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KPMG report encourages AI for sustainability

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A KPMG report says that AI, despite its large energy burden, can still be a positive tool for corporate sustainability efforts. 

The report, “AI for the Chief Sustainability Officer: Understanding the Intersection of AI and Sustainability,” notes there are many ways entities can use AI to reduce their environmental impact and advance their sustainability goals. 

AI-driven analytics, for example, can help a company gain deeper insights into their carbon footprint as well as identify inefficiencies for target emission reduction measures. It could also be used to optimize energy and water consumption in buildings and industrial processes, as well as supply chain logistics, via analysis of real-time use patterns. The report also explains that AI can be used for sustainability reporting, which often draws on many different data sources, both financial and nonfinancial. KPMG noted that AI can be an innovation tool that can assist in designing sustainable products and services, as well as forecast extreme weather events and analyze historical and real-time market data to predict future trends. 

KPMG noted that it is using AI for these purposes itself. For clients, the firm uses AI to identify its most impactful decarbonization pathways for target reduction, offers AI-guided solutions to accelerate reporting and compliance with sustainability standards, provide optimized AI tools that can reduce manual efforts within the sustainability data management and reporting process, as well as offer ongoing guidance on emerging AI technologies. 

And for itself, the firm said it is actively working to integrate AI and sustainability into its larger environmental strategy. It is currently exploring the development of AI tools that will help enhance its sustainability professionals’ efficiency and accuracy. Beyond that, it’s also working with international teams to assess the impact of their own AI use, especially on data centers they own, as well as within the context of Scope 2 emissions. KPMG is working with its key technology partners to understand the impact of AI use outside its direct control. The firm sees sustainability as a core component of its trusted AI framework. 

Despite these measures, there is the matter of AI being highly energy intensive. For instance, in Google’s most recent environment report, it revealed that its emissions have increased 13% from last year and 48% from their 2019 target, which the tech company mainly attributed to a rise in data center energy consumption and supply chain emissions, which it said was at least partially due to AI. The company conceded that as it further integrates AI into its products, reducing emissions may be challenging due to increasing energy demands from the greater intensity of AI computing, and the emissions associated with the expected increases in its technical infrastructure investment. For example, another estimate says that one query to ChatGPT uses approximately as much electricity as lighting one lightbulb for about 20 minutes. The KPMG report acknowledged this can be a challenge but is hopeful that technological advances can address the issue. 

“The computational power required for AI can lead to significant resource use and an increase in emissions, potentially offsetting sustainability gains,” said the report. “However, recent advancements in energy-efficient AI technologies and renewable infrastructure are promising in reducing energy consumption, carbon emissions and water usage. As the AI landscape continues to rapidly evolve in cost and energy efficiencies, companies may focus on emissions from owned data centers and cloud computing providers, in order to create a clear path to decarbonize.” 

Tegan Keele, KPMG US climate data and tech leader, who co-authored the report, said in an email that while AI does consume a lot of energy, it’s not the whole story when it comes to emissions. 

“While companies should be mindful of AI’s energy footprint, focusing on AI computing alone won’t move the needle on emissions. We need to look holistically at overall Scope 2 consumption and value chain impacts,” said Keele. 

Maura Hodge, KPMG US’s sustainability leader and another of the report’s authors, added that KPMG’s own efforts to help clients reduce their carbon footprint, in turn, can be useful in creating a net environmental benefit for AI solutions. 

“This is why at KPMG, we’re actively working to maximize AI’s immense potential to help drive decarbonization, while simultaneously mitigating the impacts of its energy and water consumption. It’s about finding a way to strike the balance, where AI ultimately delivers net positive environmental impact,” said Hodge. “We recommend that companies work closely with their technology partners to understand the full impact of their AI usage and development, especially for operations outside their direct control.”

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IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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