THE KPMG Difference March 2014 (in English) by KPMG Belgium

The

KPMG Difference

Demographic â&#x20AC;&#x2DC;time-bombâ&#x20AC;&#x2122;?

Magazine / March 2014

Sustainability to build long-term value

Max Havelaar, as told by its manager What the future holds for Belgian banks Intelligent mobility budget The challenges of transformation

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Find out more on kpmg.com/be/ifrs 2 | The KPMG Difference | March 2014

The KPMG difference

Contents March 2014

Responsible Editor: Patrick Simons, Avenue du Bourget Bourgetlaan 40, 1130 Brussels

This magazine and all of KPMG’s Thought Leadership can be accessed by using the KPMG app.

04 05 06 09 10 14 15 16 18 19 20 22 24 26 27 28 29

Word from our CEO Happenings An imminent demographic ‘time-bomb’? What does the future hold for Belgian banks Lily Deforce: ‘I’m an optimist’ ‘Unlocking the Power of the Many’ Belgian Fair Trade in Numbers Getting the job done Corporate Responsibility Reporting: Belgium follows the global trend Multinational Enterprises, evaluate your tax contribution to society KPMG launches “Intelligent mobility budget” pilot project Audit Committee Toolkit: a guide to effective audit committees Blending funds: new financing for EU projects Crowdfunding: is this the year for Belgium? Make a Difference Day / Kom op tegen Kanker Bookshelf A passion for...

editorial

Working with you to build sustainable value

ustainable success in business depends on understanding and managing the risks of the current business environment, while reinventing business models to unlock new commercial opportunities. You know as well as we do that as business leaders in Belgium, and around the world, you need to respond to and anticipate economic, environmental and social changes. I believe that organizations that want to successfully plot a course through these changes and build a business that is sustainable in the long term, are on a continuous journey. This is a journey that we at KPMG are ready and eager to be a part of.

We at KPMG are ready and eager to join you on your journey to successfully build your business to be sustainable in the long term.” Patrick Simons Senior Partner

We can help along the whole journey – from analysis to cut through the complexity that surrounds businesses today, to planning and implementing a strategy that works and providing the monitoring and the reporting needed to continue forward. This second edition of The KPMG Difference shares our experts’ perspectives on the support they provide on their clients’ journey towards a sustainable future. In this edition we focus on innovative funding models both at the EU and Belgian levels, on the impact of an aging workforce on pensions, on accountability in taxes and effective reporting during the audit process. As the main feature in this issue, we are pleased to highlight a leading woman in sustainable business in Belgium, Lily Deforce. As the Chair of the Board of Directors of Kauri, the Belgian Sustainable Business Network, she takes her personal passion for sustainability to a whole new level. You will have a chance to find out how this inspiring lady bridges the public and private sector for a truly sustainable future for all. Prepare to embark on this exciting journey with us.

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THE KPMG DIFFERENCE

Happenings KPMG boasts a rich diversity of initiatives, projects and expertise. Here is a sampling of the various KPMG happenings of the last few months… 11dditiee e

Bizidee

KPMG network once again sponsors the TrendsTendances Gazelle awards The title Trends Gazelle is given to companies that are recognized for contributing to the economic dynamism of their region, increasing employment and boosting innovation. For the fourth year in a row KPMG is sponsoring this initiative to demonstrate our commitment to fast-growing companies. Our approach is twofold. Firstly, we want to have our finger on the pulse of growth companies. To that end, KPMG conducted a survey at the end of 2013 in cooperation with Trends in which we asked the Gazelle of the last seven years what their expectations are in the field of investments. Secondly, we are pleased to shine a spotlight on the best Gazelle by category during the annual awards ceremony. Stay tuned for more information on these prestigious awards.

KPMG will once again lend its expertise to the Bizidee initiative. Like last year, KPMG puts the expertise of 11 coaches at Bizidee’s disposal. These KPMG professionals will advise young entrepreneurs on preparing a business plan and help them fulfill their dream of starting their own businesses. Bart Walterus and Daniël Pairon are part of the jury that will select the best business plan and reward the winner with a prize of €25.000.

KPMG Capital Last fall, KPMG International created KPMG Capital, a new investment fund dedicated to accelerating innovation in data and analytics (D&A) that will help our clients unlock tangible value of their ‘big data’. KPMG Capital will support technology partnerships, strategic alliances and the recruitment of top talent to create new D&A solutions. With these capabilities, KPMG member firms will help clients solve critical business challenges in such areas as new revenue streams, risk management and cost optimization.

New ISO 5500x standards Physical Asset Management is about to undergo a major transformation. The new International Standards Organization standards for Asset Management ISO 5500x have recently been issued. These new standards will highlight even more the evolving role of asset management in the creation of asset value for asset-intensive companies. Under ISO 5500x, the language describing asset management is dramatically different. The definition of the term “asset” has been widened to: “Something that has potential or actual value.” According to the standard, value can be tangible, financial or nonfinancial. It includes consideration of risks, liabilities and opportunities. KPMG is the only one of the Big 4 companies that worked on drafting the ISO 5500x standards on Asset Management.

DAVOS From 22 to 25 January 2014, participants from KPMG’s network of firms joined in addressing the theme of World Economic Forum 2014: The Reshaping of the World: Consequences for Society, Politics and Business. They participated with other attendees by sharing ideas on how all global stakeholders can work together to meet the transformative challenges we face and improve the state of the world for future generations. KPMG played a unique role as the manager of a unique social media aggregation site, WEFLIVE.com which provided a simple way to follow and analyze Twitter conversations from forum participants. By identifying topics, influencers and trends, individuals could track the event from anywhere in the world. WEFLive provided an up-to-the minute window into the WEF.

TWITTER We have rich conversations with our clients every day, and increasingly these conversations are happening online. KPMG in Belgium uses social media to share the latest global industry trends and hot topics, and we encourage you to ask questions, share your views and connect with like-minded professionals. Follow @KPMG_BE

March 2014 | the KPMG Difference | 5

EXPERT Muriel Lejour Senior Manager Advisor, Advisory T : +32 (0)2 708 43 74 E : mlejour@kpmg.com

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An imminent demographic

‘time-bomb’? Profound demographic changes are hitting our pension systems like statistical tsunamis.

ne of our recent studies concerns “Megatrends” observed globally in terms of economic, demographic and climate changes expected by 2030. We have to admit that while certain results

+65

Between 2013 and 2030, it is expected that spending on pensions will increase by 1.3% of GDP in developed countries.

13%

of the total population is over 65 years of age

of the total population will be over 65 years of age

of the total population is over 65 years of age

of the total population will be over 65 years of age

13%

DEVELOPED DEVELOPED COUNTRIES COUNTRIES

+65

Between 2013 and 2030, it is expected that spending on pensions will increase by 1.3% of GDP in developed countries.

were predictable, their magnitude is nevertheless surprising. Belgian workers are retiring too early. There are more and more retirees as a consequence of the post-war “baby boom”, and they are living longer and longer. As a result, less of the Belgian active population is in the labor market. However, the statutory pension scheme, which is also called the first pillar is funded on a pay-as-you-go basis, that is to say a system where those who are working pay the pensions of those in retirement. Therefore, the problem of funding pensions inevitably arises. The first pillar pension is under pressure… What does this mean in practice for public administrations? And for businesses?

