ANALYSE, REPORT AND DEVELOP YOUR ESG PERFORMANCE
It has become increasingly clear that Environmental, Social and Governance (“ESG”) metrics are no longer ‘a nice to have’ – for many investors and businesses they are now ‘a must have’.
The EU’s transparency framework, the Sustainable Finance Disclosure Regulation (“SFDR”), makes it a requirement for financial markets participants within the EU – includ¬ing asset managers, private equity and venture capital funds, banks and financial advisors – to document and report their sustainable economic activities on an annual basis.
Large and listed businesses operating within the EU now face similar mandatory reporting demands as part of the Corporate Sustainability Reporting Directive (“CSRD”), as do those in India as part of the Business Responsibility and Sustainability Report (“BRSR”) framework introduced by the Securities and Exchange Board of India (“SEBI”), as do issuers operating in certain sectors in Singapore – in the financial, food and forest products, or energy sectors, with more sectors to be added to that list next year.
Other authorities have also acted on or exploring ESG frameworks and standards, notably in the UAE, China, Australia, New Zealand, the UK and the US.
You can find a summary of the latest global developments on ESG frameworks and standards below.
Amicorp ESG Services helps asset managers, fund managers and businesses to analyze, report and develop their ESG performance levels.
|3 PILLARS OF ESG|
Our platform analyzes all the required ESG data points and more – including Scope 1, 2 and 3 emission levels – and then provides an independently validated ESG Report, Certification and Rating using the latest industry benchmarks. The auditable report can then be shared with regulators, stakeholders and shareholders.
The platform, which is powered by one of the leading credit and business information companies, also provides a basic gap analysis to help you identify where key improvements to your ESG commitments can be made.
To add to that, our team offers a consultancy service that works with your team to plan, develop and execute an ESG strategy to suit you:
- Help diagnose your current ESG positioning, and then create an action plan to bridge any gaps and achieve short and long-term goals
- Help draft ESG policies and build engagement and commitment among internal and external stakeholders
- Help identify and manage the right ESG related initiatives to support your ambitions – including potential options available through our Amicorp Community Foundation
ESG – Giving you a competitive edge
Amicorp ESG Services are not just aimed at companies that are obliged to do so because of regulatory requirements. There is plenty of evidence across most regions that having an ESG program in place can help attract investors and customers, improve financial performance through operational cost and energy savings, and attract talent, giving you another competitive edge.
Our multi-national team can support investors and businesses looking to measure their performance and develop an ESG strategy across most jurisdictions, not just the EU.
If you would like to find out more about our ESG services, please contact the team here.
SUMMARY OF THE LATEST GLOBAL DEVELOPMENTS ON ESG FRAMEWORKS AND STANDARDS
The SFDR was introduced in 2021, as a precursor to the EU Taxonomy codified in 2022 and the Corporate Sustainability Reporting Directive (CSRD) in 2023, establishes the relationship between economic activities for investment purposes and ESG-related at entity, service and product level.
The CSRD requires large as well as listed companies to regularly report on how their corporate activities impact people and the environment, which means that companies operating outside the finance industry are also required to comply with ESG reporting standards.
The UK’s Sustainability Disclosure Requirements (SDRs), introduced by the Financial Conduct Authority in 2020, are set to be fully mandatory by 2025 for large firms (asset managers with +£50 billion in AUM) while smaller companies (above £5 billion in AUM) are expected to disclose in 2026.
While ESG reporting on the continent is still in its infancy, it is gaining momentum with specific countries enforcing reporting for listed companies (in Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam).
Yet to formalise reporting, the introduction of comprehensive guidelines by regulatory bodies in China and Hong Kong serve as positive indication that these economies intend to adopt mandatory sustainability reporting.
In India, Business Responsibility and Sustainability Reports (BRSR), which is based on measurable metrics across nine ESG-related principles, is mandatory for the top 1,000 listed companies.
While voluntary ESG reporting grows in popularity in Australia, the federal government expects to implement a phased approach in mandatory disclosures starting in 2024.
New Zealand introduced mandatory climate-related disclosures for large publicly listed companies, insurers, banks, non-bank deposit takers, and investment managers companies in 2023.
While U.S companies aren’t mandated to report on ESG-related activities yet, the Securities and Exchange Commission (SEC) continues to propose rules related to investment practices with the aim of enacting disclosures on environmental impact, and diversity.
The SEC’s regulations are expected to be finalized by the end of 2023, while the next presidential elections are expected to influence the adoption (for or against) regulation.
On the Canadian front, listed companies, government organizations, and crown corporations are expected to report on ESG in 2024.
Mexico has introduced its own sustainable taxonomy even though there are multiple regulations in Mexico safeguard human rights and the environment, as corporate entities face mounting pressure to improve their reputational standings through ESG disclosures.
As of end 2022, three countries in the region have structured their own green taxonomies, with Brazil, Chile, and Colombia leading developments, while the Dominican Republic leads the way in the Caribbean.
Comprehensive ESG reporting is still in its infancy in the region, with some stock exchanges having already begun mandatory reporting on annual statements.
The region is still a way from standardized disclosures, however the expectation among markets is that it will broadly follow and adapt EU frameworks.
With ESG investments on the rise in the region, the UAE leads developments in reporting following the guidance on reporting sustainability information issued by the Abu Dhabi Securities Exchange and Dubai Financial Market.
Egypt has also emerged as a pioneer in this regard with EGX-listed companies and businesses operating in non-bank financial activities (public and private) mandated to adopt international ESG reporting standards.
Much like the LATAM region, Africa is still in its early stages of mandatory reporting as disclosures on ESG remain optional even for listed companies.
South Africa leads the continent in developing a green finance taxonomy as the country’s Reserve Bank drafts a mandatory ESG framework for financial companies it supervises.
For economies on the continent, which are heavily reliant on foreign investments, it remains prudent for businesses to adopt the habit and culture of sustainability disclosures that align with developed markets to boost investor confidence.
If you would like to find out more about our ESG services, please contact the team here: