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20 Feb, 2012

KPMG Report: Expect the Unexpected – Building Business Value in a Changing World

KPMG Consultancy

NEW YORK, Feb. 17, 2012 /PRNewswire-USNewswire/ — Policymakers and the business community should ramp up collaboration and demonstrate renewed leadership in order to achieve sustainable and equitable growth objectives, according to recommendations released today from KPMG’s “Business Perspective on Sustainable Growth: Preparing for Rio+20global summit. Summit attendees agreed to the recommendations as part of the meeting’s goal of providing business input to Rio+20, the upcoming global policy summit in June.

Yvo de Boer, KPMG’s Special Global Advisor on Climate Change and Sustainability said: “Today’s leaders are struggling with complexity. Until now, we found global trends on energy, water security and food scarcity complex enough. The convergence of other forces such as population growth, deforestation and a surging middle class is impacting business and the world around us. Leaders are overwhelmed by the sheer scale of these problems and struggling to act. There are ways to solve these problems, and that includes harnessing the capacity of business.”

“I am encouraged by the exchange of ideas at this Summit from business leaders who are not going to wait. In fact, they are already moving ahead with sustainable solutions. That said, even active leaders with sustainable business practices will run into problems if the policy framework does not create the right investment conditions.”

De Boer said the meeting’s findings included near-unanimous recommendations for Rio+20. Among them, policy leaders should:

  • Provide long-term, stable and transparent policy frameworks and incentives to scale-up investment in sustainable development.
  • Provide strong price signals on resource scarcity and environmental impacts in order to drive investment in sustainable growth.
  • Deliver new platforms for public-private collaboration at the international and national levels.

Georg Kell, Executive Director of the UN Global Compact said, “While it is encouraging to see sustainability valued so highly on corporate agendas, we are far from reaching a tipping point. Most companies are not doing enough, and many are not doing anything to address pressing challenges. Rio+20 will be a critical opportunity to change that and move corporate sustainability to global scale. We encourage businesses everywhere to come to Rio with strong commitments and transformative solutions.”

The Summit included recommendations for business to:

  • Reduce its focus on short-term performance in favor of longer term sustainable growth.
  • Adopt stretching sustainability targets – for example to reduce water, energy and material use – in order to drive innovation.

“Business affects the state of the world, and the state of the world is now affecting business,” said de Boer. “This Summit has provided a forum for business to offer a constructive perspective to the ongoing sustainability discussion. We are taking these outcomes to Rio+20 to contribute the business perspective, so we can move the sustainability agenda forward.”

The KPMG summit attracted more than 600 top CEOs and senior business leaders from many of the world’s major corporations, along with key policymakers. KPMG International hosted the event, in collaboration with the United Nations Global Compact (UNGC), the World Business Council for Sustainable Development (WBCSD) and the United Nations Environment Programme (UNEP).

Speakers included UN Secretary-General Ban Ki-moon, New York Mayor Michael Bloomberg, former U.S. President Bill Clinton, KPMG International Chairman Michael Andrew, and John B. Veihmeyer, chairman of KPMG’s Americas region and Chairman and CEO of KPMG LLP (US), as well as 50 top CEOs and prominent business and policy voices including: Alstom, the European Climate Action Commission, General Motors, International Finance Corporation, Novozymes, the Organisation for Economic Co-operation and Development (OECD), Philips Electronics North America, Tetra Pak, Unilever and the World Business Council for Sustainable Development.

Central to the three days of discussion was a KPMG report, Expect the Unexpected: Building Business Value in a Changing World, which identifies the 10 megatrends that may impact business and industry.

The KPMG research identified that the external environmental costs of 11 key industry sectors had jumped 50 percent from US$566 billion to US$846 billion in eight years (2002 to 2010), averaging a doubling of these costs every 14 years. Such external costs often are not reflected on financial statements because they may be items borne either by individuals or society at large, and are often both non-monetary and problematic to quantify for comparison with monetary values, such as the effects of pollution. The report calculated that if companies had to pay for the full environmental costs of their production, they would lose 41 cents for every $1 in earnings on average.