ESG (environmental, social, governance) and sustainable finance continue to be at the top of UK and EU regulatory agendas. In the UK, a new Green Finance Strategy has provided some clarity over the future direction of travel, and the EU continues to push forward with its Sustainable Finance Action Plan and initiatives under the European Green Deal. All of these impact the financial sector and regulatory expectations of firms.

Greenwashing concerns are paramount and are driving developments around reporting, taxonomies, product labels, ESG data and ratings and corporate due diligence. New reporting standards at global (ISSB) and EU (ESRS) level are nearing completion and additional requirements for transition plans are emerging. Nature and biodiversity are now sharply in focus, with a final disclosure framework expected from the Taskforce for Nature-related Financial Disclosures in September 2023.

Investment managers and financial advisers are increasingly expected to consider sustainability risks in their investment and advice processes, even when they do not offer or specifically advise on green products.

The measurement and management of climate-related risk now form part of business as usual supervision for banks and insurers. Progress has been made, but there is more to do.

The pressure on firms around ESG and sustainability show no sign of easing – on this page you will find insights and thought leadership from KPMG’s EMA FS Regulatory Insight Centre on the steps that regulators and firms are taking to embed the E, S and G in the financial system.

Source: kpmg.com