Financial institutions face ‘significant’ regulatory pressure with ESG & Sustainable Finance top priority

KPMG’s first UK Regulatory Barometer ranks ESG & Sustainable Finance as the top regulatory theme having most impact on the financial services sector

KPMG’s first UK Regulatory Barometer ranks ESG & Sustainable Finance as the top regulatory

  • KPMG’s first UK Regulatory Barometer ranks ESG & Sustainable Finance as the top regulatory theme having most impact on the financial services sector
  • Financial Resilience and Digital Finance also considered key factors adding to regulatory requirements for financial services institutions
  • The average Impact Score of 6.9 (of 10) indicates a ‘significant’ level of regulatory pressure for financial services firms

ESG & Sustainable Finance dominates the regulatory agenda for financial services firms, according to KPMG’s new Regulatory Barometer.

The firm’s new publication provides a source of consolidated regulatory intelligence, combining data-driven analysis, supported by the firm’s Regulatory Horizon technology which scans the regulatory landscape over a six-month period, and KPMG’s expertise. The report helps financial services institutions understand the scale and likely impact of regulatory change across nine key themes*. Financial and operational resilience and expanding regulatory activity around digital finance are also driving significant levels of pressure.

The average Impact Score for this first issue of the Regulatory Barometer is of 6.9 out of 10. The higher the score the more oversight and resources firms may need to devote to regulatory change, with KPMG’s FS Regulatory experts regarding a score over 5 as a significant level of regulatory pressure.

Rob Smith, Partner and UK head of Financial Services Regulatory and Risk Advisory at KPMG in the UK, said: “Financial services institutions constantly have to deal with new and expanding regulatory requirements. A whole range of factors are influencing regulatory agendas, from geopolitical and sustainability concerns, to worsening economic conditions and the cost-of-living crisis, changing consumer behaviour, and new technologies.

“Our Regulatory Barometer is an important tool that will help organisations with horizon scanning, planning and prioritising compliance at a time of incredible regulatory change. The data shows that the regulatory pressure on financial services firms is significant. That sentiment is reflected in conversations we have across the industry. It is clear that regulatory initiatives will continue to demand resource and attention from firms, whether that’s in terms of time, people, or financial commitment.”

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ESG & Sustainable Finance tops regulatory agenda

ESG & Sustainable Finance (8.9) topped the scores of the nine themes measured by the Regulatory Barometer. This was attributed to the sheer volume of new and developing initiatives, and the challenges of implementing detailed requirements rapidly to support environmental policy targets.

Smith added: “Sustainability has rightly been at the top of the regulatory agenda for some time as wider ESG concerns are the issues most discussed by regulators, industry and investors around the world, spurred on by the common understanding of finance’s role in reaching net zero. That trend is clear from our study as sustainability finance scored well above any of the other regulatory themes, even well-established areas such as financial resilience and the fast emerging world of digital finance.

“On the ground, we are seeing more commitments to reaching net zero driving change in financial services as stakeholders and investors demand greater transparency. Focus is also increasing in areas such as nature and biodiversity, the circular economy and broader social impacts and the ‘just transition’. The scope of regulatory rules, frameworks, standards, taxonomies and other guidance is wide ranging and increasing, covering initiatives from corporate reporting to prudential disclosures and transition plans, risk frameworks and stress testing to ratings and data.”

KPMG Regulatory Barometer impact scores



Delivering Sustainable Finance / ESG


Maintaining financial resilience


Regulating digital finance


Strengthening operational resilience


Developing financial infrastructure


Enhancing customer protection


Reviewing capital markets


Redrawing the EU-UK border


Reinforcing governance expectations





The next edition will be published in Q1 2023 and every six months thereafter.


*Notes to editor

KPMG’s analysis results in a single metric - a regulatory Impact Score - aggregated from individual theme scores. Each score is based on data analysis of the volume of regulatory updates, the complexity of the underlying rules and the challenges of implementation, and supported by the views of the firm’s regulatory experts. The data is drawn from KPMG’s Regulatory Horizon technology and scans the regulatory landscape over the past six months. In addition, maturity indicators demonstrate progress made in each area of regulation, from ‘emergent’ through ‘developing’ to ‘implementing’ and ‘mature/BAU’, alongside views on where key EU:UK regulation is likely to align or diverge.

The full KPMG Regulatory Barometer can be found at:


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For further information please contact:

KPMG Media Relations

Tel:  +44 (0) 207 694 8773

Alastair Henry, Citypress / 0161 235 0320


About KPMG:

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.