Public administrations Source: KPMG Publication, “Future State 2030: The global megatrends At the February global level we are therefore confronted shaping governments”, 2014.

20-59

At the global level we are therefore confronted with major risks, but the figures for Belgium are particularly alarming.

56%

54%

47%

of the population is between 20 and 59 years of age

of the population will be between 20 and 59 years of age

of the population is between 20 and 59 years of age

of the population will be between 20 and 59 years of age

56%

54%

BELGIUM BELGIUM

20-59

with major risks, but the figures for Belgium are particularly alarming.

47%

Source: “Perspectives financières de la sécurité sociale 2000-2050”, Planning Paper 91, Bureau fédéral du PLAN, January 2002.

For public administrations, their role in the creation of a single statutory pension constituting the first pillar in unquestionable. On the other hand, the issues relating to funding are often ignored due to lack of resources and time. Since 2012 a law1 has aimed to prepare municipalities, inter-municipal companies and public welfare centers to structure their budget to address pension costs which, as we have understood, are continuing and will continue to rise. The

1 Law of 24 October 2011 “ensuring long-term funding of pensions of staff members appointed permanently in provincial and local administrations and local police forces, and amending the law of 6 May 2002 on the establishment of the integrated police pension fund and on special provisions with regard to social security and containing various amending provisions”.

March 2014 | the KPMG Difference | 7

THE KPMG DIFFERENCE

of the population will be between 20 and 59 years of age

54%

of the population is between 20 and 59 years of age

47%

8 questions that can help you to identify and implement your personalized approach to be better equipped to face the future

40% of working age people are over 60

56%

of the population is between 20 and 59 years of age

20-59

At the global level we are therefore confronted with major risks, but the figures for Belgium are particularly alarming.

BELGIUM

69%

of working age people will be over 60

Source: “Perspectives financières de la sécurité sociale 2000-2050”, Planning Paper 91, Bureau fédéral du PLAN, janvier 2002.

demographic impacts mentioned above should always be included in the actuarial projections to deal with this real societal challenge. In collaboration with several medium-sized municipalities, our simulations have enabled us to see the importance of visualizing the change in pension costs based on various sector-specific demographic parameters.

Businesses For businesses, it is clear that the provision of a pension scheme at company level, which is known as the second pillar, will be more and more welcome. Although the crisis is forcing companies to squeeze their costs, pension schemes are a clear and growing criterion for selecting an employer. We should bear in mind that pension schemes are already present in the majority of companies. So we can say that many companies have a pension scheme, but do they know the impact of these demographic trends? Nothing is less certain. Indeed companies offering annuity pension schemes or hospitalization plans after retirement will certainly be impacted as a consequence of the demographic findings in the study. Some companies produce accounts using the recently revised IAS19 accounting standard. They will therefore have to take account of demographic changes in their assumptions (including retirement age, mortality tables, etc.) and describe the possible risks associated. The KPMG Advisory Financial Risk Management team has substantial practical experience in Employee Benefits as a result of numerous assignments in various sectors, both financial and non-financial, on a multinational, as well as on a local level. Team members have experience in Financial Services, Pension Funds, Private Equity, Public Sector and Manufacturing.

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1. How to adapt your pension scheme to current budgetary constraints? Should you change your current scheme to reduce the pension bill in the future? Is that possible within the legal framework and maintaining a social balance? 2. What scheme design can minimize your demographic risk? Are pension benefits in the form of annuities? And do you know the financial risk that entails? 3. What are the implications of harmonizing the status of manual/clerical employees on your pension scheme? What are the costs to your business and how can you estimate them now so as to be ready to make the right decisions in the future? 4. What is the impact of the economic environment on your IFRS accounting? Do you realize the importance of identifying assumptions used for calculations? And can you easily interpret the new accounting IAS revised accounting standards? 5. Does the fall in rates guaranteed by insurers represent a real risk to you as an employer? Do you have a clear vision of the accounting impact on your Defined Contribution plans? 6. How should you handle a merger and acquisition (M&A) of a new company properly when there are pension plans in force? How should you manage the legal constraints? 7. New approaches to limit the costs of health insurance are available on the market for large companies. Are you interested in an innovative way to reduce your costs? 8. Are new types of plans such as cash balance or à la carte plans not better suited to the current market conditions?

SUSTAINABILITY Tétière Bart Walterus Partner, Advisory T : +32 (0)2 708 38 80 E : bwalterus1@kpmg.com

What the future holds

for Belgian banks

Vlerick Business School and KPMG conducted a study on the future of the Belgian banking industry. The study is based on personal interviews with the executives of 15 Belgian banks representing 92% of the sector in terms of total assets. These are the 5 key takeaways.

Low growth environment

Today, Belgian banks operate in a low growth, low interest rate environment. This reality puts an increasing amount of pressure on the main value driver for most banks: net interest income. It’s true that most banks are trying to offset the erosion of interest margins, however, many are struggling to do so and about half of the banks in the sample seem to recognize that there will be some negative pressure on this value driver.

Putting clients at the center

With new strategies and business models come new ways of measuring performance. There seems to be increased attention to customer-related key performance indicators (KPIs). Customercentricity, client satisfaction and net promoter score will be the most important KPIs of the future. Concerning the more traditional measures, 71% of the banks are targeting a cost-income ratio lower than 60%, while the average return on equity target is 10%.

Cost management will be key

The focus on cost management strategies is expected to continue in the future. Making physical branches more cost-effective through increased automation and streamlining of different distribution channels will be one of the top priorities for the larger banks. For both smaller and larger retail and universal banks, the integration of different contact points will allow the bank to create a complete customer experience and additional value for the bank.

Ultimately – fewer banks

Interviews concluded with questions about the general state of the Belgian banking landscape in the coming 5-10 years. About 80% of the banks are convinced that the number of banks will decrease through a further consolidation phase set to start two years from now. Banks will grow larger, and the presence of pan-European players will become inevitable.

Regulations impact profitability

On the regulatory side, a vast body of rules is heading for the sector, and banks are now in the process of evaluating and implementing requirements and new compliance procedures. The report specifically draws attention to the expected consequences for the banking industry of the Basel III capital and liquidity requirements. Around 87% of the banks interviewed confirm that the implementation of the Basel III regulatory framework will impact the banks’ profitability and/or the choice of business model in the future.

The results of the study were presented on November 6th, at a seminar in the Vlerick offices in Brussels. A panel of experts discussed the most important findings of the study. The panel debate included executives of banks such as BNP Paribas Fortis, bpost bank and Argenta, as well as representatives of Febelfin (the Belgian Financial Sector Federation), KPMG and Vlerick. The vivid debate - led by Bart Walterus, head of Management Consulting at KPMG Advisory – included a number of hot topics such as cost pressure, future distribution models, the necessity to split retail banking from investment management, and a further consolidation of the Belgian banks.

