Environmental, Social and Governance (ESG) services
As climate-related risks become more acute, both investors and consumers are increasingly shifting towards more sustainable businesses. To stay competitive, organisations now see environmental, social, and governance (ESG) not as something nice to have, but as an essential part of their business strategy. Businesses want to understand how ESG can help them identify new revenue streams, reduce costs and attract investors, while helping to contribute towards a more sustainable future. Companies that can successfully tackle these challenges will generate new opportunities, while those that fail to act may put their business models at risk.
KPMG China has a dedicated cross-functional team of experts who help corporates and public sector clients plan and execute ESG programmes to create long-term value. Our propositions sit under six main pillars:
- Reporting & Measurement
- Climate Change & Sustainability
- Sustainable Finance
- ESG in Deals and
- Economic & Social Development
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Our Reporting and Measurement capabilities enable our clients to create and adopt improved methods, tools and frameworks to better track, measure and communicate their ESG performance. We support our clients throughout their ESG reporting journey. For asset managers, we provide standardised Securities and Futures Commission (SFC) reporting. We also advise clients on rating improvement and implementation, and support them to measure and report climate risks in accordance with relevant frameworks and regulations (e.g. Task Force on Climate-related Financial Disclosures (TCFD)) as well as scenario analysis.
We also can help clients strengthen their board/senior management oversight and management of ESG topics, and determine KPIs to measure & evaluate ESG performance. This includes the implementation of ESG governance, process and control review as well as providing Internal Audit on ESG. Additionally, we help clients to develop and deploy climate & ESG accounting technology tools that can generate reliable metrics that can be independently verified.
ESG assurance is a key area of investment. Only if the information that businesses report is robust and independently assured can it gain the trust of investors, stakeholders and the wider public. That trust is essential. Without it, there’s no way of being sure of meaningful progress and change as the world battles to help secure a better future. As a result, we are highly conscious of our responsibility in striving to deliver that assurance. The obligation is clear: to deliver ESG assurance that best serves the public interest.
KPMG China’s Assurance team provides pre-assurance and assurance services to our client, in order to add credibility to sustainability disclosures and products (e.g. financial instruments) and fully respond to the stakeholder trust expectations. Our key clients range from listed companies to financial services companies offering green bonds and other sustainable finance products.
Our Climate Change & Sustainability practice helps clients to develop business models, products and services that help them meet their carbon emissions reduction goals, understand their impact on environment, improve their biodiversity performance or develop a circular economy model. We can help our clients reach carbon neutrality through measurement & verification; improved energy efficiency; carbon offsetting; China Certified Emissions Reduction (CCER) & carbon trading; as well as through carbon assets and other ESG investments.
We help clients to better understand the nature and scale of the risks and opportunities related to climate change. We can advise on the development and implementation of a customised decarbonisation strategy - with science-based targets and roadmaps - that allows an organisation to reduce its carbon emissions by transforming their business models, products, services and supply chains.
Our Sustainable Finance practice integrates ESG measurements into responsible investment, financing, insurance and corporate finance strategies and processes. Our services include helping our clients to understand, quantify, manage, and mitigate physical and transitional risks from climate change with models, advanced data analytics and technology-enabled tools. They also entail advising our clients to develop strategy, governance, systems and products for responsible investment, banking and insurance.
Further, we provide advice to clients to develop product strategies to achieve net-zero in financed emissions and supporting them to manage risks on financial products. These risks include conventional financial risks such as credit, market and liquidity risks; as well as specific risks related to transition finance, segment-specific sustainable finance solutions as well as circular business financing.
In 2021, KPMG worked with banking clients to conduct climate risk stress tests based on requirements from local regulators. Due to the distinct nature of climate risk, traditional stress testing approaches adopted in the banking sector were not sufficient to measure the climate-related impact. KPMG successfully developed new stress testing approaches, which included both physical risks and transition risks associated with adopting ESG strategies; as well as climate risks related to clients’ vulnerable exposures. Utilising our network of industry experts, we developed a systematic framework to analyse key risk factors such as carbon abatement potential and costs; shift in demands and supplies and change in climate-related public policies; and transition risk impact on the carbon-intensive sectors. With the revised approach, clients were able to differentiate the impact to various carbon-intensive sectors and prioritise their business strategy accordingly.
ESG factors are now seen as important value drivers for dealmakers, as well as essential to post-deal value creation, corporate brand and reputational expectations. KPMG China can assist clients with their ESG strategy development and deal execution, working either with funds investing in ESG or with companies looking at business transformation or performance improvement through ESG investment. Meanwhile, KPMG China can help funds and multinational corporations develop an ESG management framework and identify ESG Due Diligence key areas to ensure acquisitions are made in line with the ESG strategy at the fund and corporate level, as well as identify ESG-related risks and identify value creation opportunities. We also advise clients to improve ESG performance of assets to enhance long-term financial performance and exit valuation.
KPMG China’s Economic and Social Development practice works shoulder-to-shoulder with governments, public authorities, multilateral institutions, private companies, foundations and other development-minded organisations to measure impact and enable societies to grow in a more equitable way.
We focus on sectors such as housing, education, healthcare, sports & recreation, arts & culture as well as human & social services. Our service offering includes helping our clients to build more resilient and sustainable supply chains via our Procurement Advisory practice. We also help our clients strategise and deliver policies and public infrastructure projects that provide progressive services to communities and drive economic growth. We also assist our clients to deliver community-centric public services enabled by a robust digital transformation strategy.