(Credit: Pixabay)RepRisk, an ESG data science firm which combines machine learning and human intelligence to identify ESG risks, and K2 Integrity, a compliance and risk advisory firm, announced they have entered into a partnership in which RepRisk will provide K2 Integrity with access to its independent ESG Risk Data; K2 Integrity will incorporate the data into the process and analysis used in its new ESG Fund Certification, which analyzes whether managers and funds are compliant with ESG regulations.
A lack of consistency in ESG risk identification and reporting has recently been cause for criticism from investors, regulators, and fund managers. With new ESG regulations looming globally, there is a challenge to understand which investments are truly compliant.
“When we look at our data, one of every five climate-related ESG incidents over the past two years was also linked to misleading communication (greenwashing). This presents a challenge for investors when it comes to separating empty promises from meaningful action, and a challenge for funds in proving their credentials,” says Alexandra Mihailescu Cichon, EVP at RepRisk.
K2 Integrity’s new solution aims to support investment firms and their managers as they encounter increasing ESG regulations, including those from the Securities and Exchange Commission in the US, and the recent Sustainable Finance Disclosure Regulation (SFDR) in Europe. The solution hopes to provide managers with independent analyses of their products to certify they are compliant with local ESG regulations and deliver on their ESG targets as advertised, to help address the industry-wide issue of greenwashing.
This solution works with K2 Integrity's recently launched independent certification program for ESG strategies for funds and fund managers. The offering will continue to help assist clients in addressing risk, meet regulations and compliance requirements, and assess, design, and implement certifications and training for the marketplace.
This ESG certification is based on a fund’s voluntary self-disclosure and independent review by K2 Integrity experts, who analyze, assess and validate the fund’s own commitment to investors. Rather than rely on self-reporting by a manager, independent certification provides a review of approach and processes, as well as demonstrates alignment with the industry’s best practices.
