ESG is shifting from compliance to core business strategy, says KPMG global ESG head

For companies worldwide, ESG is no longer about ticking boxes on disclosure. It is fast becoming a matter of business continuity and financial stability, John McCalla-Leacy, head of Global ESG, KPMG International told Fortune India.

“Embedding ESG into core business strategy makes financial sense. You mitigate risks if you’re clear about where your operations are located, whether in low-lying areas prone to flooding or in regions exposed to wildfires. These are real disruptions that hit costs and, in some cases, even share prices,” he said, citing the example of a global automotive manufacturer that lost 10,000 units in production after flooding in its supply chain. The event triggered a 7.7% drop in its share price.

KPMG’s upcoming international survey which is still in its final stage underlines this shift in mindset. While only 22% of global CEOs last year expressed confidence in meeting their 2030 net-zero targets, this year nearly 70-75% are confident or somewhat confident of achieving them. “That’s a remarkable shift,” he said. “With any new initiative there are one-off costs there are short-term costs there are additional needs for capital allocation to invest in into these things... but companies are sticking to their commitments, which is likely to accelerate investment in renewable energy and new technologies.”

In fact, The World Business Council for Sustainable Development’s business barometer of June 2025 references that 61% of CEOs said there will likely be an impact around extreme weather which will hit their costs this year. “So you need to understand what the risks are, are you mitigating them this year, and are they embedded in your strategy with individuals ideally responsible for delivering it, and ideally linked to their remuneration. That is managing the downside risk, but you also manage the upside potential,” he said.

Technology, especially AI, is emerging as an enabler. In one instance, AI-driven optimisation helped an office block cut 60% of its energy costs; in another, a shopping centre reduced heating-related consumption by 70%. 

“It’s about how you code and use it. AI is a tool, it can either increase the problem or help solve it,” Leacy added. 

India lens

On India’s role, the ESG head acknowledged the challenges of balancing rapid economic growth with sustainability, especially in areas like energy access and equity. Yet, he pointed out that Indian firms are producing some of the strongest examples of pragmatic ESG reporting linked to transformation. 

The country remains one of the fastest-growing economies in the G20, with soaring energy demand and infrastructure needs. At the same time, global frameworks such as the EU’s Carbon Border Adjustment Mechanism are pushing companies to align with low-carbon standards. “Some of the best examples I use globally of reporting linked to actual transformation come from India,” he said. “The issue is not whether India is behind Europe, it’s how businesses here can use ESG to stay competitive in global markets.”