Integrating ESG as part of the investment process presents unique opportunities for differentiation and value creation. Asset managers must navigate significant complexity as investor expectations are increasing while leading practices are emerging, and ESG and climate disclosures and regulations evolve.
Effective approaches go beyond risk management and compliance. Impactful strategies align to the investment style and culture of the asset manager, presenting a unifying position for the organization that are tailored for investment in different asset class. Establishing the right policies, processes and controls, data and communication strategy are core building blocks of a consistent and thoughtful program.
Key questions for asset managers to consider when determining how to evolve and advance their approach include:
- Is there a common understanding of the role of ESG, related opportunities and risks across the firm?
- How well-equipped are you to respond to investor questions about ESG?
- What is your ESG data management strategy? How reliable and decision-useful is ESG information captured?
- Have you established a consistent approach to setting targets, measurement, and reporting ESG performance?
- What is your approach to reporting and regulatory readiness as new requirements are established?
- How well integrated is consideration of climate risk into your portfolio analysis? Do you have an established decarbonization commitment and strategy?
KPMG firms' ESG services
KPMG firms offers ESG services that match the diverse needs of asset managers with various degrees of ESG maturity. This support typically covers:
- ESG strategy development and implementation: Tailored strategies based on deep market insights to establish an approach aligned to your ambition.
- Climate and decarbonization strategies: Assisting firms to identify pathways to succeed in the low carbon economy at the corporate, fund, or investment level.
- ESG diligence: Holistic evaluation of the ESG and climate potential of targets.
- Portfolio value creation: Leveraging KPMG’s proprietary data and analytics tools to identify opportunities to leverage ESG to drive unique value creation strategies.
- Monitoring and reporting: Establish data management and reporting strategies, processes and controls that streamline information requirements to satisfy performance management, investor, and regulatory reporting requirements.
- Review process: Assisting with governance and risk assessment processes, stress test investment portfolios for climate, regulatory, or assurance readiness.
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