The knowledge you need to start your ESG journey

  • Has the pace of evolving environmental, social and governance (ESG) regulations left you struggling?
  • Is your ESG strategy already integrated into your business game plan and daily operations?
  • How confident are you of your sustainable investment strategy?

If you’ve lost sight of the impact ESG and sustainable investing will have on future generations, you’ve come to the right place. Our ESG experts assist our clients on meeting regulatory requirements and investor expectations while extracting value from ESG investments and leaving a lasting legacy. 

Stay on top with KPMG insights: Beyond Sustainable Finance

Information evolves quickly when it comes to ESG and Sustainable Finance. What was considered the latest intel last month may be out of date by the next. There are also a large number of regulations and disclosure requirements to keep track of including EU taxonomy, Mifid, SFDR, and more.

The lack of clear information may leave you struggling to stay updated and to understand what’s required. Furthermore, you must also have a clear knowledge of the market’s best practices. This complexity could increase your risk of unintentional greenwashing.

We understand that our clients are not only looking to remain compliant through these regulatory changes, but also need a reliable information hub where they can be assured of the latest information. 

ESG Due Diligence: What do you need to know?

In today’s business world, ESG risks are becoming one of the main topics of discussion also when sealing a deal. As a result, a proper ESG due diligence process is critical to managing risk and creating value.

For Asset Managers

A thorough understanding of ESG can mitigate any reputational risks from greenwashing (amongst other risks). ESG due diligence can help you get an understanding of:

The readiness of fulfilling the sustainability disclosure requirements

Do the operations support the ESG ambitions and investment strategy

How robust the internal control systems and ESG due diligence process (ex-ante, ex-post) are

The ESG data model and sustainability reporting capabilities

The sustainability performance of the portfolio and the positive impacts during past years

Once the risks are identified, it is equally important to confirm the gaps against the buyer’s ESG framework and what is required for a smooth integration. In addition, the consideration of ESG can create group synergies and economies of scale, bringing new advantages and opportunities to the business (attracting co-investment, reducing credit or insurance cost,…)

For Investors

It is paramount to analyze the portfolio of investments even deeper, as well as the supply chain due diligence process. Therefore, a readiness assessment and identifying any gaps which could influence the deal value is highly important.

The available sustainable data available helps investors have a more holistic view to what they are investing in and complements the financial and other analysis. This includes a deep dive into:

Evaluating the eligibility and the substantial contribution of the activity to one of the EU Taxonomy objectives

Assessing the compliance with the Technical Screening Criteria

Performing the Do Not Significantly Harm Check of the activity against other EU Taxonomy objectives

Ensuring that minimum social and governance safeguards are met

The latest on ESG funds: making finance sustainable

ESG Funds are funds that have either environmental or social characteristics, or have defined environmental or social objectives. The positive environmental and social impacts of ESG funds on society are what institutional and retail investors seek. Of course, it’s important that these global benefits go hand in hand with financial returns. With such funds, a strong investment strategy is essential to be able to identify investments that best support the investors’ ESG strategy and ambition.

A stronger investment strategy usually has clear exclusion and selection processes that incorporate external scores and chooses the best performers, and additionally may leverage the Principle Adverse Impact (PAI) indicators.

Based on the ESMA’s annual statistical report on the cost and performance of EU retail investment products it is however clear that “UCITS with an environmental, social and governance (ESG) strategy outperformed their non-ESG peers, and were also overall cheaper.”


ESG in Luxembourg and beyond: defining the world of tomorrow

As markets worldwide continue to cement sustainable action plans, we’ve been consumed by the compliance and regulation side of sustainability.

Luxembourg has recently become European ESG fund asset leader with 32% market share and 44% market share in total European ESG net flows (source Morningstar, ZEB and ALFI 2021).  One of the main regulatory drivers for this has been the EU Sustainable Finance Disclosure Regulation, 2019/2088 (SFDR), which was adopted at the end of 2019 and amended by the EU Taxonomy Regulation, 2020/852 (Taxonomy Regulation) in 2020.

The financial market participants are currently preparing for the more detailed and challenging Regulatory Technical Standards (RTS) that will become applicable from 1 January 2023. That will bring the following additional efforts.

  • Preparing the principle adverse impact reporting at entity level, including a minimum of 20 indicators (18 mandatory + 2 optional)
  • Ensuring that the precontractual documentation is updated and is ESG compliant (following SFDR and EU Taxonomy disclosure requirements)
  • Making sure that the website disclosures follow the reporting guidelines of the RTS Chapter IV both on entity and product level
  • Checking that the entity has the right data vendor and data model to be able to prepare the periodical report
  • Having a well-defined ESG journey and a robust investment strategy, on top of a strong corporate governance
  • Putting a reporting solution in place for the EET (European ESG Template) report production
  • Making the entity able to reply to investors’ demands and preferences following the requirements of MiFID II & IDD delegated acts

Go from insight to action with our experts

Are you looking for pragmatic answers to questions like…?

  • How exposed am I to non-ESG compliance or risk of greenwashing?”
  • What is the impact on my business and operational model?”
  • “How to adapt my due diligence process and how to monitor the ESG performance?”
  • “What are investors expecting from ESG and how can I mitigate the risk of greenwashing?”
  • “How can I define new business opportunities from ESG?”

From evolving and complex regulations to issues surrounding greenwashing, it is not easy to find clear answers and action steps. Fortunately, the experts at KPMG can set you on the right course to make ESG a reality for you. 

Explore our ESG services below

  • Position

  • Develop & Transform

  • Monitor

  • Report

  • Assurance

  • ESG Regulatory Readiness assessment
  • Sustainability Benchmarking assessment
  • ESG Due Diligence
  • Sustainability strategy definition
  • EU Taxonomy alignement assessment & implementation
  • Impact matrix
  • Adhesion to internal standards
  • Training and Education
  • ESG data model check & upgrade
  • New ESG products (SFDR) & services launch
  • Change management
  • CO2 reduction pathway
  • Update policies & procedures
  • Upgrade internal audit function
  • Review your IT systems to integrate ESG data
  • ESG risk & compliance framework
  • Define your ESG & Carbon strategy
  • Supply Chain Due Diligence
  • Carbon Footprint assessments & efficiency solutions
  • Governance model robustness assessment
  • Compliance check
  • Performance and impact (PAI) assessment
  • Carbon border tax impact assessments
  • ESG Corporate accounting
  • SFDR / EET / PAI reporting
  • External assurance & certification
  • CSRD / EU Taxonomy
  • Impact report
  • Sustainability risk report
  • Carbon footprint
  • Reporting as per international standards
  • Corporate report
  • Green Bond Framework, use of proceeds & allocation report
  • ESG investing process
  • Sustainability & CSRD report
  • EU Taxonomy alignement (Tax d'abonnement reduction)
  • Climate action & CO2 mitigation pathways
  • SFDR periodic report
  • Alignment with reporting frameworks and standards

Learn more about our services here:

Discover which solution is right for you ›