March 2014 | the KPMG Difference | 9

SUSTAINABILITY

‘I’m an

optimist’ Sustainability – that was to be the subject of our conversation with Lily Deforce. But it quickly became clear that passion and enthusiasm would be at the core of any interview with this inspiring woman.

ily Deforce is an animated lady, to say the least, and she has a fascinating background. Once she had her doctorate in molecular biology under her belt, she began her career as Technical Brand Manager at Procter & Gamble and combined her full-time job with taking care of her three children. After taking a twoyear sabbatical, she decided to change gears and went to work for the NGO, Vredeseilanden. Today, Lily Deforce is General Manager of FAIRTRADE Max Havelaar in Belgium and President of KAURI. “I was very content working for Procter & Gamble, but I took a very deliberate decision to leave to explore other avenues. In the end I went to work for Vredeseilanden at a time when the integration of three organisations was in full swing. This led to a post-merger period that was particularly interesting. At the time we were especially concerned with the question of how we could be most effective in development. We needed to find the best tools to achieve real progress in partnership with farmers. It wasn’t so much about farming techniques, but much more about the business side of things. So, what do you do to ensure that these farmers are actually relevant on the world market? What do they have to do about it themselves – and how can you give them enough economic clout to ensure they can develop their own communities? Cooperation is extremely important. Our aim is not to solve things for them, but to support them where they are so that they can find their own solutions and develop through their own efforts. From this point of view, the move to Max Havelaar was also a

10 | The KPMG Difference | March 2014

logical one. With my business background and my initial experience with development, it’s the job of my dreams.” “If there is something that I really believe in, it’s responsible business. That’s the real driving force behind sustainable development. Structurally and in the long term, we have to look at development aid in a different way. That’s something I learned at Vredeseilanden. ‘Trade, not aid’ is such an important adage. We drive trade to get people out of poverty so they don’t stay dependent forever. Trade is a huge incentive.” “Lots of people see you as some sort of hero when you move from the private sector to the non-profit sector. But I believe that there are also plenty of heroes in the private sector. Changing an organisation from the inside out is much more difficult. People like Paul Polman from Unilever or Thomas Leysen at Umicore are doing fantastic work in this area. They’re the frontrunners. And I can’t actually say that I would never go back there at some stage. I’m nearly 50 now and still have a long career ahead of me. If I can, I intend to keep working for a long time. Certainly a lot of the people I work with may decide over time to go back to the private sector. We all need to be able to build bridges. That’s so important.”

kauri “KAURI’s function is to be a bridging organisation. As a learning network, KAURI offers a stimulating environment for anyone who wants to shape and develop the sustainability policy of his or her organisation. By building trust between the different

Lily Deforce, General Manager of FAIRTRADE Max Havelaar and President of KAURI.

March 2014 | the KPMG Difference | 11

Fairtrade @ Work - Anyone drinking Fairtrade coffee at work will be more inclined to buy it themselves.

sides, we hope to achieve understanding, dialogue and deepen the cooperation between them. And we are proud of this role, because we have come a long way. When KAURI first began, you still had these two very separate entities: the companies and the NGOs – and usually there were no bridges in between. The NGOs were running campaigns for something or, more often than not, against something. And the companies were dealing with NGOs from a risk management perspective. They were thinking about how to “deal” with these organisations. What approach to take?”

We need to define the problems together and then deal with them together. That creates bridges and more importantly goes ‘beyond the talking’.

“In this initial phase, KAURI mainly played the role of mediator. Using dialogue to find areas of common interest; trying to understand why another position was the way that it was, yet still maintaining a respect for everyone’s point of view. I still remember when NGO leaders found it hard to sit at the same table with CEOs. It simply wasn’t done. It was a bit like selling your

12 | The KPMG Difference | March 2014

soul to the devil; ‘sleeping with the enemy’ – an improbable teaming up of two worlds. KAURI took a constructive approach to these issues at the time.” “Once we understood that, we took baby steps towards achieving cooperation. We tackled certain social issues together. Still today, in many companies, corporate social responsibility remains the equivalent of stakeholder management – putting stakeholders in boxes and then managing them, examining their agendas and then looking at ways of dealing with them and especially of managing them. But this is still limited to the risk perspective.”

“Honestly, I believe corporate social responsibility is a thing of the past. Now it’s all about ‘creating shared value’. Social problems today have become so great that a single player cannot tackle it all alone. We need to define the problems together and then deal with them together. That creates bridges and more importantly goes ‘beyond the talking’.

SUSTAINABILITY

“Talking is important, of course – dialogue is important. KAURI creates a setting for bringing together people with very different backgrounds. Take, for example, the job-switch day that we facilitated between McDonalds and the Ethisch Vegetarisch Alternatief organisation. It seems highly unlikely in itself and is, of course, still at the stage of getting to know one another. But the aim is to work in partnership to create a win-win situation.” “Here is another example. At Max Havelaar, we went looking to see what we could do for supermarkets like Colruyt and Delhaize. They have become an important partner for us because they provide a gateway to a huge number of Belgian consumers. Our most important goal is to achieve access to markets for our farmers in the south. So these big companies play their role in accomplishing that, and they are also involved in ‘sustainable sourcing’, preserving their supply chains. Once again, Max Havelaar is helping them there, too. We are examining their supply chains with them. You

How do you make a job socially meaningful? If you succeed in doing that as a company, what you do every day is relevant for our society.

come up against a particular obstacle or challenge and get to work on it as partners – now that’s truly ‘creating shared value’. And this is something we have already been doing for twenty-five years.”

Vision “Certainly with large companies we have to dare to work towards the issue of how we can be socially relevant as a company in terms of our core business today, tomorrow – and especially in 20 years’ time. How do you engage the young people of today? How do you make a job socially meaningful? If you succeed in doing that as a company, what you do every day is relevant for our society. It’s a major shift to go from a philanthropic approach to a strategic one, with implications on corporate social responsibility.

Sustainability is becoming increasingly integrated into companies’ core business ideas and associated with innovation and business opportunities in the long term. If you create your strategy today looking forward to the years ahead, the question of your ‘societal relevance’ from the perspective of ‘creating shared value’ must be a central component. And it certainly won’t do you any harm from a business point of view.”

“Our main goal is to achieve access to markets for our farmers in the south.”

“KAURI supports this goal and again acts as a facilitator. By setting up dialogue sessions, multi-stakeholder panels and topical discussions – in a word, bringing the various parties together – KAURI has a critical role to play. More and more we are becoming a ‘matchmaker’. And we are doing so in such a way that sustainability is no longer a burden, it becomes an opportunity for your company to lead the way forward in society.” “Undoubtedly as a company you will get difficult questions about this, both from the outside and from within – like, why do we have to do this? Well, this is my answer: ‘because your ‘licence to operate’ is all about dealing with sustainability’. The concept is about the ‘power of you’, the fact that it is everyone’s responsibility to make our world a better place. And this means that the CEO of a trendsetting company naturally has enormous power to harness this energy as part of the way it does business.” “I am an optimist. There are companies that have tried and failed along the way. But there are also some that are already in the process of achieving the idea of ‘creating shared value’ that have taken genuine steps in that direction and that are willing to position themselves accordingly. These are the ‘front runners’ and we need to give them a stage to operate from.”

