Customers, employees, investors, regulators and the public are placing greater focus on Environmental, Social and Governance (ESG) than ever before. This is leading to changes in the options available to corporate borrowers to raise capital – as well as in the way financial services distribute it. Sustainable finance rewards those who perform well on ESG factors, which signal a more resilient and sustainable business. Sustainable finance enables lenders to comply with regulations while offering new products, and it gives more options to borrowers.
The sustainable finance opportunity for lenders, asset managers and insurers
Financial services firms have a unique role to play in driving greater sustainability into the wider economy.
New rules and regulations are forcing the pace of change. COVID-19 has shown organisations can embrace new ways of working faster than we ever thought possible. Making sustainable finance a core part of the investment strategy is no longer a choice: it is an imperative.
We help banks, insurers and asset managers:
- comply with a wave of UK and EU regulations due by 2021 to disclose information about the sustainability of who they loan to, insure or invest in
- transform their business model, including technology, data, capabilities and culture to enable the transition to financing sustainable activities
- develop strategies for customers in the portfolio performing poorly on ESG – for example, through target setting and a more collaborative approach, or through divestment
- design and provide ESG finance options for borrowers that not only incentivise their sustainable activities but are more competitively priced
The sustainable finance opportunity for corporate borrowers
Incorporating ESG factors into corporate debt transactions provides two principal benefits for borrowers: access to the broadest pools of capital, and tangible debt pricing benefits if they can demonstrate that a positive ESG impact is delivered.
Deal structures are evolving to move beyond looking purely at ‘green’ initiatives. An increasing number of transactions focusing on social or governance aspects – such as employment practices, board diversity and access to education.
We help corporate borrowers to:
- evaluate and enhance ESG financing options
- identify potential ESG financers
- negotiate commercial terms of ESG financing to align with their strategic objectives
- optimise their credit ratings based on ESG factors
Further offerings for sustainable finance
We can help the providers and recipients of finance to transform their operating models to comply with the upcoming wave of regulation. We can help them embed ESG into their business for strategic advantage.
Our sustainable finance transformation services include:
- ESG maturity assessment
- ESG regulatory decomposition
- ESG target operating model design and implementation
- ESG learning to upskill your employees
- Portfolio ESG risk assessment and AI-driven bespoke ESG scoring
- ESG valuations and due diligence
ESG finance assurance: Green, social and sustainability bonds and green loans
With global experience as an independent reviewer and Bond assurance provider, we offer services ranging from an Issuer's Bonds framework, to an individual Bond issuance or Loan origination.
Our expertise includes:
- second party opinion: providing assurance over compliance and mapping to established Bond Principles and Guidelines
- verification against a designated set of criteria, such as external standard or alignment of reporting with the published Bond Principles
- certification covering an issuer's Bond or associated Bond framework, as well as the use of Proceeds against a recognised external green, social or sustainability standard