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Don’t drown in the rising tide of ESG regulation

9 December 2021

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Intertrust Group is using data to build ESG metrics for our own operations and those of our clients, while our new head office in Amsterdam reflects our commitment to sustainability. Antonello Argenziano, Product Director, and Keith Pulsifer, Chief of Staff, explain

Assets in environmental, social and governance (ESG) investment products are forecast to reach $13tn (€10.9tn) by 2025. Nearly three quarters of these will be in Europe, the Middle East and Africa, according to asset management consultancy Casey Quirk.

As private market fund clients seek to offer viable ESG products to investors, regulatory pressure is rising, particularly in Europe, where the European Commission’s Action Plan for Financing Sustainable Growth aims to support the shift to a green economy and the Paris Agreement objectives.

Clients must keep these regulatory and reporting requirements for ESG products in mind to protect their reputations from greenwashing. In particular, managers needing to prepare reporting and pre-contractual documents face two looming deadlines:

  • January 2022 for the EU Taxonomy (a classification of environmentally sustainable economic activities)
  • July 2022 for the Sustainable Finance Disclosure Regulation (SFDR), with some elements coming in January 2023

From January 2022, SFDR will also require Netherlands financial companies and their overseas operations to inform investors on how they manage climate-related and environmental risks.

Yet reliable ESG data is much less readily available in private capital. Managers need to support portfolio companies as they develop a consistent, ambitious and pragmatic approach to ESG reporting.

ESG data by design

Many of our clients know what ESG milestones they want to report but must still weigh their chosen data points against those of other private funds. They also need to keep abreast of both ever-changing regulations and the ESG expectations of target institutional investors.

Without technology to plot the data, ESG reporting can be particularly painful for portfolio companies, especially if they handle it manually. Many in-house teams at fund and portfolio level are ill-equipped to address the proliferation of reporting standards.

As well as the SFDR and the EU Taxonomy, they must grapple with the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). Without technological solutions, General Partners (GPs) risk becoming lost in data.

How to develop valuable ESG metrics

Clients need support to manage their sustainability risk profile and meet ESG objectives through the full investment lifecycle.

Third-party support can play a vital role in assessing the ESG performance of their funds and assets, supporting effective investor disclosure and compliance with current and future regulations.

This is why Intertrust Group has developed its ESG data gathering and analytics solution to help private equity and real estate clients collect and analyse ESG data while also managing ESG risk in their portfolios.

We cover over 30 frameworks, including GRI, SASB and TCFD, with the flexibility to provide configurable ad hoc reports and monitor market regulatory standards as they evolve.

Intertrust Group moves to Amsterdam Edge West, launches emissions survey

Intertrust Group is also showing its commitment to ESG principles at its sustainable new office space at Amsterdam Edge West.

With the highest BREEAM rating awarded to an office building, The Edge boasts more than 6,000 sq m of solar panels, with thermal energy storage below ground, making it an energy positive development.

Not only are we acquiring sustainability certifications through our office space, but also through our growing team of ESG certified talent. By year’s end, we plan to have 15 ESG certified professionals working across our services and at our offices worldwide.

Our colleagues across the globe are committed to our sustainability journey. We have engaged sustainability experts South Pole (who work with ESG forward-thinking organisations such as McKinsey and the World Bank) for our own full greenhouse gas emissions audit.

More than 35 of our global offices are actively working through the ESG data collection process. And we have also launched a global colleague survey to measure indirect emissions from commuting.

All of our staff will eventually fulfil mandatory ESG in-house training through our online portal. We believe that after living and breathing ESG, we can put our experiences into practice, guiding clients with their own ESG metrics and industry-specific and regulatory standards.

Our goal is to have a completed greenhouse gas footprint inventory and a set of science-based targets by early 2022. It’s an ambitious but achievable timeline and one we are determined to meet.

Why Intertrust Group?

  • We support all three factors of ESG with specialised resources and expertise, allowing you to focus on your core business.
  • We meet international standards and local requirements across the whole value chain, with a one-stop-shop approach.
  • Using our expertise across 30 countries, our solutions evolve with ever-changing market and regulatory requirements, so you can rely on up-to-date ESG data.
  • We help drive efficiency in the implementation of your ESG strategy with a global delivery model.
  • Expert guidance helps you take control of ESG data with 24/7 access to performance data and key performance indicators for individual companies, dashboards and reports.
  • Online dashboards and reports allow clients to compare the performance of portfolio companies and funds, benchmarking their individual performance against their peers, based on multiple filters, for example by country or sector.
  • Our solutions allow your portfolio companies to calculate greenhouse gas emissions based on up-to-date national and local coefficients.