KPMG index measures 140 countries' ability to respond to change

Asia Pacific countries and jurisdictions are generally improving in handling climate change, according to the 2019 KPMG Change Readiness Index (CRI). Singapore climbed two levels to be ranked No. 2, while Taiwan is up 18 places.

The CRI, now in its fourth year of biannual publication, ranks 140 countries* on how effectively they prepare for, and respond to, major change events. This edition of the report focuses on the capabilities countries need to successfully address climate change and mitigate associated risks.

Timothy Stiles, Global Chair of KPMG's International Development Assistance Services, commented: "Climate change is among the most pressing issues we face as a global society. Those countries failing to recognise the impact of climate change are likely to be unprepared for its growing costs, which will be levied on citizens, businesses and economies around the world. Our 2019 report aims to demonstrate that there isn't a one-size-fits-all approach to responding to major change.

"Our research highlights that too many nations can be reliant on either business, government or civil society to shoulder the responsibility for change readiness, but in our experience this doesn't yield the best long term results. True preparedness is when each segment of society - enterprise, government, and people and civil society - works in harmony toward a shared outcome."

The CRI top 20 countries and jurisdictions (with the change in ranking from 2017)

Switzerland

Singapore (+2)

Denmark (+2)

Sweden (-2)

UAE (-2)

Norway (+5)

Germany (+2)

UK (+2)

New Zealand (-3)

Netherlands (-3)

Qatar is now in 12th place (+7); Australia is 14th (no change in ranking) while Hong Kong fell two places to 15th. Taiwan is 17th (+18), and Japan (+3) is 18th.

The CRI measured each country across three key pillars of capability: enterprise sustainability, government as well as people and civil society. Enterprise sustainability, which looks at the private sector's role in rising to the challenge of national preparedness and response to climate change and environmental degradation. Measures for enterprise sustainability include CO2 emissions per unit of GDP, and the share of renewable energy in use by a country.

The 2019 index revealed that countries most susceptible to climate risks are mostly low-income and lower-middle income countries. Less mature economies like Afghanistan are the worst-performing in climate resilience, as are countries in Sub-Saharan Africa and South Asia. The majority of higher income economies are considered low risk, high readiness countries.

This year's report reveals that poorer countries face double jeopardy when it comes to climate change: a higher risk from the negative impacts of climate change and a lower capacity to implement climate-ready policies and institutions.


Explore:

Learn more about the CRI and how each country performed

^*All uses of the word 'country' or 'countries' in the 2019 CRI refer to both countries and jurisdictions. The term country is used for brevity.

The CRI is built on research and analysis on primary source data and from more than 1,400 experts and secondary sources including the World Economic Forum, World Bank International Monetary Fund and the UN.

Asian VC investments remain steady in Q416

Following 2015’s peak funding levels, 2016 was a challenging year for venture capital (VC) investment across the globe, with decreases in both the number of deals and the total value of VC investment, according to Venture Pulse Q4 2016, a quarterly report on global VC trends published by KPMG Enterprise. 

Worldwide venture capital activity declined by 24% year over year, though total global venture capital investment remained substantial at US$127.4 billion*. After a strong start to 2016, investor optimism quickly turned cautious and purse strings tightened over the second half of the year. Market uncertainty was further fuelled by geopolitical upheavals, including the UK’s Brexit vote and the US presidential election.

“VCs are taking this respite, triggered by global uncertainties, to reassess their portfolio and focus on only seeking out top quality deals and also in helping their portfolio companies more actively in their next level of growth,” said Chia Tek Yew, Head of Financial Services Advisory at KPMG in Singapore. “As such, whilst there was an absence of megadeals, we continue to see significant interest and development in core sectors such as fintech, insuretech, healthtech and underlying technologies in cybersecurity, artificial intelligence and Internet of Things.”

Key 2016 highlights 

• Worldwide venture capital activity declined by 24% for the year, from 17,992 completed financings in 2015 to 13,665 in 2016. 

• Globally, total deal funding declined from $141 billion (2015) to $127 billion (2016). 

• Deal funding in Asia remained steady year over year at just over US$39 billion, despite a significant decrease in megadeals in the last quarter of the year. Overall the number of deals in Asia declined by 23.1%. 

• Venture-backed exits declined 26% year over year, although signs indicate 2017 may see a renewal in the initial public offering (IPO) market. 

• Worldwide corporate participation in VC continued to grow, currently sitting at 15% of all deals. 

• First-time financings to startups, a sure sign of investor caution, dropped 27.2% from a high of US$18 billion compared to US$13 billion in 2016.

Key Q416 highlights 

• Global VC deals activity in Q416 declined 31% compared to the same quarter last year, with just 2,809 deals – the lowest deal activity since Q411. 

• VC-backed companies raised just US$21.8 billion in Q4, the lowest level of deals funding since Q114. 

• While deal activity was down, median-deal sizes remained high across almost all funding categories worldwide, ranging from a median of US$30 million for Series D+ to a median of US$1.1 million for seed deals, showing that investors were willing to pay for the right opportunities. Seed funding is funding at a very early stage of the business, possibly before the product or service has been fully developed, while Series D+ refers to funding for a more mature company. Companies often end their rounds of funding at Series C, when they are successful but continue to need money to acquire others or to scale to the next level.

