerplate 
that is inadequate for investment decision making. Also, 
in the less than 24 percent of cases where metrics were 
disclosed, they were non-standardized.30
To date, over 100 ESG standards-setting initiatives have been 
developed, creating a confusing alphabet soup. Among the 
most prominent standard setters that employ some type of 
materiality filter are as follows:
— SASB is an independent nonprofit that currently maintains 
provisional sustainability accounting standards for 79 
industries in 11 sectors. The standards focus on the 
industry-specific sustainability factors reasonably likely to 
have material impacts, identifying an average of five topics 
and 13 metrics per industry. Materiality is based upon the 
materiality framework of existing U.S. securities laws. 
Companies can use the standards to disclose information 
to investors in SEC filings, such as annual reports on 
Forms 10-K and 20-F. Some U.S. public companies, such 
as Jet Blue31 and Kilroy Realty,32 are already issuing SASB 
reports or implementing SASB provisional standards; 
and Bloomberg LP, a private company, reports on its 
sustainability initiatives using SASB standards (the first 
company to do so).33
— The Global Reporting Initiative (GRI) is an independent, 
international organization that seeks to help businesses, 
governments, and other organizations understand and 
communicate the impact of business on ESG issues such 
as climate change, human rights, and corruption. The GRI 
factors are not limited to investment-related issues. Of the 
world’s largest 250 corporations, 93 percent report on their 
sustainability performance and 82 percent of these use 
GRI’s standards to do so.34 SASB and GRI have developed 
a partnership in an effort to foster harmonization.35
— The Financial Stability Board’s Task Force on Climate-
Related Financial Disclosure (TCFD) employs a 
disclosure regime, based upon other existing climate 
disclosure frameworks, that is intended to support the 
reporting of consistent, forward-looking climate-related 
risks and opportunities to investors, lenders, insurers, and 
other stakeholders.36
Demand for data 
We believe that investors will increasingly seek standardized 
disclosures and metrics so they can analyze comparable 
data, particularly within industries. As a result, we anticipate 
there will be a consolidation among raters as winners are 
selected and comparability prevails. In the interim, public 
companies will continue to receive numerous questionnaires, 
surveys, and requests for information from standard-setting 
organizations and the many organizations that gather ESG 
data. Some companies will choose to ignore some or all 
of these requests, since they can be time-consuming and 
expensive to answer. The problem, however, is that data 
providers and analysts/raters may nonetheless gather data 
or supply a rating—and without information directly from 
the company, the data or rating on which it is based may be 
inaccurate.
Low ESG scores can have real-world consequences that a 
board must understand. For example:
— Company-issued requests for proposals (RFPs) may 
include minimum ESG “score” requirements.
— Some funds are restricted from investing in companies 
with low scores.
— ESG scores can prompt stockholder proposals and affect 
investor loyalty in activist situations.
— Some clients will not use asset managers with low  
ESG scores.
— ESG scores are now being used in the worlds of fixed 
income, lending, and insurance.37
As a result, companies and their boards should focus on 
effectively telling their ESG story and understand issues that 
could result in negative ratings from data or ratings providers 
used by their investors.
Since comparable metrics-based data is prized by investors, 
what should the board do to help facilitate such disclosure? 
One option is to use metrics proposed by SASB (or another 
widely recognized standard setter); another is for companies 
in the same industry that are not inclined to use existing 
frameworks to work together to craft meaningful industry 
metrics. The latter creates the opportunity for a direct 
dialogue with investors on the usefulness of the chosen 
measures and then refinements to those metrics based on 
feedback.
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The ESG journey    25
In addition to standard-setting bodies and regulators focused 
on disclosure, several investor initiatives are defining how 
ESG matters align with investment returns. Established 
in 2005 and supported by the United Nations, Principles 
for Responsible Investment (PRI) counts nearly 2,000 
investment managers, asset owners, and service providers 
as signatories who strive to include PRI’s six principles in their 
investment processes. In 2015, Ceres, a nonprofit focused 
on leadership and sustainability, worked with BlackRock to 
create a guide for institutional investors on how to engage 
with corporations on ESG issues.
