Fenergo, the provider of digital solutions for Know Your Customer (KYC) and Client Lifecycle Management (CLM), has launched a solution to “enable financial institutions to reduce regulatory and reputational risk and streamline operations for ESG compliance.”
This allows firms to automatically “calculate climate, reputational and complementary ESG risks and efficiently fulfil regulatory obligations including Sustainable Finance Disclosure Regulation (SFDR) and the Corporate Sustainability Reporting Directive (CSRD).”
ESG software as a service (SaaS) is “available as a standalone or as part of Fenergo’s end-to-end CLM platform.”
It allows financial institutions “to streamline data capture for their clients and visualise supply chain hierarchies before applying accurate ESG ratings.”
Fenergo’s unique flexibility and configurability also “enable financial institutions to absorb ESG into existing CLM frameworks and leverage financial crime resources, reducing organisational silos and gaining operational efficiencies.’
Firms can build client ESG profiles “by leveraging information from external ESG data providers before validating it against existing know your customer (KYC) documentation and controversy screening.”
With the ability to classify and prove the ESG performance of the client book, financial institutions can “unlock access to green funding, reduce capital requirements and benefit from an enhanced reputation.”
Stella Clarke, Chief Strategy Officer, Fenergo, said:
“The synergies that exist between KYC and ESG operating models and the overlap on data collection make CLM a natural home for ESG. Financial institutions can leverage existing processes, people and data for ESG, creating a single client view and driving real, tangible efficiencies. This also provides financial institutions with the advantage of being able to quickly operationalise ESG compliance processes and meet regulatory obligations, thus protecting reputation and attracting ESG-conscious clients and talent.”
The solution helps financial institutions “to streamline compliance processes for regulatory requirements such as the SFDR which mandates firms to make a series of disclosures around the sustainability of the assets they are managing, and the CSRD, which aims to bring sustainability reporting on a par with financial reporting.”
Reporting standards and disclosures such as the EU Taxonomy and the Task Force on Climate Related Financial Disclosures (TCFD), which “encourage firms to track the reporting impact an organisation has on global climate change, are also covered by the solution.”
In the US, this solution also “comes at a pivotal time for financial institutions, as this year the Securities & Exchange Commission has taken its first steps toward regulating ESG.”
The proposed amendments to rules and reporting forms “to promote consistent, comparable, and reliable information for investors concerning funds’ and advisers’ incorporation of environmental, social, and governance (ESG) factors.”
As the US continues to develop its ESG regulatory framework, disclosure and reporting requirements, in-scope financial institutions operating within the US will need “to capture the right data so that they can continue to remain compliant as new regulations are passed and implemented.”
Edel Brophy, Director of ESG and Regulatory Compliance, Fenergo, said:
“We are now seeing the US begin to look towards developing an ESG regulatory framework, and the SEC simultaneously ramp up their enforcement actions over claims of greenwashing and ESG misconduct, bringing greater transparency and accountability to sustainable investing The reality is for financial institutions headquartered or operating in the US, to avoid regulatory scrutiny, they will need an ESG solution that can leverage already existing compliance processes, streamline them, and help them quickly pivot to face new, ESG regulatory changes. Our solution enables them to do just this.”