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SUSTAINABILITY

‘Unlocking

the Power of the Many’

The Fairtrade flow of goods has exceeded an annual value of €5 billion.’ So states the 2012 annual report of Fairtrade Max Havelaar. This is proof, if proof were needed, that fair trade really does exist among consumers and that the Fairtrade label is an excellent pathway towards achieving a more equitable world economy. Lily Deforce shared with us her perspective on Fairtrade in Belgium. Origin “Fairtrade came into being in the 1960s from a development initiative in Mexico. The employees of NGOs were struck by an injustice. They were getting a salary, but the local coffee-growers they were working to help were not able to get a fair price for their coffee on the market. These employees became the forerunners of a new realisation that if they could ensure that farmers received a fair price for their produce, they would be making an income and so creating the driving force towards self-sufficiency.” “Initially, goods were sold via an alternative network of world retail outlets and only involved coffee. This meant we were only reaching 1% of global consumers. But if we truly wanted to make an impact on the international coffee trade, we had to start working with the major supermarkets. The first steps towards proper labelling as a tool for bringing these products into the marketplace were taken in the Netherlands in 1988, followed by Belgium in 1989. The first products were of course coffee, but then bananas in 1992 and since then many other products. Today, we have over 400 different product specifications. We have now set criteria for every farmed raw material that can be traded in sizable quantities.”

How it works “In practice, you are asking a farmer to grow crops in an environmentally and socially responsible way. You then set economic guarantees by ensuring a price that covers his overhead. There’s a minimum that farmers must earn as wages. But don’t forget, the specifications for each of our products can be very detailed and farmers are also inspected regularly to make sure that they are still meeting requirements. If the inspection reveals any shortcomings we can withdraw the certification.

14 | The KPMG Difference | March 2014

Reward is thus one aspect of Fairtrade, but we are also a sort of ‘umbilical cord’. We provide farmers with a whole range of information about developments on world markets. We also help and guide them, and on the Belgian market, we act as a kind of broker who defends their interests.” “We also only work with organised farmers, usually working in cooperatives, never with individuals. You have to have a certain weight to operate on the world market. When they meet requirements, they can market their harvests under the Fairtrade label. This means that when a trader buys from a certified farmer, he has to pay the minimum price. So, essentially, an organisation that was originally anonymous becomes part of a bigger whole. In this way, they can grow into a strong cooperative. And we certify not only the farmers, but the entire chain, from trader to roaster all the way to the supermarket chains.”

In Belgium “Fairtrade is an international organisation and in Belgium, we are responsible not only for providing consumers with information and general awareness, but we are also service providers helping to ‘source’ products for all kinds of companies operating on the Belgian market. So we act as consultants helping to build sustainable supply chains.” “We currently have a market share of almost 10% for bananas. That’s already pretty significant. Coffee is more a niche and our share is a little over 2%. But we are still small. Although all of the supermarkets are represented as part of our distribution channels, it’s the consumer who has the final say. So our ultimate goal is to have Belgian consumers who make an informed choice for fair products. This is where large companies again have an important role to play. Through our Fairtrade at work project, wherein companies opt for Fairtrade products in their outsourcing process, they are also making consumers aware. Anyone drinking Fairtrade coffee at work will be more inclined to buy it themselves for the whole family.”

Future “We have been around for 25 years. Now we want to take the next step in providing a greater offering, getting involved in ‘full switch’ scenarios like they have done in the United Kingdom, Switzerland and the Netherlands. With that type of scenario, you create supermarkets where only Fairtrade products are sold.”

SUSTAINABILITY TĂŠtiĂ¨re

Belgian Fair Trade in Numbers The fair trade movement has significantly grown over the years. Highlighted here are some of the leading statistics from Belgium.

91%

The volume growth of fair trade desserts and ice creams in 2012

2000 The number of products available through the Fairtrade@work program

Over 400 The number of fair trade products that can be supplied to retailers in Belgium

86 million 24% to

Number of retail locations where fair trade products are sold in Belgium

The estimated value of the Belgian fair trade market

47% <1%

Market penetration of fair trade products in Belgium in five years (2007-2012)

9/10

Of Belgian consumers discuss fair trade with family and friends

Percentage of Belgian chocolate market that is fair trade

80% Of producer organizations worldwide are smallholders

1.3 million

The number of fair trade farmers and workers worldwide

Source: FAIRTRADE Max Havelaar, Annual Report, 2012.

March 2014 | the KPMG Difference | 15

Value adding Pieter Herremans Director, Advisory T : +32 (0)2 708 48 81 E : pherremans@kpmg.com

Getting the

job done

We have a broad range of functional experts who can help you to orchestrate an effective and sustainable transformational program.

oday the pace of change is faster than ever and firms are constantly confronted by the need to transform. The challenges are great. Organizations spend millions of Euros on transformation management tools, methods and resources. Yet, they still struggle to deliver complex change.

Once the end goals of any transformation are determined, organizations need to develop a high-level execution roadmap to support and guide implementation of the changes. Each roadmap will be different and implementing it will be risky. So firms must find ways to bridge the gap between where they are today and where they want to go.

In KPMG internationalâ&#x20AC;&#x2122;s survey of 600 global organizations, less than 10% of respondents said that their transformations had succeeded in achieving their primary objectives. In addition, 30% had experienced cost overruns of 150-200%. A relentless focus on the delivery of real business value is imperative, and this requires a strong, independent outside perspective.

The KPMG Transformation Program Management approach addresses this by providing organizations access to competent program professionals, global knowledge, methods and tools, and thus enables companies to realize successful, complex business change programs.

Overcoming these challenges and accomplishing successful transformations are key to sustainable growth. But how to get there?

These professionals have identified four general types of roadmaps: separations, integrations, operational improvements and restructurings. The first two involve deals that transform a

Nine Levers of Values Framework

Financial performance outcomes

Business model

Markets

Propositions and brands

Revenues

Clients

Operating model

Core business processes

Operational infrastructure and technology Organisational structure, governance and risk controls

Costs Management information and key performance indicator dashboards

16 | The KPMG Difference | March 2014

People and culture

Measures and incentives

business either to shrink or grow (organically or through a takeover). The latter two involves transformation from within the business. All four require different approaches and expertise. These KPMG Transformation professionals have tackled all the roadmaps. For example, KPMG managed the program offices of the different work streams for the global separation of INGâ&#x20AC;&#x2122;s banking and insurance activities. KPMG deployed a global, multi-functional team of 100+ advisors to work with ING management to help protect and enhance value by developing a more efficient, effective and tailored separation process and minimize negative cost implications and post-separation business challenges. In another example, a Belgian leading university was facing limitations in the

operating model in both the course and student administration processes. They called on the KPMG team to help them to improve their student-centricity and improve efficiency. KPMG worked sideby-side with them to define their business case and their new target operating model, to select a new IT system, manage and meet various compliance requirements and establish the overall roadmap for a complete internal business transformation program. At the end of the two-and-a half year process, the university is now better placed to meet strategic objectives for the future, run efficiently, manage regulatory compliance and run more flexibly. Taking on the challenge of transformation is difficult but with the right roadmap and approach the destination of sustainable growth is within the reach of any CEO.

For most, transformational change is driven at two separate levels: the more external business model and the more internal operating model. Business model change focuses on the features that impact the firmâ&#x20AC;&#x2122;s revenue: the markets, propositions & brands, and clients. Whereas operating model change focuses on the features that impact the firmâ&#x20AC;&#x2122;s costs: core business processes, operational infrastructure and technology, organizational structure, governance and risk controls and people and culture. Of course, they are intrinsically linked and transformation must be driven across both. Organizations that keep the business model and the operating model closely aligned, increase shareholder value more quickly than those that do not.

