The global financial services sector is experiencing increasing pressure to operate a more sustainable business model that considers the long-term goals of society at large. This pressure is sourced from multiple directions, including investors, customers, regulators, policy makers, and special interests, all seeking information by which to assess an entity’s commitment to responsible banking and investment through strategies that address environmental, social, and governance (ESG) concerns.
This collective pressure has advanced consideration of ESG-related risks and sustainability finance from “emerging” issues to foundational factors that financial services companies – and really all companies in all industries - must begin to incorporate into their business strategies and core risk assessment areas.
A variety of guidelines to measure and disclose ESG efforts have been put forth, including the reporting standards of the Sustainability Accounting Standards Board (SASB), the recommendations of the Financial Stability Board Task Force on Climate-related Financial Disclosures (TCFD), and the principles and goals of the United Nations addressing responsible banking, responsible investment, and sustainable development. Regulators in the U.S., notably the Federal Reserve Board, Securities and Exchange Commission, and the Commodity Futures Trading Commission, are just beginning to address how to integrate ESG risks into their supervisory and regulatory expectations. Still, even in the absence of specific regulatory requirements, many U.S. companies are committing to, acting upon, and measuring and reporting their ESG strategies to achieve sustainability goals and related business gains.
Adopting a responsible approach to banking and investment along with skillful management of ESG issues can improve a company’s risk-adjusted returns, enhance its brand and reputation, spark commercial opportunities, mitigate certain portfolio risks, and improve market positions and long-term value. Yet, designing and implementing a successful approach can be challenged by rapidly evolving ESG-awareness, changing business models with increasing digitization and automation, and expanding expectations from customers, investors, and regulators.
KPMG stands ready to help our clients develop and implement ESG programs with speed and agility, offering assistance across such areas as business and risk strategy, data analytics, resiliency, valuations, compliance, operations, reporting and attestation. Our professionals can offer bespoke responsible banking and investment services, which can be tailored to match differing needs and levels of maturity. We would be very pleased to speak with you about your thoughts and plans related to ESG.
For more information, download the full report below.
The information contained herein 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.