Environmental matters have become critical especially in the wake of sustainability. However, sometimes it is not easy to assess the impact of all companies on the environment. FOr instance, how can one assess the EDD for the banking sector?
I assume environmental DD would only be crucial in industries that have to do with natural resources and would eventually directly or indirectly impact the livings. banking , health care, and technology sectors would need regulatory and policy DD more than environmental.
What we see with our clients is that Environmental DD (or even ESG DD) moves from “identifying risks” only, to really assessing value creation opportunities going forward. Following the Green Deal in EU, this will only gain attention and importance in my opinion.
In Canada, the Office of the Superintendent of Financial Institutions (OSFI), which governs the banking and financial sector, has released their guidelines in March 2023 for Climate Risk Management. They present an angle of focusing on the risk management as we transition towards a low-greenhouse gas economy. This will impact how companies in this sector manage their investment portfolio and report to their shareholders. From what I understand, institutions are still asking more of OSFI for practical application.