D i v e r s i f y e n e r g y s o u r c e s —Reimagine the use of different energy sources, suppliers, transportation systems, and infrastructure to bolster energy resilience, sustainability, and security. Decarbonization is at the forefront of many governments’ ESG strategies, including efforts to improve energy efficiency, accelerate the shift to renewables, electrify fleets, and reduce energy consumption. To achieve future emissions targets, agencies need to understand their current emissions footprint, define a baseline for carbon emissions, and establish a strategy for execution. I m p r o v e c l i m a t e r e s i l i e n c y —Mitigate mission disruption caused by heightened climate events and realize opportunities to enhance infrastructure, supply chain, and operational resiliency and security. Government agencies need to consider existing vulnerabilities and how to manage climate risks given those vulnerabilities. Incorporating “whole of life” physical infrastructure asset management into long-term planning, investing in resilient infrastructure, adopting an equity lens and leveraging advanced analytics to improve emergency preparedness, and implementing operational resiliency and continuity of operations plans are just some ways governments are improving climate resiliency. H e l p o p t i m i z e n a t u r a l c a p i t a l u s e — Adopt innovative approaches to natural capital management to increase efficiencies and protect ecosystems. The preservation of natural capital and biodiversity is critical to the continued delivery of government benefits and services, including agriculture, access to clean water, food safety, and drug production. In this way, natural capital protection is implicitly a societal and economic problem and is a key threat to national security. Climate action and the protection of natural resources cannot be thought of in isolation. I n s p i r e a f u t u r e w o r k f o r c e —Invest in a healthy, diverse, and competitive workforce to enhance employee attraction, retention, and engagement, and ultimately, advance your mission. This starts by demonstrating an interest in ESG and a sustained commitment to address ESG issues relevant to the agency‘s employees and stakeholders. Then, develop progress reports and communications to chart progress toward those goals. Also, evaluate employee sentiment around compensation and rewards, career pathing, and mentorship programs. Urgent priorities Government agencies each have their own priority ESG areas of focus, which should be aligned with their strategic mission and reflective of constituent, employee, and other stakeholder interests. For example, environmental agencies may have an outsized focus on the E, while health and human services agencies may be more focused on strategies related to the S. On the whole, market signals identified by KPMG point to several ESG issues for governments to consider prioritizing to mitigate pertinent risks and create sustainable opportunities for their agency, employees, and constituents: © 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. 7 Environmental, Social, and Governance: Government leadership as a catalyst for success