March 2014 | the KPMG Difference | 17

SUSTAINABILITY Mike Boonen Partner, Audit T : +32 (0)3 821 18 23 E : mboonen@kpmg.com

Corporate Responsibility Reporting: Belgium follows the global trend Belgium is on the right track, but there is still plenty of room for improvement.

oday two out of three large Belgian companies report on corporate responsibility. These figures put Belgium below the global average. A recent KPMG report analyzed 4,100 companies in 41 countries to evaluate the number of firms who actively track their social and environmental impact. The results revealed that the number of companies who do report is increasing worldwide. In Belgium this is also the case but the market is lagging one or two years behind. Of the 4,100 global companies surveyed, 71% actively report.This is up from 2011 figures when only 64% issued these reports. For the 250 largest companies in the world, the figure is even higher, with 93% reporting on their corporate responsibility. There has definitely been a shift in the last 20Â years. In 1993, when KPMG first analyzed these reports, companies were asking whether or not they should report on sustainability. This debate is over. Reporting on corporate responsibility is the norm nowadays. The study also explained that the quality of the reports is improving. Companies are increasingly taking account of environmental and social changes around them and integrate these into their strategy to manage risks, unlock opportunities and create long-term value. Mike Boonen, responsible for Sustainability at KPMG in Belgium, gave his perspective on the Belgian figures saying, â&#x20AC;&#x153;Belgian companies are lagging just behind the improving global trend. Of the largest Belgian companies 68 percent report on corporate responsibility, while thereof only 19 companies also have assurance provided

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Growth in reporting since 1993 Percentage of companies with CR reports % 100 95 80

83 71

64 53 45

40 35 20

12 0

1993 N100 G250

1996

1999

2002

2005

2008

2011

2013

Base N100/G250 companies Source: KPMG International, The KPMG Survey of Corporate Responsibility Reporting 2013, December 2013.

by an independent third party on their reported sustainability performance. And not even a handful of the largest 100 companies in Belgium issue integrated reporting to provide combined insights into financial, social and environmental performance of all company activities. While much has already been done, clearly Belgium can still do a great deal more in this area.â&#x20AC;?

EXPERT Koen Maerevoet Partner and Head of Tax and Legal Advisors T : +32 (0)2 708 38 67 E : kmaerevoet@kpmg.com

Multinational Enterprises, evaluate your tax contribution to society The days are gone when tax was solely an expense to be managed. Today, tax authorities, stakeholders and society are holding businesses accountable to “do the right thing” by paying their “fair share” of taxes.

orporate reputation management has always been an issue for large global businesses. Just like corporate social responsibility and environment, taxes are becoming a prominent topic: brand damage can occur if there is a perception that a company’s tax affairs are overly aggressive or “unfair”. Over the last two years, major companies have been placed in the spotlight on the basis of the small amount of tax they paid in the UK, relative to their earned income. Often unprepared to face the scrutiny of the tax authorities and, to a great extent, the media, this led a major coffee retailer to announce early in December 2012 that, having listened to customers and the British public, it would agree to pay higher corporation tax in the UK than what was actually required by law. This was coupled with similar stories in the press about an internet retailer and a large search engine company.

Whether as a result of regulation or stakeholder demands, full tax disclosure will become an unconditional requirement for multinational companies. Greater transparency is a growing demand and tax directors need to start considering this as part of their overall tax planning strategy, if they have not already.

Ask yourself: are you proud of your tax contributions to society? Will it be perceived as adequate by the public? Do you have a communications plan, if necessary, to explain your contributions?

We believe that this debate on tax transparency is not going away any time soon. Driven by postglobal financial crisis revenue and expenditure, the rise of corporate social responsibility, greater media focus, the internationalization of businesses and the increasing influence of the internet, this debate has been accelerated by base erosion and profit shifting (“BEPS”) discussions held in 2013 at the OECD level. Tax morality and tax transparency must be at the core of a Board’s attention: working with tax professionals to proactively address this issue, making sure that tax positions are appropriate and defendable. At KPMG, we wish to help you successfully manage the balance between tax planning, tax transparency and corporate reputation. If you have uncertain tax positions, be ready to lay them on the table for tax authorities and other stakeholders. In order to be prepared for this, you must ensure that the right control mechanisms and systems are in place to demonstrate that you are paying the right amount of tax on time and in the right jurisdiction. Think about the reputational implications of your company being perceived as not paying its “fair share” or engaging in questionable tax planning if this is highlighted on Facebook, Twitter or the front page of the newspaper.

March 2014 | the KPMG Difference | 19

Mobility Campaign

Frank Vancamp Partner, Tax and Legal Advisors T : +32 (0)2 708 36 70 E : fvancamp@kpmg.com

KPMG launches "Intelligent mobility budget" pilot project The growing mobility problem in Belgium is being felt everywhere: traffic jams, parking problems, air pollution, etc. VIM – the Flemish Institute for Mobility – and KPMG are taking on the challenge and have committed themselves to the “Intelligent mobility budget” pilot project. 250 employees from 25 different companies (including KPMG) will make the transition to a flexible and variable budget for commuting and for work-related journeys. Lead on the project, a KPMG Partner, will also play an advisory role within this project with regard to taxation and social security and make recommendations to the government.

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he pilot project introduces an intelligent mobility budget: each of the participating employees will receive a personal budget for travel expenses to and from work and/or work-related journeys. This budget includes all costs that the employer previously spent on mobility, such as a company car, fuel card, parking spaces, etc. Employees can then use this budget to decide how they will travel: by car, public transport, (electric) bicycle, etc. The mobility budget of most companies usually goes to company cars, of which there are currently some 770,000 on the roads in Belgium1. One of the goals is eventually to be able to reduce this number by introducing an intelligent mobility budget for those who would benefit more from an alternative transportation offering.

250 employees will try sustainable mobility 25 companies will each nominate 10 employees to participate in this pilot project. All the companies will be given a mobility scan, which will draw up an accessibility profile of their business. This process will examine which means of transport are present or available nearby, and what is the profile of the 10 participating employees and their journeys. This scan also maps out the tax aspects and the cost of travel. Based on the scan, companies can then determine their own approach to start the pilot project.