While mandating ESG disclosure may not currently be a 
priority for the SEC, the reality is that investors will continue 
to push for useful information. ESG is no longer just a 
negative screen for socially responsible investors; it is 
increasingly a component of mainstream portfolio managers’ 
investment analysis. In that regard, Bank of America Merrill 
Lynch’s June 2017 report found that 50 percent of the 
institutional investors with investment horizons of more  
than five years that responded to its annual survey employed 
ESG factors, compared to 11 percent with “months” as their 
time horizon.38
As a practical matter, a stockholder base that includes 
long-term investors should be attractive to boards and 
management—and aligns with the underlying concept of 
long-term value creation. 1 
Board oversight
Ensure that the board has the right composition, 
structure, and processes to oversee ESG in the context 
of strategy and long-term value creation.
The structure and processes a board creates to oversee ESG 
issues will vary based on a number of factors, such as the 
size and complexity of the company’s operations (including 
its supply chain and whether operations are international), 
its industry, the magnitude of the company’s ESG risks and 
opportunities, the degree to which ESG issues are central to 
the company’s strategy, and the level of director expertise 
regarding relevant ESG issues. 
In analyzing appropriate ESG oversight, we recommend 
directors consider the following factors.
Board composition
An important question for boards of all companies with 
exposure to material ESG risks and opportunities is whether 
they have the composition—including directors with the 
relevant experience and expertise—to understand ESG risks 
and opportunities and to oversee management’s handling 
of these issues. In some instances, a specific issue may be 
so critical to the company that subject matter expertise will 
be important, such as in the example of investors calling for 
certain companies to have “climate competent” boards. 
Some high-profile boards, such as ConocoPhillips and GM, 
have recently added directors with strong ESG expertise and, 
by doing so, have sent a message to the market about their 
priorities.
To the extent the board lacks the necessary experience 
and expertise, directors should consider including it as a 
criterion for future candidates. As is the case with cyber 
expertise, a board should not look for a candidate who just 
possesses this one skill set. Rather, the goal is to find a well-
rounded candidate who also has relevant ESG background. 
Whether or not the board includes a director with relevant 
ESG expertise, the full board will benefit from continuing 
education on the issues and may consider looking to third-
party specialists for help.
continued on next page
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26    The ESG journey
Structure and processes 
In considering how to provide strong oversight in this area, 
the board’s considerations should include:
— Allocating oversight responsibilities. Which activities 
should involve the full board and which are best handled 
by an appropriate committee? Given the importance 
of having everyone on the same page, level setting is 
best done at the full board level. In contrast, oversight 
of the assessment and the various types of stakeholder 
communications may require a significant amount of time 
and expertise that might more effectively be delegated 
to an appropriate committee. The determination of 
whether this set of responsibilities should be added 
to the agenda of an existing committee or housed in a 
more focused, newly created committee will depend 
on factors including the type and magnitude of the 
issues, the available bandwidth (if any) of the existing 
committees, and the culture of the board. For example, 
the board of Nike formed a Corporate Responsibility and 
Sustainability Committee, which includes in its charter the 
following responsibility: “Review and provide guidance 
to management on sustainability issues and impacts, 
and the integration of sustainability into Nike’s business, 
including innovation, product design, manufacturing and 
sourcing, and operations.”39 According to Bloomberg LP’s 
latest data in 2015, 123 S&P 500 companies had assigned 
responsibility for oversight of ESG/CSR to a board 
committee, up from 116 in the prior year.40
— Information flow. What information should management 
provide to the board? The board must work with 
management to determine what information the board 
will receive—for example, the KPIs and metrics to be 
used—and how frequently. In that regard, the board 
or appropriate committee should consider whether an 
ESG dashboard would help facilitate understanding and 
discussion of important ESG issues. 
— Incorporating ESG into the board’s oversight 
of strategy. For many companies, this is a change 
management effort. Adding an ESG lens to strategy, 
incorporating ESG risks into the overall ERM process, 
and establishing and tracking metrics that include 
the strategically significant ESG initiatives as part of 
assessing progress against overall company strategy, 
implications for compensation, talent and culture, etc., 
may require significant organizational change—not only 
for management, but also for the board. Whether it rests 
with the chairman, lead director, governance committee, 
ESG committee or somewhere else in the board structure, 
there should be a “home” for oversight of ESG integration.
