Matt Farnsworth
Technical Director - Sustainable Business, ESG & Transaction Advisory
Sustainable Finance
The European Commission’s Sustainable Finance Action Plan promotes sustainable investment in the EU in line with global climate change commitments. Developed to help deliver the Paris Climate Agreement and the UN‘s Sustainable Development Goals the plan will see several regulations and standards, affecting EU Financial Market Participants (FMP), being implemented over the coming years.
Some of these changes will apply both to financial products offered in the EU as well as the FMPs (investment firms, banks, asset managers, pension providers and insurance-based investors) themselves. They cover a wide range of requirements from standardising due diligence and strategic approaches, stakeholder engagement, materiality assessment, disclosure and ESG ratings.
And its not just FMP’s, the plan will have wider implications, particularly for listed corporates, investees and those reporting on ESG metrics to market analysts.
What to expect and when
What about Brexit & UK?
There is the question as to whether the EU Sustainable Finance package will apply to UK markets going forwards. It is largely understood that certain elements of the package will be in place prior to the leaving date, and some will come fully into force post-Brexit. How the Government carries forward this position is being closely monitored.
What next?
The impact of the Sustainable Finance Action Plan will vary depending on the nature of your business:
Obligated UK/EU Financial Market Participants
Investors will be increasingly tasked with reorganising the way in which sustainability factors are integrated into investment strategy, decision making, product selection and labelling, ratings and company disclosures.
We’re here to help:
- Integrate Sustainability Factors into your Investment Policy, Strategy and Portfolio Management
- Improve portfolio understanding through ESG Due Diligence
- Align UN Sustainable Development Goals (SDGs)
- Support you during ESG stakeholder engagement programmes
- Work with your investee companies to improve ESG performance
- Advise on Task Force on Climate-related Financial Disclosures (TCFD) recommendations
- Keep you up to date on ESG Megatrends
- Build internal team capacity through training.
Listed Corporates & Investee Companies
For investees, including public listed and larger corporations, your investors will be reviewing your sustainability performance and ESG ratings from 2020-21 onwards.
Affected companies will need to ensure that they have the right information to hand by early 2021 to ensure that their ESG performance ratings and market valuations remain unaffected and to ensure ongoing unrestricted access to capital.
In particular, we expect corporates to face further climate related scrutiny from banks when applying for finance as regulators develop new regimes for the assessment and migration of climate risk under the UK Prudential Regulation.
We’re here to help by:
- Advising on how to best align in-house sustainability and ESG programmes with investor or lender requirements
- Developing mechanisms to collect, analyse and report on currently non-reported ESG disclosures and improve sustainability performance
- Helping companies to incorporate carbon management strategy and decision making into non-financial reporting
- Reviewing supply chains and sourcing procedures for key environmental and social risks
- Training Boards of Directors in ESG and Sustainability.
Watch now...
Watch our latest vlog 'Essential upcoming ESG issues for investors and corporates' to learn more about the Sustainable Finance Disclosure Regulation. Join Matt Farnsworth, Technical Director in Sustainable Business, ESG & Transaction Advisory as he looks at what’s new and what this means for organisations moving forward.
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But what does this mean for big, or small, business?
Matt Farnsworth
Technical Director - Sustainable Business, ESG & Transaction Advisory +44 (0) 1454 853 000 EMAIL
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