• The number of new unicorns (companies with a US$1 billion valuation) minted dropped to just six in Q416, the lowest level since the term 'unicorn' was coined in 2013.

In Asia, while the total number of deals dropped dramatically, the total amount of VC invested remained steady year over year at around US$39 billion – the only region to do so. However, Q416 ended on a low note, with 24.7% less investment and 29% fewer deals than the same quarter last year.

Despite a late year slump, investment in China was up year over year – reaching a record US$31 billion invested. This despite the number of deals dropping from 516 to just 300 between 2015 and 2016. India showed an almost opposite trend, with the number of deals remaining relatively high, while total VC invested dropped over 50% from US$8.2 billion to US$3.3 billion year over year.

“Even though some VCs may still stay on the sidelines to await clearer signs of improvements in the economy, several sectors in Singapore have managed to remain attractive,” said Chia. “Technology companies have been steadily receiving funding and with artificial intelligence and cognitive learning expected to transform everyday life and business, they will continue to be appealing in 2017.” 

*Data for the report provided by Pitchbook.

KPMG sees holes in global corporate responsibility reports

Carbon reporting from the world's largest companies lacks consistency, making it almost impossible for stakeholders to compare one company's performance easily and accurately with another's, according to the 2015 edition of the KPMG Survey of Corporate Responsibility Reporting*.

Professionals at KPMG member firms reviewed the carbon information published by the world's largest 250 companies in annual financial and corporate responsibility reports. They found that although four out of five of the companies discuss carbon in these reports, the type and quality of information published varies dramatically. For example, only half the G250 (53%) state carbon reduction targets in their company reports and, of these, two thirds provide no rationale to explain why those targets were selected.

The type of emissions reported also varies considerably, KPMG said. While a majority of reporting companies report on emissions from their own operations (84%) and from purchased power (79%), only half report on emissions in their supply chains. Even fewer, less than one in ten (7%), includes information on emissions resulting from the use and disposal of their products and services.

Around half (51%) of the companies that do discuss carbon in their company reports refer readers to further detailed information in alternative sources such as the CDP database** for investors. The other half does not.

Wim Bartels, a partner with KPMG in the Netherlands and KPMG's Global Head of Sustainability Reporting & Assurance, is the lead author of KPMG's survey. He said: "All stakeholders should be able to access good quality, comparable information on a company's carbon performance quickly and easily from the company's annual financial or corporate responsibility reports. That is simply not the case today.

"There is a clear need for improvement and global reporting guidelines on carbon could help to address this problem. It should not be left to companies alone to figure this out; industry bodies, regulators, standard setters, investors and others all have a role to play."

KPMG's study follows a recent proposal to the G20 by the Financial Stability Board for a task force to develop consistent climate-related disclosures for companies to help lenders, insurers, investors and other stakeholders to understand material risks¹. The Climate Standards Disclosure Board (CDSB) has also introduced a voluntary framework aimed at helping companies include investor-relevant climate information in mainstream financial reporting².

The KPMG study includes guidelines on data, targets and communication that KPMG member firms believe companies should follow when publishing carbon information in annual financial and corporate responsibility reports.

KPMG's researchers devised a scoring methodology based on these guidelines which they used to assess the quality of reporting from each of the 250 largest companies. Key findings include:

• One in five large companies in high carbon sectors such as mining, construction and chemicals does not report on carbon in its annual financial or corporate responsibility reports
• European companies have a higher quality of reporting than companies elsewhere in the world
• Companies in the transport & leisure sector produce the highest quality reporting by sector, and oil & gas companies the lowest
• Only half the companies that report on carbon in their annual financial or corporate responsibility reports explain how cutting carbon benefits their business

The KPMG Survey of Corporate Responsibility Reporting includes a view of global trends in corporate responsibility (CR) reporting based on analyses of reports from 4,500 companies across 45 countries. It shows that the rate of CR reporting is now higher in Asia Pacific than it is in Europe or the Americas. Nearly eight in 10 (79%) companies in Asia Pacific report on CR.

The highest rates of CR reporting are now found in emerging economies such as India, Indonesia, Malaysia and South Africa. These high rates are often driven by regulation, either from governments or stock exchanges.

The research also shows that it is now standard business practice to include CR information in the annual financial report – more than half (56%) of the 4,500 companies studied do this.

Interested?

Download the report

*The KPMG Survey of Corporate Responsibility Reporting is now in its 9th edition and was first published in 1993. Research is carried out by professionals in KPMG member firms and is based on publicly available information published by companies in their corporate responsibility reports, annual financial reports and websites.

In the 2015 edition, the sample of the world's 250 largest companies is based on the 2014 Fortune 500 listing³. Global trends in CR reporting are based on a study of reporting from the top 100 companies by revenue in each of the 45 countries.

**The CDP database is the largest collection globally of self-reported climate change, water and forest-risk data.
1 Source: http://www.financialstabilityboard.org/wp-content/uploads/Disclosure-task-force-on-climate-related-risks.pdf Retrieved 17 November 2015
2 http://www.cdsb.net/what-we-do/reporting-frameworks/climate-change Retrieved 19 November 2015
3 http://fortune.com/global500/2014/