KPMG Releases 2024 ESG Due Diligence Study

Written By Ava Morisi

Overview:

A recent KPMG study reveals that 61% of investors in the European Market for Alternative Investment Funds (EMA) prioritize ESG due diligence, driven by the potential for monetary gains.

The Study’s Findings

KPMG's study highlights a significant shift in investor behavior, with a majority now considering ESG factors as crucial in their decision-making process. This trend underscores the growing importance of sustainability in the investment landscape. Key findings include:

  • Increased Focus on ESG: 61% of investors prioritize ESG due diligence for better financial outcomes.

  • Higher Returns and Lower Risks: ESG-focused investments are linked to improved financial performance, suggesting that sustainability and profitability go hand-in-hand.

  • Long-term Value Creation: Investors believe that integrating ESG criteria contributes to long-term value creation and risk mitigation.

Economic Incentives

Investors are increasingly recognizing that integrating ESG criteria can lead to better financial performance. The study suggests that ESG-focused investments often yield higher returns and lower risks, making them an attractive option for those looking to maximize their profits.

Implications for Companies

The findings indicate that companies with strong ESG practices are likely to attract more investment. This trend encourages businesses to adopt sustainable practices and improve their ESG reporting to meet investor expectations. Specific implications include:

  • Enhanced Investor Appeal: Companies with robust ESG practices stand out to investors seeking sustainable and profitable investments.

  • Improved Transparency and Reporting: Businesses need to focus on transparent and detailed ESG reporting to meet investor demands.

  • Competitive Advantage: Organizations with strong ESG credentials are likely to gain a competitive edge in the market.

Challenges and Opportunities

While the shift towards ESG-focused investing presents opportunities, it also poses challenges. Companies must navigate the complexities of ESG reporting and ensure transparency to gain investor trust. However, those that succeed can benefit from increased investor confidence and financial support.

The KPMG study underscores the growing importance of ESG due diligence among investors in the EMA. As the trend continues, companies that prioritize sustainability are likely to see greater financial rewards and investor interest.


Read the full report here: https://assets.kpmg.com/content/dam/kpmg/be/pdf/2024/ESG-due-diligence-study-2024.pdf

Ava Morisi
Previous

Climate Bonds Initiative and EMF-ECBC Partner to Align EU Covered Bonds with Sustainable Finance Goals
Next

Britain to Invest up to $28.5 billion for Carbon Capture Projects