As a bottom-line matter, finding the right mechanisms for 
board oversight is likely to be an iterative process, subject to 
change as the company and its ESG risks and opportunities 
change. Oversight of these issues, like oversight of any 
issue that significantly impacts long-term value creation, 
requires the right people in the boardroom, information to 
keep the board sufficiently informed and allow directors 
to track progress, processes that enable the board and its 
committees to exercise appropriate levels of oversight, and a 
commitment to continuous improvement. 1
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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

The ESG journey    27
The drum-beat of “meet or beat the quarter” is increasingly 
being challenged by a chorus of investors, employees, 
customers, and other stakeholders calling for greater focus on 
the long term. 
As ESG continues to move from the periphery to the center of corporate 
thinking—on strategy, risk and reputation, operations and efficiency, and long-
term performance—the board has a pivotal role to play in helping to set the 
context and the drive the company’s focus on these issues:
— Articulating what “ESG” means to the business and agreeing on 
common language
— Identifying key ESG-related risks and opportunities—particularly those 
that are strategically significant to the company
— Integrating ESG issues into the company’s strategy, and helping to ensure 
alignment and buy-in across the enterprise through the right culture and 
incentives
— Effectively communicating the company’s “ESG story” to investors and 
other stakeholders
— Ensuring that the board itself has the skills, processes, and information 
necessary to help guide the company forward.
Wherever the company is on the ESG journey, the five-part oversight 
framework outlined in this paper can help to drive a robust conversation 
about what ESG risks and opportunities may impact the company’s key 
stakeholders, corporate strategy, and long-term performance and how they 
will be addressed. 
Companies that identify and incorporate these issues into their strategy 
will clearly stand apart—to investors, customers, employees, and the 
communities in which they operate—as forward-thinking organizations, 
focused on long-term performance and value creation. 1
Moving 
forward
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International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

28    The ESG journey
References
1	
DB Climate Change Advisors, Deutsche Bank Group, Sustainable 
Investing: Establishing Long-Term Value and Performance,  
June 2012.
2	
Beiting Cheng, Ioannis Ioannou, and George Serafeim, 
Corporate Social Responsibility and Access to Finance, Strategic 
Management Journal, 35 (1): 1–23, 2013.
3	
George Serafeim et al., The Financial and Societal Benefits of  
ESG Integration: Focus on Materiality, June 2016.
 4	
Bank of America Merrill Lynch, ESG Part II: A Deeper Dive,  
June 15, 2017.
5	
DB Climate Change Advisors, Deutsche Bank Group, Sustainable 
Investing: Establishing Long-Term Value and Performance.
6	
Vanessa C. Burbano, Social Responsibility Messages and  
Worker Wage Requirements: Field Experimental Evidence from 
Online Labor Marketplaces, Organization Science, 27(4), 2016, 
pp. 1010–1028; Jens Hainmueller, Michael J. Hiscox, and Sandra 
Sequeira, Consumer Demand For Fair Trade: Evidence From A 
Multistore Field Experiment, Review of Economics and Statistics, 
97(2), 2015, pp. 242–256.
7	
Gibson Dunn, Shareholder Proposal Developments During the 
2017 Proxy-Season, June 29, 2017.
8	
Larry Fink Annual Letter to CEOs, BlackRock, 2016 and 2017.
9	
See BlackRock Investment Stewardship Our Engagement Priorities 
for 2017–2018.
10	 State Street Global Advisors letter to board members,  
January 26, 2017.
11	 Press Release, Shareholder Climate Change Proposal Withdrawn, 
Vanguard, August 14, 2017.
12	 Fidelity Funds’ Proxy Voting Guidelines, January 2017.
13	 Trian Partners Environmental, Social, and Governance Policy 
Statement, June 2017.
14	 These are companies with nearly 15 million employees and  
more than $6 trillion in annual revenues.  
See http://businessroundtable.org/about.
15	 Business Roundtable Principles of Corporate Governance,  
August 2016.
