Meetup on ESG_KPMG

Social is the
New Green:
Targeting the ‘S’ in
ESG
Presentation prepared for FinTech Belgium Meetup on ESG
—
December 15th 2022

2
© 2022 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Confidential 2
Document Classification: KPMG Public
People taking agency
• Engaged citizens are taking to the streets and social media to demand action
from governments and businesses on pressing social and environmental
challenges.
• Expectations for companies to address these issues will also continue to grow.
• Customers, especially youth, will increasingly shift their loyalties to companies
they perceive to be delivering positive social and environmental impact.
According to global data from public-relations and research by Edelman,
70% of Gen Zers are active in social or political causes. 1 in 5 people
would not work for an organization that does not share their values.
Inspired by Greta Thunberg, the September 2019 climate strikes were
international strikes and protests for climate action that took place in over
150 countries and estimated to have gathered 4 million people worldwide.
“We are maybe fighting for our future, but there’s people fighting for their current lives right now. Those are the
people that need to be heard.” - Anuna de Wever, Belgian Climate Activist

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Planet & human health are intrinsically
linked
“Climate change is intrinsically linked to public health, food and water security, migration, peace, and security.
It is a moral issue. It is an issue of social justice, human rights and fundamental ethics.” - Former UN Secretary
General Ban Ki-moon
Between 2030 and 2050, climate change is expected to cause
approximately 250,000 additional deaths per year (WHO).
In order to reduce these severe health effects the global
temperature rise should be kept at 1.5° (IPCC).
Climate change & health risk - WHO
Ongoing biodiversity loss is altering the ability to ensure
human health and well-being through goods and services
created.
Air pollution being one of the biggest environmental threats,
WHO created an ad-hoc Air Quality Guidelines to save millions
of lives.
The cost of direct damages from climate change will impact
those with limited health infrastructure, which is largely in
developing countries.

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Inequality is out of control
Oxfam estimates that inequality contributes to the deaths of at least 21,300
people each day.
Covid 19 was the biggest set back for global poverty reduction since the 90s
and the war in Ukraine threatens it as well.
Since the 1970s, income inequality has been rising. The richest 10% of the
global population currently takes 52% of global income, whereas the poorest
half of the population earns 8.5% of it.
“Decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the
cost of simply staying alive” - Gabriela Butcher, Executive Director, Oxfam International, 2022
Today in Belgium, 1 in 8 people’s income is below poverty line.
Moreover, 1 in 4 children in Belgium are at risk of falling below the
poverty line with 1 in 7 children already living in poverty.
Financial inclusion contributes to reducing financial inequalities and is
increasing at a rapid rate worldwide (WEF). Belgium is within the top 20
countries with access to financial services (World Bank).

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Human Rights are engaged throughout
the value chain
Companies follow these minimum social safeguards:
• International Bill of Human Rights
• International Labor Organization Declaration on Fundamental Rights and Principles at Work
• OECD guidelines for MNEs
• Social Due Diligence Directive
• UN Global Compact
“When the fundamental principles of human rights are not protected, the center of our institution no longer holds.
It is they that promote development that is sustainable; peace that is secure; and lives of dignity.” - Zeid Ra’ad Al
Hussein, former UN High Commissioner for Human Rights
The EU is expanding its taxonomy to include the social aspect – Social Taxonomy – in
order to increase transparency, uphold human rights, and enhance living and working
conditions.
The European Commission has committed to human rights through an integration of a
new pillar: the European pillar of social rights. The commission has set an action plan as
well as 20 principles that help deliver on rights for citizens. *Corporate Human Rights
Benchmark - WBA
Top 10 of best ranked
companies on Human
Rights*
1. Unilever
2. Wilmar International
3. PepsiCo
4. Hewlett Packard Enterprise
5. Coles Group
6. Ford
7. The Hershey Company
8. Marks & Spencer
9. Diageo
10. General Motors Corp

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CEO Activism is on the rise
“As of now, Earth is our only shareholder […] ALL profits, in perpetuity,
will go to our mission to ‘save our home planet’.” - Yvon Chouinard,
Patagonia CEO, referencing the donation of the family’s shares to a
trust which sole intent is to solve environmental issues.
• A group of top US CEOs known as the
Business Roundtable completely revised
its definition of a corporation's purpose to
include "a basic commitment to all of our
stakeholders," not just shareholders.
• A system of "stakeholder capitalism"
results when different economic
stakeholders consider not just their personal
interests but also the interests of society
as a whole.
It stands in contrast to current structures like
shareholder capitalism or state capitalism,
where the interests of a single stakeholder
are prioritized.
“In today’s globally interconnected world, a company must create value
for and be valued by its full range of stakeholders in order to deliver long-
term value for its shareholders.” – Larry Fink, Black Rock CEO
“Businesses have to use every instrument at their disposal to reduce
these barriers” – Kenneth Frazier, former Merck CEO, on addressing
racial inequality following the death of George Floyd
CEO voices on societal challenges
“CEO activism is not a leadership choice, but a modern and an evolving expectation. CEOs have to realize that
Millennials are coming into the organization and expecting the CEO to public ally represent the values of that
organization.” - Marc Benioff, Salesforce CEO

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Diversity, Equity & Inclusion (DEI) is about
more than just gender
Gender usually takes center stage when talking about DEI.
The WEF 2021 Global Gender Gap Report estimates it will take
135.6 years for the gender pay gap to close on its current trajectory.
In order for us to be truly inclusive we must account for all aspects
of diversity.
The benefits of looking at DEI as a whole include:
• Increased profitability: diverse executive teams are 30% more
likely to experience above average profitability.
• Better decision making: diverse teams are 60% faster at
effective decision making.
• Foster innovation: inclusive organizations report 83% increase
in innovation.
• Consumer citizen understanding: 49% of employers focus on
diversity to understand consumers.
The Bayer’s ‘Growing Representation and
Opportunities for Women’, fosters an
accountable and inclusive culture that
champions the growth and achievement for
women.
The Norwegian oil fund, the largest
global sovereign wealth fund, aims to speak
out and vote against companies that don't
have diverse enough boards of directors.
Belgium is in the top three in Europe for
companies that show a strong commitment
to equal pay and working conditions
regardless of gender, age or religion.
“Today when I think about diversity, I actually think about the word ‘inclusion.' And I think this is a time of great
inclusion. It's not men, it's not women alone. Whether it's geographic, it's approach, it's your style, it's your way of
learning, the way you want to contribute, it's your age - it's really broad.” - Ginni Rometty, Executive Chairman of IBM

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Michael
Wagemans
Head of Sustainability,
KPMG Advisory
+32 499 69 53 36
mwagemans@kpmg.com
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member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
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