Change of mentality for employers, employees and the government Frank Vancamp, Partner in the Automotive Sector is KPMG’s driving force behind this project: “We see a change of mentality going on. Both the employer and the employee need, and are interested in, a flexible policy; unfortunately, we still lack a legislative framework to make this possible. We really want to play a pioneering role in this and show that it is actually possible within this legislative framework.” In time, the project will hopefully lead to a lasting change in behavior from both employers and employees. Because the current rate of wasted hours is no longer feasible. Wouter Van Linden, HR Director at KPMG: “One of the biggest issues for our HR policy is that we urgently need

to start asking the question whether it is still important to work dependent on time and place. As an employer, we definitely need to be flexible and offer our employees more freedom in work and mobility. That is why we are also so enthusiastic about committing ourselves to this project: together with VIM, we can outline how a future mobility budget should look.” Wouter Van Linden continues: “For us as an employer, it is important to be able to provide flexibility to our employees in the future. This definitely makes us a more attractive employer in times where mobility plays a key role in choosing a job.” Bart Peeters, CSR Responsible & Markets Manager at KPMG is one of the participants in this project: “I’m glad to be part of this project. Finally we can move towards a truly sustainable and flexible mobility beyond ‘leaving before or after the traffic jams’. I am also aware that my experience will play an important role in the change in mentality among my colleagues.” Frank Vancamp, KPMG: “An intelligent mobility budget has some major advantages: the employee can plan his/ her travel flexibly and has more freedom of choice. As an employer, you can operate more efficiently and cut costs, and what is more, you are promoting sustainable mobility. As the icing on the cake, there are also benefits to society because hopefully we can bring down the number of hours spent sitting in traffic jams and guarantee a better quality of life.” Several partners have signed up for this pilot project. VIM (Flemish Institute for Mobility) will take on the coordination function, advise and support participating companies in rolling-out this project within their companies. Other partners are responsible for tools such as payment cards, mobile applications and software systems to facilitate the administration for HR departments. KPMG’s crucial role in this project is to advise on the taxation and social security aspects, which is the role of the team of Frank Vancamp and Alexis Ceuterick. They will provide first-line advice to participants, with customized assistance as necessary. On the basis of feedback from the participating companies they will make policy recommendations.

1 see KPMG Company Vehicles Study, Frank Vancamp, 2012, p 17.

March 2014 | the KPMG Difference | 21

AUDIT COMMITEE INSTITUTE Sophie Brabants Partner, Audit ACI Belgium Chairwoman T : +32 (0)3 821 18 66 E : sbrabants@kpmg.com

Wim Vandecruys Senior Manager, Audit ACI Belgium Director T : +32 (0)1 128 66 31 E : wvandecruys@kpmg.com

Audit Committee Toolkit: A guide to effective audit committees Corporate governance excellence continues to be an important element of business, both in Belgium and across the globe. Expectations of stakeholders have never been higher, and the scrutiny by regulators and investors never more stringent. As a result, the role of the audit committee has rapidly increased in importance and expanded in scope.

o that end, specifically recognizing the challenges that audit committees face in meeting their increasingly demanding responsibilities, the Audit Committee Institute (ACI) has developed the ACI Audit Committee Toolkit. The ACI Audit Committee Toolkit is an all-in-one handbook on audit committees and is therefore a one of a kind reference relevant for directors and others dealing with audit committees. It

✔ All-in-one reference hanbook on audit committee

✔ Expertise from several ACI experts around the world

articulates, from a specific Belgian perspective, the principles underlying the audit committee’s role while also providing a vast amount of non-prescriptive guidance to help audit committees and boards gain a better understanding of the processes and practices that help create and sustain effective audit committees. Contact the ACI Committee to order your copy of the toolkit at info@auditcommitteeinstitute.be

✔ Belgium specific legal landscape and governance needs

✔ Guiding principles and detailed practical guidelines

✔ Complete set of practical instruments and tools

... a must read handbook for directors, internal audit and others dealing with audit committees. 22 | The KPMG Difference | March 2014

About ACI Sponsored by more than 30 countries around the world, the Audit Committee Institute provides audit committees and board members with practical insights, resources, and peer exchange opportunities focused on strengthening oversight of financial reporting and audit quality, and the array of challenges facing boards and businesses today – from risk management and emerging technologies to strategy and global compliance. Also in Belgium, ACI is a knowledge resource for the support of audit committee and other board members. The forum—a service provided free of charge—serves to facilitate the mutual exchange of experience and leading practice among board members. Fundamentally, ACI programs support members by providing a focus on evolving issues, the sharing of leading practices, and the opportunity to meet with their peers. For more information on ACI, contact us at info@auditcommitteeinstitute.be or visit our website at www.auditcommitteeinstitute.be.

udit committees can make a strong contribution to a ‘no surprises’ environment and an effective audit committee can be a key feature of a strong corporate governance culture, bringing significant benefits to an organisation. Such committees are supported by fundamental building blocks: an appropriate structure and foundation; reasonable and well defined responsibilities; an understanding of current and emerging issues; and a proactive, risk-based approach to its work. However, it is also important that each board and audit committee should assess its own circumstances, governance structure, financial complexity, maturity and issues – when defining its specific audit committee practices. Practices that work best for one organisation may not be ideal for another. Nevertheless, certain guiding principles underlie the effectiveness of every audit committee and the right principles can help to ensure that ‘company specific’ practices are applied effectively – that is, by the right people with the right information, processes and perspectives.

March 2014 | the KPMG Difference | 23

GLOBAL Mindset Mercedes Sanchez Varela Partner, Advisory KPMG EU Office T : +32 (0)2 708 43 49 E : msanchezvarela@kpmg.com

Blending funds New financing for EU projects “With less money at hand, the EU will have to become more efficient and innovative in the way it seeks to finance new initiatives and blend funds from different sources, but will actors be able to quickly align to this new way of thinking?”

mart growth solutions; creating sustainable infrastructure; reducing youth unemployment and increasing social inclusion – these are only some of the many pressing challenges facing Europe. Innovation, partnerships and result orientation are the buzzwords we hear in the corridors and sessions of the EU. But add to this the ambitious goals for the next seven years, the challenging mix of priorities for Europe 20201, and we understand why efficient spending is at the top of everyone’s mind.

KPMG EU office engages with the European Commission, the European Parliament and all EU stakeholders for the firm. Our EU office is located in the EU area in Brussels and closely follows the latest discussions on the 7 year financial perspectives for the European Union for 2014-2020. One of the new discussions around accessing innovative financing is the expected role of the financial instruments.

Blend funding opportunities have been going on for a while in the EU and have been mostly successful. This is an encouraging trend. But we might have big doubts about the long-term implementation of this kind of funding and thus in its sustainability If we take the example of the Youth Employment Initiative, we see it represents 0.06% of the multi-annual financial framework (MFF) in the long-term budget. As a single sum this seems rather marginal. But a number of other measures address employment issues directly or indirectly in transversal EU funds, whose amounts have increased compared to the last framework for the 2007-2013 period. How do you gain efficiency in such a complex financial framework? To answer this, we must first question whether we have carefully assessed to what extent a common EU initiative is a better fit than the national responses that can be adapted to the specifics at the local level. If at the EU level, strategic developments are driven by Europe 2020, how much of these EU priorities are really set as national priorities and thus leveraging and sparking a multiplier effect across Europe? And what does this mean from a funding and efficiency perspective?

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Efficiency and effectiveness A major change for this upcoming budget period is that unused funds will be reallocated to ensure that the total amount budgeted for 2014-2020 will be spent on the true EU priorities. Budgets will thus be more flexible, and this is a welcome change.

However, this flexibility does not necessarily also imply further efficiency. To determine whether the EU budget will become more effective let’s not only focus on numbers. The goal is to no longer ‘just’ spend the money, but to spend it wisely. Mercedes Sanchez Varela, Partner at the KPMG EU Office shares her perspective: ”I consider it one of the main achievements of the last few years that policy makers and public authorities started to change their focus, going from an absorption perspective to one focused on the impacts achieved.” This focus on results is also visible from an audit perspective. “There is a clear shift in various EU funds from a rather limited focus on compliance matters to assessing and reviewing performance. In times of austerity like this one, when efficient spending becomes even more important, I think this is a correct shift in approach.” “Of course this will mean new challenges and an ambitious, and dare I say interesting, role for all those managing and verifying EU funds. All member states, authorities, and even private firms like KPMG, need to follow these new trends. We all need to be innovative both in terms of tools and methodologies that reflect this new way of doing business. Blending funds from different sources of financing will certainly be a part of this shift. But will all the actors be able to quickly master this new thinking and align their practices accordingly? Is Europe ready?”