16	 See Sustainability Accounting Standards Board SASB Materiality 
Map™, available at https://sasb.org/standards-overview/materiality-
map/.
17	 See Nike Corporate Responsibility & Sustainability Committee 
charter.
18	 Ibid.
19	 Coca-Cola 2016 Sustainability Report.
20	 Bruce Pfau, How an Accounting Firm Convinced Its Employees 
They Could Change the World, Harvard Business Review,  
October 6, 2015.
21	 Claudine Gartenberg, Andrea Prat, and George Serafeim, Corporate 
Purpose and Financial Performance, Harvard Business School 
Working Paper No. 17-023, September 2016.
22	 Unilever’s Sustainable Living brands continue to drive higher rates 
of growth, Unilever press release, May 18, 2017.
23	 Corporations and Society: Doing Social Good While Doing  
What’s Good for Business, Harvard Business Review Analytic 
Services Report, 2017
24	 Ibid.
25	 Starbucks Issues the First U.S. Corporate Sustainability Bond, 
Starbucks Corp. press release, May 16, 2016.
26	 Corporate Responsibility, The Clorox Company, and Verification 
Statements, Bristol-Myers Squibb Company, accessed  
August 23, 2017.
27	 Bank of America Merrill Lynch, ESG Part II: A Deeper Dive; DB 
Climate Change Advisors, Deutsche Bank Group, Sustainable 
Investing: Establishing Long-Term Value and Performance; and 
Teresa Czerwinska and Piotr Kazmierkiewicz, ESG Rating in 
Investment Risk Analysis of Companies Listed on the Public 
Market in Poland, Economic Notes, Vol. 44, No. 2, July 2015, pp. 
211–248.
28	 Mozaffar Khan, George Serafeim, and Aaron Yoon, Corporate 
Sustainability: First Evidence on Materiality, The Accounting 
Review, March 2015.
29	 Commission Guidance Regarding Disclosure Related to Climate 
Change, Securities and Exchange Commission, published February 
2, 2010, effective February 8, 2010.
30	 Sustainability Accounting Standards Board, State of Disclosure 
Report 2016.
31	 Jet Blue 2016 Sustainability Accounting Standards Board Report.
32	 A Conversation on Implementing SASB Standards with Sara Neff 
of Kilroy Realty, Sustainability Accounting Standards Board blog, 
March 23, 2017.
33	 Bloomberg LP 2016 Impact Report, 2017, p. 8.
34	 Global Reporting Initiative, GRI: Empowering Sustainable 
Decisions, Our Five Year Focus 2015–2020.
35	 Robin Hicks, Is Sustainability Reporting Working? Eco-Business, 
June 29, 2017. 
36	 The G20 organized the Financial Stability Board and requested that 
it review how the financial sector can take account of  
climate-related issues.
37	 Society for Corporate Governance, slides for Society Webinar-
Practical Perspectives on ESG: What’s Really Important,  
July 11, 2017.
38	 Bank of America Merrill Lynch, ESG Part II: A Deeper Dive.
39	 Nike Corporate Responsibility & Sustainability Committee charter.
40	 Data provided by Bloomberg LP.
Note: Survey data reported is based on 120 responses (from board directors and senior management) to 
an online survey conducted by the KPMG Board Leadership Center August–September 2017.
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG 
International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of 
KPMG International.

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The KPMG Board Leadership Center champions outstanding governance to help 
drive long-term corporate value and enhance investor confidence. Through an 
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permissible for KPMG audit clients and their affiliates or 
related entities.
©2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the 
KPMG network of independent member firms affiliated with KPMG International Cooperative 
(“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are 
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The information contained herein is of a general nature and is not intended to address the 
circumstances of any particular individual or entity. Although we endeavor to provide accurate 
and timely information, there can be no guarantee that such information is accurate as of the 
date it is received or that it will continue to be accurate in the future. No one should act upon 
such information without appropriate professional advice after a thorough examination of the 
particular situation.
The views and opinions expressed herein are those of the authors and interviewees and do not 
necessarily represent the views and opinions of KPMG LLP.
Contact us
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Leader 
KPMG Board Leadership Center
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KPMG Board Leadership Center
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KPMG Board Leadership Center
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