At the 2020 World Economic Forum (WEF) in Davos, KPMG and the International Business Council unveiled a unified corporate responsibility reporting framework organized around the UN Sustainable Development Goals (SDGs). Since then the world fell into turmoil with the onset of COVID-19. This disruption has prompted companies to accelerate their digitization efforts to shift to work-from-home, manage customer expectations, and reduce long term costs.
At the same time, companies have also been forced to begin a period of intense introspection regarding the future of their businesses and the viability of their business models. For many companies, the last few months were a wake-up call regarding the significant deficiencies in their enterprise risk management plans and approach to risk modeling. One of the most pressing risks coming into focus as a result of COVID-19 is climate risk and the associated challenges to maintain effective corporate operations in a climate-impacted world. Climate risk has long been a topic of discussion among corporate officers, but corporate actions are often limited to basic mentions of associated risks in the disclosures section of corporate annual reports. COVID-19 has the potential to be the catalyst motivating executive leadership to consider and implement strategies to mitigate climate impacts and decarbonize operations.
This runs counter to the traditional assessment of market responses that theorizes Environmental, Social, and Governance (ESG) focused initiatives would be shelved and environmental regulations loosened to enable countries and companies to better weather the resulting economic storm and stimulate the Economy. However, at record-breaking levels, companies are driving the development of large-scale corporate decarbonization initiatives and shareholders increasingly expect holistic ESG initiatives, including robust climate impact assessments and decarbonization plans. The regulatory landscape is now catching up with these expectations, with the European Union leading the way. These actions are the leading edge of a new normal in corporate strategy and performance linked to corporate sustainability performance.
Corporate decarbonization at-scale is challenged by a perceived lack of accurate, objective, and accessible data. We believe that the acceleration of digitization and integration of digital trust practices in a post COVID-19 world will provide the tools and solutions necessary for decarbonization to gain a robust foothold in Corporate operations.