KPMG U.S. CEO Outlook: Now is the time to double down on ESG

This month, we released our 2022 KPMG U.S. CEO Outlook, featuring insights from?more than 400 U.S. CEOs. For the past few years, most CEOs have supported the ESG imperative, believing it’s best for their financial performance and access to capital. In fact, this year the percentage of CEOs who connect ESG with improved financial performance nearly doubled with 70% of CEOs seeing financial benefits.

Yet this year, 59% of CEOs also indicated that to prepare for an anticipated recession, they’d pause or reconsider their organization’s ESG efforts in the next six months. This shift is a classic moment of balancing short-term and long-term returns. With the potential recession testing CEOs’ commitment to ESG strategy, reducing investments may lead to long-term financial risks.

CEOs will decide whether they will prioritize next quarter’s results or recognize that in the future there is only going to be one kind of economy — a low-carbon economy — and investments they make now will position them to thrive throughout this transition.

For activists and other stakeholders, the past few years have heralded a number of ESG moments and milestones. But for CEOs, this is their ESG moment. Delaying key ESG efforts could make businesses more reactive in the future rather than help them lead the way with greater transparency, resilience and sustainability. The businesses that see through these initial investments to realize transformative growth will have the upper hand as economies strengthen.

It's critical that organizations like KPMG U.S. continue to support our clients and communities as trusted advisors to help them prosper in a low-carbon economy. This includes improving measurements, an area KPMG as a firm has invested considerable time and energy in, as we know robust ESG frameworks are essential to ensuring transparency and helping clients make informed decisions on ESG issues.

In addition to helping clients simplify and navigate their ESG journeys, we also help them see the long-term value in this investment to begin with. When our clients see the value drivers and understand the transformational nature of the opportunity to thrive in a low-carbon future, they want to be accountable to their targets so they can share that story with their stakeholders.

Demonstrating our leadership on ESG issues includes advancing our own ESG journey at KPMG too. ESG is core to our business at KPMG, and we will continue to leverage our capabilities — internally and externally — to have the largest tangible impact for our clients, people, communities and planet.