ESG in Regulatory and Compliance - New challenges for Financial Services

ESG - Environmental, Social, Governance - stands for major challenges but also opportunities that banks and insurance companies have to deal with in order to become fit for the future. It includes aspects such as climate change and environmental protection, respect for human rights, diversity of employees and sustainable corporate governance. In the meantime, numerous regulations have been developed for all aspects and it is a challenge not to lose the overview.

The three letters E, S and G also stand for the new awareness of our time and a fundamental transformation of the business world. ESG contributes to rethinking and a new understanding of values. ESG has evolved from a risk and compliance issue to a strategic factor that - if properly considered and implemented - offers an opportunity for more growth, profitability and higher company value. The handling of sustainability must be disclosed comprehensively and is an important reputational factor for companies.

Our ESG solution in the area of Regulatory & Compliance for the financial sector (in particular banks, insurance companies, asset managers and payment service providers) implements ESG requirements in corporate governance and reporting with the help of the following services:

1. ESG Radar

The frequency with which new requirements on ESG risks are published highlights the strong focus of regulators and policymakers on the financial sector from different perspectives, resulting in a sheer volume of regulations and guidance. To ensure that you do not lose track and are always up to date, our ESG Radar provides an updated overview of the latest changes.

• Overview of all ESG-relevant regulatory changes
• Sorting of daily updated information according to ESG relevance
• Possibility to additionally sort by affected sectors and other criteria, e.g. relevant standard setters
• Determination of relevance and significance of individual innovations in the ESG environment for institutions
• Ensuring complete addressing of all relevant ESG regulations in the company
• Creation of the basis for efficient ESG implementation using synergies

2. Implementation of the Supply Chain Act

On 1 January 2023, the Supply Chain Due Diligence Act (LkSG) came into force. It regulates corporate due diligence obligations in supply chains and for the first time legally stipulates the responsibility of companies, banks and insurance companies for the observance of human rights within their business sector and their supply chains.

Corporate due diligence obligations include:

Establishing a risk management system and conducting a risk analysis; adopting a policy statement of corporate human rights strategy; embedding preventive measures; taking immediate remedial action in case of identified rights violations; establishing a complaints procedure; documentation and reporting obligations for the fulfilment of due diligence obligations.

We bring specialist know-how and implementation experience from various projects:

• Procedure model for the efficient and fast introduction of the requirements of the LkSG in regulated companies as well as GAP analysis tool.
• Industry knowledge and market view through market survey/study on the implementation status of the law in selected financial services companies
• Early definition of a target organisation for the implementation of the due diligence requirements with the involvement of numerous divisions
• Conceptual solution of new procedures, e.g. risk analysis or reporting
   

3. Pillar III  - ESG Disclosure

The CRR's regulatory disclosure requirements on environmental, social and governance risks oblige large capital market-oriented institutions to disclose extensive quantitative information on transition and mitigation measures as well as physical risks supplemented by qualitative information on ESG risks in business strategy, risk management and corporate governance since the end of 2022. With CRR III, an extension to all banks is expected from 2025.

Our range of services on this topic:

• Process model for the efficient and rapid introduction of ESG requirements in credit institutions as well as GAP analysis between ESG programme and ESG disclosure requirements, especially in the areas of data supply, processes and methods.
• Readiness assessment for the new requirements of CRR III
• Organisational localisation of the future disclosure requirements
• Identification of the interfaces between the ESG requirements of Pillar III, CSRD, EU taxonomy, LkSG and the planned EU Capital Requirements Directive (CSDD)

4. Trainings and workshops

ESG regulation is characterised by a multitude of very complex requirements, which are also subject to a dynamic process of further development. Both affected technical and IT areas as well as managers must keep pace with these developments. That is why we offer:

• Focused workshops on the requirements and current topics
• Training for your committees, stakeholders and employees
• Continuous further development and up-to-the-minute information for you