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Financial and operational climate risks - 4 items
Sustainability is a subject high on the agenda of the financial services sector. Clients ask for it, legislation requires it. Moreover, society calls upon the financial services sector to contribute to a sustainable future. Banks, insurance companies, private equity and other market players are seen as a crucial factor to finance and realise the transformation to a sustainable economy by integrating environmental, social and governance (ESG) information into their decision-making processes.
How to deal with the sustainability challenge
Four levels of leadership in sustainable finance
Financial institutions are increasingly aware of their role in the transition to a climate-neutral, green, circular, inclusive and competitive economy. There is a growing awareness that sustainability can also be profitable in a strictly commercial sense. The new measures, their scope, impact and compelling nature, and the speed with which they are being implemented, make sustainability a strategic priority.
Financial institutions cannot escape the issue of how to implement sustainable finance. An initial focal point is the way in which they wish and are able to distinguish themselves from their peers. Is compliance with legislation good enough when it comes to sustainability, or is the ultimate goal that investment choices lead to positive changes in society? We distinguish four levels of leadership that financial institutions can adopt compliance, active management, active engagement and frontrunner.
Client Case: ESG due diligence counteracts corruption
The Dutch Good Growth Fund - Financing Local SMEs - (DGGF) – is an initiative of the Dutch government to stimulate entrepreneurship and create jobs in frontier markets. Amongst other things, PwC acts as the environmental, social and governance (ESG) manager, enabling the fund to maximise its impact on the ground, while keeping ESG risks at bay.
Our approach in helping you understanding and managing ESG opportunities
Within the financial market, many organisations are not fully equipped to find and make sustainable investments. The inclusion of ESG (Environmental, Social, Governance) criteria in their investment process is new. For example, how can you find a way through various labels and quality marks? How to understand and manage ESG risks and opportunities? How to find responsible goals for profitable growth. How to monitor and report?
To enhance strategy, unlock value, and build trust we will have a constructive and transparent dialogue with you and your stakeholders. We help you by:
- Offering a dedicated team of experts within our global network;
- Applying an integrated approach;
- Relying on the experiences of former projects and clients best practices.
Mainstreaming ESG into traditional investment processes, from strategy to execution.
Identification of ESG risks, and policy development, responsible portfolio management, setting up appropriate risk management processes, and monitoring (ESG Dashboards) and reporting.
Building trust through transparency
Measuring and communicating ESG performance in line with internal and external reporting practices and requirements - from legal requirements such as the EU Directives to climate risk and TCFD disclosure, human rights disclosures in line with the UNGP Reporting Framework, and integrated reporting
Unlocking new opportunities and cost-efficient digital tooling
Offering data-driven tooling and products that screen your portfolio. The outcomes can for example be used for optimization, risk management and providing opportunities for sustainable growth (e.g. ESG benchmarks, impact investment, circular finance, FinTech, green bonds, etc.).Â
Workshops and learnings to stay ahead
Designing and delivering tailored workshops and e-learn solutions on responsible investing and lending. All our learning solutions are tailored to the client’s needs, ESG risk exposure, financial position and so forth.Â
We have designed and delivered training for different financial institutions on - among others - the Equator Principles, IFC Performance Standards, UNPRI, UN Guiding Principles on Human Rights & Business, OECD instruments on responsible business conduct, Sustainable Development Goals, as well as sector specific risks with the aim of helping clients design their ESG policy approach.Â
Discuss the sustainability transformation for your organisation with our experts
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