Environmental, social and governance (ESG) associated opportunities and risks are becoming more and more relevant for financial institutions. Not only do ESG considerations make sense for the environment, sustainable operations are linked with better economic performance. Banks are therefore concerned not only with their own ESG footprint, but also the ESG risks and opportunities they are subject to as a lender. This is coupled with a constant flow of new regulations which is bringing extensive compliance and horizon scanning challenges for banks.

As banks move towards integrating ESG across their business, some factors to consider include:


  • How does the Bank compare to peers?
  • How is the Bank going to meet its public net zero commitments?
  • Are the products offered ready from an ESG perspective?
  • Is the ESG incorporated in the target operating model?
  • How is a Bank engaging with its clients and their transition strategies?

Operational effectiveness

  • Is the Bank aware of ESG matters across its organization, including processes, systems and controls?
  • Does the functional decision-making take ESG matters into account?
  • Is ESG considered while developing products and services?
  • Are ESG risks and opportunities integrated in procedures and policies?
  • Is the Bank taking advantage of the opportunities that IDE policies can bring?

Regulatory compliance and reporting

  • Is the company ready to cope with existing and upcoming regulatory requirements?
  • What are the gaps that can already be identified?
  • Is the company measuring, reporting and disclosing non-financial ESG information that is critical to understanding both strategic intent, risks and opportunities?
  • Who in the Bank is responsible for ESG at functional and
    Board levels?

KPMG professionals can help

KPMG professionals can support banks facing those ESG challenges. From assessment through to assurance, they are skilled at implementing complex, multidisciplinary programs of work.

KPMG firms can help banks with:

  • ESG maturity assessments and benchmarking/strategy
  • ESG governance and target operating model transition frameworks
  • Decarbonization strategies, climate risk stress testing and including scope 3 emission capture and reporting
  • Tooling and customization of ESG data collection and reporting
  • Risk management; integration of ESG risks, i.e. full consideration of the ESG risk drivers and impact relationships with known risk types (taxonomy/risk inventory/risk strategy), integration into the existing risk and model landscape, selection of risk assessment tools, involvement in reporting and forecasting processes— consideration of ESG factors in business and capital planning (via scenario or sensitivity analysis).
  • ESG assurance services