GRI 3.13

BSD Consulting performed an independent assurance process for KPMG Sustainability Report 2011, which was developed according to Global Reporting Initiative (GRI) guidelines.

Independence

We work independently and ensure that none of the BSD staff members maintains business ties with KPMG. BSD Consulting is licensed by AccountAbility as an assurance provider (AA1000 Licensed Assurance Provider), registered under No. 000-33.

Our Qualification

BSD is a consulting firm specialized in sustainability. The verification process was conducted by a qualified team of professionals with long-standing experience in external assurance.

Responsibilities and limits

KPMG has prepared the Sustainability Report and is responsible for all its content. The objective of the assurance statement is to inform interested parties of the conclusions of BSD on the adherence to three principles of AA1000 Assurance Standard (2008) and the quality of the management processes for sustainability. Our work did not include the verification of historical financial data. This assurance statement includes the confirmation of the self-declared GRI-G3 Application Level.

Purposes and Scope

The assurance process aims to provide KPMG´s stakeholders with an independent opinion on the quality of the report, the management processes for sustainability, the adherence to three principles of AA1000 Assurance Standard (2008) and the continuity of the established processes. The scope of our works covers all information included in KPMG 2011 Sustainability Report, full version, referring to the period from October 1, 2010 through September 30, 2011 (presented as 2011), and the total Emission (C02e tons/year) and value added statement data cover the period from January 1, 2011 through December 31, 2011.

Methodology

The assurance process was conducted according to the AA1000AS (2008) (AA1000 Assurance Standard 2008), type 1, moderate level of assurance. The process covers the assessment of adherence to three principles of AA1000: completeness, materiality and responsiveness.

The established procedures during the work include:

• Sustainability Report content review:
• Understanding the process of generating information for the Sustainability Report. It was not under BSD scope to validate quantitative data.
• Analysis in Media, website and legal basis information;
• Interviews with managers from key areas regarding the relevance of information for reporting and sustainability management
• Interviews with the company’s partners;
• When relevant, confronting the sustainability performance information with the company’s management;
• Assessment of the evidences of external stakeholders consultations;
• Assessment of the relevance of the Sustainability Report information considering external publics.

Main Conclusions on Adherence to AA1000AS 2008 Principles

1. Inclusion – addresses the stakeholders’ participation in the process of developing and implementing a transparent and strategic sustainability management process.

• The engagement process was carried out by individual interviews, in order to classify and priority nine topics presented by a consulting company contracted by KPMG International. There was a process to prioritize the stakeholders’ groups’ selection. The publics consulted in Brazil were: clients, partners and managing partners, employees, regulating agencies, sector experts, civil society and the press. For the next cycle, it is recommended to include stakeholders groups that represent overall KPMG activities throughout Brazil.
• The corporate citizenship area is expanding its transversal performance within KPMG areas, including the Executive Board, composed of several partners. It is important to expand the internal knowledge of sustainability at all hierarchical levels, including both the technical and administrative staffs, in order to broaden the integration of the sustainability actions into the daily activities.
• The Executive Board is composed by seven partners and by the KPMG Brazil’s president, who leads the process of including sustainability into the leadership’s agenda. The company created the new position of COO (Chief Operating Officer), who is responsible for the corporate citizenship area and seeks to implement sustainability actions in the administrative operations, focused on eco-efficiency. The Executive Board is also involved in the sustainability report process and review.

2. Materiality (or Relevance) – subjects required for the stakeholders to make decisions on the organization’s economic, social and environmental performance.

• KPMG´s Brasil corporate citizenship area, along with KPMG International, defined the material issues for the report, based on the study developed by an independent consulting company. According to the evaluation of the involved participants in the process, the subjects classified as being of major importance are aligned with KPMG strategy:
• To conduct the businesses on ethical basis: KPMG has a risk management area, including policies, procedures, processes and trainings on the subject, which performs throughout the company’s administrative and technical areas.
• Accountable and transparent governance systems: the sustainability report is an evolvement of transparence in the sector, including the Assurance process. KPMG is periodically submitted to compliance audits, both by KPMG International and by Brazilian regulating agencies.
• To conduct top quality services with total independence: the company has a code of conduct focused on the business integrity. There are annual trainings on ethics and independence that are mandatory for the professionals and partners. It is important to have new employees, temporary employees and third parties involved in these education processes.
• Fair treatment of employees: the company focuses on the development and training of personnel, with a broad range of trainings for all hierarchical levels. The organization may evolve with respect to occupational health and safety, including transportation and travel issues.
• The report presents an overview of highly material topics identified in the consultation to the stakeholders, also including a description of the actions developed with the communities and the provision of Climate Change and Sustainability services. However, there are opportunities to address, in greater depth, topics covering internal environmental awareness and monitoring, and the supplier’s chain management.
• It should be noted that the materiality process should be reviewed periodically, in order to achieve updated and consistent results, considering the company’s current sustainability context. In 2011, KPMG Brasil bought the fifth largest Brazilian audit company, an operational expansion that should be considered in the stakeholder identification and in the definition of materiality for the next cycle.

3. Capacity of Response – addresses the actions taken by the organization as a result of specific stakeholders’ demands.

• KPMG in Brazil establishes commitments related to socio-environmental issues according to the company’s global directives, such as the reduction in the water and energy consumption, and the global goal of Greenhouse Gas reduction. It is important to define local goals and commitments, within the context and scope of the country’s activities.
• Socio-environmental indicators are consolidated by the Climate Change and Sustainability area, which gathers information from the responsible areas in different formats, and without an unique standard. It is important to review and improve the reliability of the internal controls for consolidation of the sustainability report information. As well as to align the concepts and ways of measurement of the sustainability indicators between the administrative and technical areas and among the Brazilian offices.
• The company includes human rights clauses in the new contracts with suppliers and service providers. However, there are no formal risk management procedures in the suppliers’ chain with respect to sustainability. For the next cycle, we recommend implementing processes for supplier risk assessment in order to identify critical sustainability aspects.
• In order to improve the sustainability management, we recommend defining an integrated governance, creating, for example, a Sustainability Committee, led by the corporate citizenship area, along with a Sustainability and Climate Change Services area, with the involvement of the administrative and risk areas, as well as other pertinent areas, and the regional offices.

Level of GRI-G3 Application

Following GRI-G3 guidelines, BSD declares that KPMG 2011 Sustainability Report is classified as Application Level B+. The report comprises items related to the company’s profile and offers disclosure of the management processes as well as sustainability approaches. The report provides information on all the performance indicator categories: economic, environment, human rights, labor, society and product. However, the diclosure on the Strategy and Analysis (1.1 and 1.2) can be improved.

Final Comments

We highlight KPMG’s efforts to improve the sustainability report by incorporating the assurance process. In our view, KPMG has several procedures and practices related to material topics related to ethics, independence, quality, transparence and internal public, and is seeking to consolidate the socio-environmental management by implementing actions aligned with the other material topics, such as suppliers’ chain. It is important to stress the need to integrate sustainability practices into the administrative and technical areas, also seeking to expand engagement with external stakeholders.

São Paulo, August 8, 2012.
BSD Consulting – Brasil