Innovative financing It can be argued that the “new” financing mechanisms are not all that new. What we really are seeing is more of a crossroad, where we are considering their potential use and seeing concrete regulatory changes that could help them to be used more frequently. Already, some evidence shows that loans provided to SMEs with favorable conditions are in many cases more effective than grants and fully bring the multiplying effect to 1 to 4 or 5. With these regulatory steps, the Commission has chosen the right direction to go towards innovative financing solutions. It has opened a window for innovative opportunities, which means new potential for greater impact from less investment. But we come again to the question of implementation. It is unclear whether the actors involved in shared management, as well as beneficiaries, are ready to take advantage of these new opportunities or can really take advantage of them. New actors are also expected to play a more engaged role, such as the European Investment Bank but so are commercial stakeholders, such as banks. All this needs to fit into a clear and consistent framework to operate, with different perspectives and expectations combined to achieve one goal. Despite it all, Europe remains the best placed actor to consolidate and reconcile potential views and make them happen. What our European economies need is indeed easier access to finance the Europe of Growth and jobs that all claim to pursue, notably in time for the election of a new European Parliament in May 2014.

“Europe 2020” is the European strategy for “smart, sustainable and inclusive growth”. It was adopted in 2010 and influences all EU policies. 2 Blending loans and grants is one of the core activities of the European Investment Bank (www.eib.org), the financial institution supporting EU policy objectives, within Europe and in third countries. 3 This new initiative, deriving from a commitment by Member States in 2013, aims to reinforce employment measures towards people under 25 and not in education, employment or training. 4 The objective “Competitiveness for growth and jobs” increases from 9.2% of the budget in 2007-2013 to 13.1% in 2014-2020. 5 See for instance “Counterfactual impact evaluation of enterprise support: lessons from Northern Italy”, 2012 1

March 2014 | the KPMG Difference | 25

SUSTAINABILITY Bart Walterus Partner, Advisory T : +32 (0)2 708 38 80 E : bwalterus1@kpmg.com

Crowdfunding is this the year for Belgium? Compared to other countries, Belgium is a slow starter. But the Belgian market is in a good position for this innovative approach to take off.

n 2013, KPMG Advisory conducted a study on behalf of the Flemish government looking at the global trends of crowdfunding and finding various policy options governments implement to stimulate this innovative way to finance start-up businesses. Crowdfunding provides a platform for start-ups or other types of organizations to look for financial support from ‘the crowd’ to fund a project. There are different forms of crowdfunding: sponsorships, reward-based, loan, equity. In some cases people donate money and receive a small reward like a cd, a concert ticket or a painting. Sometimes it operates more as a loan or a real investment with a market-based reward. The study showed that crowdfunding is also an efficient way to measure the marketability of a new project: if a lot of people are willing to invest in a project, it will be easier to convince professional investors and the market of the feasibility of the project.

Until now, crowdfunding has grown internationally by more than 60% ($2.8 billion in 2012). In Belgium it has been used to sponsor social or artistic projects, as well as to finance commercial projects. According to Bart Walterus, Head of Management Consulting at KPMG Advisory, “Crowdfunding is getting more popular in Belgium, but we are still behind other countries.”

euros through crowdfunding, the Netherlands 14 million. And Belgium? Less than 1 million. But going forward, Bart says that there is no reason for this innovative funding not to take off. In fact, the Belgian market is well placed for this opportunity. Crowdfunding, if well organized and promoted, can offer complementary funding.

The study showed that last year The Netherlands had 22 crowdfunding platforms and the UK 44. Belgium only had a few.

He adds: “Entrepreneurs have difficulties financing their business, especially when they are starting. On the other hand, Belgians have a lot Until now, of savings for which they hardly get any return crowdfunding on these days. Crowdfunding can help in bridghas grown internationally by ing the gap between those two economic realities: ‘the crowd’ can help to stimulate entrepremore than neurship and to create jobs.”

Other statistics provide clear indications of this lag. In 2012 the UK raised a value of 94 million

So perhaps now is the time for crowdfunding to grow in Belgium.

26 | The KPMG Difference | March 2014

60%

SUSTAINABILITY Bart Peeters CSR & Markets Manager T : +32 (0)2 708 47 75 E : bpeeters@kpmg.com

MADD

Make a Difference Day As part of its Corporate Social Responsibility program and continual campaign to cooperate with the community, the KPMG network in Belgium sponsors an annual Make a Difference Day (MADD), which encourages KPMG employees to take part in a one day, hands-on volunteering project to benefit the less privileged in our local communities.

ach year, a wide range of volunteer projects, throughout Belgium, is selected in which all KPMG employees are welcome to participate. Projects include environmental initiatives, painting, decorating and social support activities. Huize Monnikeheide has supported people who are mentally handicapped through housing projects for more than 40 years. Their mission is to give people with a mental handicap access to a life of dignity, where they have the same opportunities in terms of work, leisure, housing and to maintain a regular social life.

The MADD event at Monnikenheide gives our people a great opportunity to spend some time in support of people who need it most, and this in the peaceful environment of “the forests of Zoersel”. The event was highly appreciated by all the management, staff and residents of Monnikenheide. This year the Board of Monnikenheide even included a full page on KPMG’s MADD in their annual report. Everyone from Monnikenheide and from KPMG is looking forward to sharing this time together again next year.” Harry Van Doninck – Partner, Audit

Kom op tegen Kanker Each year, KPMG commits to the fight against cancer through participation in the annual 1000 km Kom op tegen Kanker event. This year, in addition to sending two teams to participate in the event, KPMG has also taken the extra step to act as one of the three key sponsors of the event. Here is why we participate in this critical fight against time to save lives… To support the KPMG teams, please make your donation (tax deductible after 40 euros) to: IBAN BE 14 7331 9999 9983 BIC KREDBEBB Reference 170-047-334 Cancer: distant and unknown? Not for me. I was confronted with this disease as a child when my aunt died of cancer. You need to know she was a vegetarian, she did not smoke nor did she drink alcoholic beverages! I was very confused: can anyone die from this terrible disease? Cancer patients and their immediate environment are going through a very difficult period in their lives. By comparison, cycling 125 kilometers is really peanuts.”

We all know relatives, friends and colleagues who have been fighting against cancer. Some of them have not won the battle against this terrible disease. Participating in activities that support the improvement of cancer treatments such as the “1000km of Kom op Tegen Kanker” is a token of our remembrance for those who have suffered from cancer and with any luck, will give more hope for recovery to those who are confronted with the disease in the future. But, the 1000 km is also a sports event for trained and less trained cyclists. It is a challenge to participate in such a long distance or even part of it. It is however also an opportunity to ride on a traffic-free route and, guided by a fantastic organization, together with hundreds of other people who all have their reasons for doing this, related to sports and other motives.”

