NEW YORK, July 19, 2022 — A new KPMG LLP publication titled “Environment, Social, and Governance: Government Leadership as a Catalyst for Success” analyzed a survey of over 1,400 U.S. residents and federal, state and city government employees on what role governments should play in environmental, social and governance (ESG) issues. Most U.S. public respondents (70%) agree or strongly agree governments should lead on ESG issues, but only 35% agree or strongly agree governments are taking appropriate action. Data privacy and security is the top ESG issue for federal employee survey respondents (88%), followed closely by infrastructure modernization (76%). In contrast, state and city employees listed infrastructure modernization as the top issue (86%), followed by data privacy and security (83%). The public ranked data privacy and security as the most important issue (72%) and affordability and accessibility as the second biggest issue (70%).
“The ESG movement has quickly evolved in the U.S. across all sectors, and in government especially,” said Lorna Stark, national sector leader for Government at KPMG LLP. “Governments have an opportunity to build on a foundation of leadership on ESG issues — with a history of setting green standards and defining supplier diversity programs — by answering a broader call with an observable shift and once again taking a role at the front of this movement.”
The survey results underscore key forces driving a greater focus on ESG in government, including heightened expectations of employees and society generally for governments to address ESG issues. More than 92% of U.S. public respondents believe government engagement with environmental and social issues at least somewhat impacts their approval of government.
In addition to public opinion, the heightened expectations from other stakeholders, including credit rating agencies, make ESG a strategic business imperative that cannot be ignored. S&P Global Ratings published its first ESG Credit Indicator Report Card for U.S. states and territories in March 2022, reflecting S&P’s opinion of the influence that ESG factors have on its credit rating analysis. Recent landmark federal funding programs, such as the Infrastructure Investment and Jobs Act, invest in ESG at the federal level and provide incentives to spur ESG-related action by state and local governments.
“Now is the time for government agencies to transform their mindsets and consider ESG holistically as central to their missions rather than as siloed issues managed in distinct areas,” Stark said. “This mindset shift, in which governments realize and embrace their leadership in ESG across their many roles, can serve as a catalyst for the success of the overall ESG movement and governments’ own modernization and transformation efforts.”
Other findings from the survey:
The U.S. public believes the federal government should bear the primary responsibility for ESG issues, with state government next in line.
There is a gap between the importance that U.S. public respondents place on ESG topics and their perception of government action in those areas.
Most federal, state and city government employee respondents are satisfied with their employers’ diversity, equity and inclusion (DEI) efforts.
Government agencies can lean into ESG to improve the employee experience and attract the next-generation government employee.
More education and communication are needed for government employees to support the governments’ actions in ESG.
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Between February and April 2022, 1,000 U.S. residents, as well as 200 federal government and 227 state and city government employees across the U.S., were asked 15–17 questions on a variety of ESG issues.
More information from the survey can be found here ESG and Government.
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