Key considerations Broadening governments' mission to encompass ESG priorities begs the question of where to start. It’s critical to transform ESG from a siloed issue, with its parts individually managed in distinct corners of governments, into a core competency that’s systematically embedded in governments’ strategic mission. The senior-most levels of the agency must take a leadership role, establishing ESG targets—that are informed by and reflective of constituent, employee, and other stakeholder interests—to set the “tone at the top” and drive sustainable change throughout the agency. Achieving this integration can be complex. Every government agency must understand and shape the total impact of its strategy and operations externally—on the environment, constituents, the communities in which it operates, and on other stakeholders—and internally, on its employees and performance. However, the core questions to ask when adopting an ESG lens are the same regardless of an agency‘s ESG priorities, as the following framework shows: Gain agreement on what ESG means for your agency — How will this focus on ESG help optimize the achievement of our mission, organizational resilience, long-term performance, etc.? — Which material ESG topics intersect with our agency‘s mission? — Does leadership have a common understanding of what ESG means in practical terms to our agency? — What is our current understanding of the impact of our agency on the environment and social issues? Assess risks and opportunities — How do we identify and quantify ESG-related risks and opportunities to our physical, digital, and human capital assets? What is the time horizon and severity of impact? — How resilient is our agency to mission disruption? What is the impact on constituents? — How are we managing the current ESG risk environment and where are the gaps? — What opportunities does our agency have for potential innovation posed by ESG demands? Analyze stakeholder impact — What will our stakeholders value most now and in the future? — What are our constituents, employees, and other stakeholders saying about ESG topics? — How does our approach to ESG topics influence the broader stakeholder ecosystem? — How can we set clear responsibilities for ESG initiatives across all levels of our agency? — How can our agency shape our ESG message to stakeholders in the context of our strategic mission? Embed ESG into your agency‘s strategic mission — What might be required of our agency or suppliers in the future from a regulatory standpoint? — How can we incorporate ESG objectives into strategic planning and budgeting? — Does our agency have the right people, experience, and structure to oversee ESG in the context of our strategic mission? — What processes or policies do we need to establish to integrate and operationalize an ESG strategy in our agency? What more should we do to educate our people on the effects and benefits of ESG and build their skills? — How can we measure the progress and impact of our ESG initiatives? 01 03 04 02 1 3 Environmental, Social, and Governance: Government leadership as a catalyst for success © 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.