Geert Bogaert – Director at KPMG Tax & Legal

Koen Maerevoet – Partner and Head of KPMG Tax & Legal

March 2014 | the KPMG Difference | 27

MADD

Bookshelf

Bookshelf The Social Banker v2.0 - Social Media Lessons from Banking Insiders There is little time to waste. Already, many of the world’s most innovative banks are leveraging social media to create competitive advantage. Indeed, the real question for banks is no longer whether they should invest in social or not, but rather how they can use social to improve everything from the customer experience through to culture change. This report represents the views, the experiences and insights of some of the industry’s social media leaders, including retail banking executives, social media experts and KPMG’s own industry insiders.

Change Readiness Index KPMG’s 2013 Change Readiness Index (CRI), produced in partnership with Oxford Economics, ranks 90 countries (developed and developing), measuring them across 26 components to compare capabilities in the areas of enterprise (business environment), government, and people and civil society (social and human capital). The study is unprecedented in its scope and unique in its consideration of change readiness. The top five 2013 CRI rankings for change readiness, with an emphasis in developed countries, are Singapore, Sweden, Qatar, New Zealand, Germany. The countries with the most improved rankings in comparison to 2012 are the Philippines, Cambodia, Thailand and Mozambique.

KPMG’s Global Automotive Executive Survey 2014 The Global automotive executive Survey is KPMG International’s annual assessment of the current state and future prospects of the worldwide automotive industry. In this year’s survey, 200 senior executives from the world’s leading automotive companies were interviewed, including automakers, suppliers, dealers, financial services providers, rental companies and mobility solution providers. Knowing that consumers will have to choose between their consciences, their wallet and their status, it is of note that 92 percent of the senior executives said that buyers’ top priority is fuel efficiency and that 70 percent want a longer lasting vehicle. 47 percent consider use of alternative fuel technologies as critical to consumers’ purchase decisions, but this figure is down from 70 percent in 2009.

Going Beyond the Data A recent data and analytics (D&A) report reveals a stark disconnect between C-suite executives who realize the value of big data, but are unsure of how to effectively implement and manage their existing resources. Through interviews with 144 CFOs and CIOs from multinational companies, the study discovered that a large majority of executives (75 percent) find it difficult to make decisions around D&A, even though 99 percent consider it to be important to their business. This report demonstrates not only the hunger to harness new D&A capabilities, but also the greater level of support that’s needed to operationalize these insights. The challenge is for firms to leverage internal data and ‘big data’ by using analytics to drive the systems. But the reality is that operationalizing D&A does not necessarily mean new systems and tools; rather it is about blending old-school business intelligence with new-world big data and analytics to drive both your legacy and your emerging IT strategies.

The full reports can be accessed by using the KPMG app.

28 | The KPMG Difference | March 2014

PASSIONATE

A passion for... At KPMG we are passionate and we want to share that passion. In each edition, we will profile KPMG’s own by sharing our, sometimes unexpected, passions as we exceed our limits to give back and contribute in unique ways to our communities and our world.

or the last four years Luc Oeyen, Head of Audit has been taking on the challenge of height. From Machu Picchu in South America to the Mont Blanc and Mount Elbrus in Europe, he has climbed up to 5642 meters and faced -20° temperatures. This personal passion has come from a desire to discover new horizons and overcome obstacles. He shared with us some of the thrills and challenges of taking on the wonders of nature. How do you prepare for a trekking experience? It can be a long process depending on the challenge, the height, the cold and the distance. I generally begin training three months in advance. Then a few days before setting out, I train at a higher altitude to begin preparing for the challenges of the thinner air. Of course it also requires the right gear – the pack, the clothes, the food. I begin preparing for that well in advance. The more often I go the easier it becomes to get prepared. Experience plays a big role. What is most satisfying about trekking? Trekking is a challenge that must be taken on alone. Even with a group, or with a guide, everyone has to accomplish it on their own. The result is immensely satisfying when you succeed. When you go into the natural world, you leave everything behind. It is beautiful and impressive at the same time. Although it is not always an easy trail, you know where you are headed. And when you get there – Wow! Trekking remains a dangerous sport, how do you avoid the risks? It all comes down to preparing and experience. For example, when I prepare to trek over glaciers I have to be sure to bring large lines. They are key if you want to be protected from a fall. When you are very high in the sub-optimal temperatures, food and water have to be packed in the appropriate containers. Otherwise, water freezes and the food has to be easy to access

because you have to eat fast. As soon as you stop moving the cold sets in. And of course no matter how well you prepare, there are always some surprises. When I climbed to the top of Mount Elbrus (see photo above with Luc at 5642 meters) we had to wake up very early, at 4 in the morning, to begin hiking and we did not get close to the top until midday. By the time we got close a deep fog rolled in. It can get dangerous very quickly so we had no choice but to begin descending as quickly as possible. The feeling of success is constantly in opposition to the sense of responsibility and common sense you need to overcome the challenges of the elements. You have to stay cool, keep morale up and most importantly, keep moving. Is there a link for you between your passion for trekking and your work as KPMG’s Head of Audit? Well, it all comes down to calculated risks. I don’t want to take unnecessary risk but the goal remains clear. The same is true in financial audit with preparation being key to a smooth execution. What is next? Perhaps Mount Kilimanjaro or the Aconcagua in Argentina… Who knows? The sky’s the limit. It is exciting, how the journey to discover your own limits can be.

March 2014 | the KPMG Difference | 29

KPMG APP

Thought Leadership App

ain instant access to KPMG insights from around the world on todayâ&#x20AC;&#x2122;s most pressing business issues and complex challenges. Free to download, the app supports a multi-lingual user interface, available in 25Â languages. The app allows you to filter studies by theme and provides insights across a broad range of industries as well as search and sort publications and reports with powerful search features. Read more about global trends that matter to you and your business in studies like this one:

Future State 2030 What are the global megatrends? What needs to change? The Future State 2030 explores how governments must respond to the global megatrends driving change into 2030.

Top Employer KPMG in Belgium has been named the best employer in Belgium for 2014 by the Top Employers Institute. This is the eighth consecutive year that KPMG has been among the Top Employers, but the first time KPMG has ever been ranked number one.

30 | The KPMG Difference | March 2014

The report identifies nine global megatrends. While they are highly interrelated, the megatrends can broadly be grouped into trends reflecting changes in the status and expectations of individuals, changes in the global economy and changes in the physical environment. The report suggests that appropriate strategies for future success will include greater cooperation in the international arena, promoting behavioral change in citizens and an increased focus on proactive measures to mitigate the worst of the impacts. Governments will be characterized by a shift towards becoming more integrated, outward focused and making better use of technology.

Fairtrade@work Join the many companies and organisations that have made the Fairtrade@work commitment. Discover the diversity of products available and contribute to sustainable trade around the world. www.fairtradeatwork.be info@maxhavelaar.be

Prepare for the future KPMG Sustainability services are here to help you build long-term value. Sustainability professionals at KPMG member firms are here to help you understand what environmental and social change mean for your business. We can help you create value and sustain performance for the long term. We look forward to working with you.

kpmg.com/be

The information contained in this magazine is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. This magazine is also available in Dutch and in French. © 2014 KPMG Support Services, a Belgian Economic Interest Grouping (“ESV/GIE”) and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Belgium.