10 Government as a policy maker Policy making is a central role of governments, creating guiding principles and courses of action for governments. Governments are now enacting policies that advance action on ESG-related issues, including establishing ESG commitments and targets, creating task forces and interagency working groups to examine and address ESG issues, and other policy efforts. For example, among many other federal sustainability targets, the U.S. government rejoined the Paris Agreement in 2021 and set a Nationally Determined Contribution to achieve a 50 percent to 52 percent reduction from 2005 levels in economy-wide net greenhouse gas pollution in 2030. 10 At the state level, 24 states and the District of Columbia have established economy-wide greenhouse gas emissions targets. 11 The federal government is also pursuing policies focused on advancing equity for all, calling on federal agencies to identify and address barriers to equal opportunity that underserved communities may face due to government policies and programs. 12 State and local governments are also making policy decisions to prioritize equity in their jurisdictions, including commitments to recruit and retain a diverse government workforce that is reflective of the demographics of the jurisdiction. Critically, governments’ policies related to ESG issues spur government action and help ensure that ESG- related issues are key considerations in government operations planning and decision-making. Governments lead by example by setting and implementing policy on ESG. Government as an operator G overnments maintain operations, manage supply chains, and provide government services that inherently have a broad impact on ESG issues. Just as any entity, governments at all levels generally use energy, water, vehicles, transportation systems, real estate, and suppliers that impact, and are impacted by, the environment in which they operate. Many governments, spurred in part by the impact of the COVID-19 pandemic, are implementing hybrid work policies and reducing their real estate footprints, 10 © 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. electrifying their fleet vehicles, and enhancing privacy and cybersecurity, among many other operational strategies that may d irectly or indirectly advance ESG objectives. Governments are among the largest owners and operators of infrastructure assets—from military bases, roads, bridges, ports, and transit systems to energy, public health, and education infrastructure, and more. As approximately 70 percent of global greenhouse gas emissions come from infrastructure construction and operations, governments will likely consider incorporating a focus on ESG and resilience into capital planning and investing in resilient infrastructure. 13 Investment in resilient infrastructure also plays a critical role in mitigating the impacts of natural disasters on communities and will likely be considered with an equity lens to protect vulnerable communities susceptible to disproportionate impacts in their social, built, economic, and natural environments. Governments procure products that are vital to defense, national security, health, equity, and the economy, including weaponry, pharmaceuticals, medical supplies, rare earth elements, semiconductors, and many other products. Supply chains for such products have experienced significant disruptions from the pandemic, port crises, severe weather events, and supply and labor shortages—all highlighting the vital importance of governments investing in building supply chain resilience, sustainability, diversity, and security. In addition, governments are continuing to examine their procurement practices and contractor and supplier programs to advance related ESG goals. Respondents tell KPMG that governments are falling short of expectations in addressing many of these ESG issues. In the area of disaster response and resilience, for example, 56 percent of survey respondents are less th an satisfied with how the government is addressing this issu e. Some 60 percent of respondents are not satisfied with their experience of receiving government services. 1 4 With significant footprints, governments have the opportunity to improve the design and delivery of services and make operational and supply chain decisions that have a significant impact on advancing ESG goals, while carrying out their mission. 10 11 12 13 14 Fact Sheet: President Biden Sets 2030 Greenhouse Gas Pollution Reduction Target Aimed at Creating Good-Paying Union Jobs and Securing U.S. Leadership on Clean Energy Technologies Center for Climate and Energy Solutions, U.S. State Greenhouse Gas Emissions Targets Executive Order 13985: Advancing Racial Equity and Support for Underserved Communities Through the Federal Government The World Bank (2018). Low-Carbon Infrastructure Private Participation in Infrastructure (PPI) 2002 to H1 2017 KPMG surveys among U.S. federal, state, and city government employees