Competence Sustainable Finance
Social and regulatory requirements are putting increasing pressure on the financial sector to consider sustainability in its decisions and processes. Since the EU Action Plan was published in 2018, sustainability is now also becoming an increasingly important focus in the finance sector. Complemented by the legal changes, the term "sustainable finance" is understood in the broadest sense to include aspects of environmental, climate, social and corporate governance. In this context, the abbreviation ESG "environmental, social and governance" criteria, is often used.
Finbridge has already begun to build up expertise in this field as well as increasingly addressing other issues. From analysing the impact on risk management, reporting and MiFID2 to preparing the database in preparation for these areas, Finbridge takes a practical approach that focuses not only on compliance with legislation but also on cost efficiency in implementation.
Finbridge has a high level of competence alongside banking processes due to its technical orientation and strong implementation expertise, and thus successfully bridges the gap between specialist areas and IT.
Our focus
Our expertise lies in the following areas:
Data management: ESG requirements are accompanied by a high demand for sustainability data. Financial institutions face the challenge of efficiently collecting, structuring and contextualising ESG data in the credit origination and securities settlement processes and making it available to various buyers. This can be achieved, for example, through a central platform in which the data is managed, aggregated and made available via service.
EU taxonomy: The European Union has created a uniform classification system for sustainable activities. The regulation, which came into force in 2020, defines what is meant by "sustainability". In addition to the classification system, the Taxonomy Regulation includes disclosure obligations for financial market participants and companies that are required to submit a non-financial statement under the Non-Financial Reporting Directive (NFRD). In order to comply with the new auditing and reporting obligations, the banking sector in particular and its IT landscape are facing especially great challenges. These range from the availability of the required ESG data to the systematic collection of data and its processing to legally compliant disclosure.
Risk management: The integration of ESG criteria into risk assessment requires institutions to incorporate new methods and models for the appropriate outlining of risks taken. This affects all common banking risks, but to varying degrees. Adapted processes for the inclusion of relevant data streams are just as necessary as the methodologically consistent integration of new risk factors into the models used. Especially when using external data sources, extensive criteria for appropriateness and representativeness must be observed.
MiFID II: The guidelines for transparency and investor protection, which are generally in the process of being amended, are also developing in the direction of sustainable finance. For example, it has already been decided to include sustainability preferences of investors in the advisory process. Banks are also obliged to take the criteria of sustainability into account in addition to the target market when developing products. We expect further adjustments to the guidelines which will be going in the same direction.
Reporting and disclosure: The activity of implementation in banking supervision impose a large number of reporting and publication obligations on institutions. For instance, through the NFRD (Non-Financial Reporting Directive), large companies, banks and insurance companies have been obliged to report non-financial information on an annual basis since 2017. In the upcoming years, the NFRD will be progressively replaced by the CSRD (Corporate Sustainabiliy Reporting Directive). With the CSRD, significantly more companies will be under reporting obligation and the requirements for sustainability reports will increase. Meeting these constantly changing requirements requires flexible analysis and implementation strategies. In particular for the disclosure of ESG information, an extensive overlap of commercial and regulatory requirements must be taken into account. In addition, there is an increased requirement of transparency from customers, which, if addressed in a targeted manner, can also positively influence the institutions income.
Sustainable Bond Reporting: As the market for sustainable bonds is growing steadily and strongly, so is the obligation for reporting and the need of information on the side of the investors. For example, with the issuance of green bonds in accordance with the EU Green Bond Standard, reporting on the use of funds (e.g. Green Bond Allocation Reporting) and on the environmental impact (Impact Reporting) is mandatory in order to strengthen investor confidence in green bonds.
CO2 footprint: In response to the Paris Climate Agreement, the lower house of the German Parliament passed the current Federal Climate Change Act in June 2021. The primary objective of the Federal Climate Change Act is to reduce CO2 emissions in Germany. At present, the Federal Climate Change Act does not result in any mandatory measures for companies, as no legal resolutions have yet been passed in this regard. However, it can be assumed that companies will be obliged to publish information on their CO2 balance in the future. But even without a legal obligation, companies can already prepare themselves by generating and analysing data on their CO2 consumption. This helps them to know their own emission levels and to start implementing measures as soon as they become necessary. For companies, there are basically two different ways of looking at a greenhouse gas balance: The Corporate Carbon Footprint (CCF) as a company-related approach and the Product Carbon Footprint (PCF) as a product-related approach. Individually adapted tools can be used to calculate the CO2 footprint, allowing the company's own CO2 footprint to be determined as precisely as possible with little manual effort.
Further topics
It goes without saying that we constantly stay up to date and keep an eye on the legal requirements. Through our work with and on current publications as well as newly developing issues, we are always up to date, even on topics outside of our core competences.
In addition to our website, you can find further articles and content on current topics directly on our LinkedIn Profile.
Need to take action?
Are you looking for a strong partner for your ESG project? Regardless of whether the strategic planning is still pending or whether it is already a matter of practical implementation, we will be happy to support you in your project.
No matter the topic, we will be happy to convince you of our competence and strength of implementation throughout the entire front-to-back process within the field of sustainable finance.
Our strengths
With strong solution and implementation skills as well as project and management experience, Finbridge reduces project risks and ensures a high level of target achievement within the assigned project tasks.
The core competencies of the consultants deployed are key success factors and the basis for high quality standards.
By engaging Finbridge, your institution gains a reliable partner who enables the achievement of the essential project goals.
Contact us
Are you planning a project in the field of Sustainable Finance? We would be happy to work with you to develop concrete action requirements and to support you in your project.
In doing so, we draw on the broad front-end expertise of our consultants alongside banking processes and support you with practical case-studies, customer-specific solution sketches and project planning for implementation strategies.
Please get in touch with us. We look forward to receiving your enquiry.