Just 29% of firms are ready for ESG data to be assured despite regulatory deadlines

Almost one-third (29%) of companies feel ready to have their ESG data independently assured, according to research from KPMG. This is only up a fraction from nine months ago, despite fast-approaching and evolving regulatory deadlines to report on ESG. In the EU, for example, reports will start appearing from the largest companies in early 2025, and this reporting wave will require independent assurance.

Assessing companies’ progress in preparing for the demands of ESG reporting and assurance, the research classifies organisations into Leaders (29%), Advancers (46%) and Beginners (26%) and calculates a maturity score.

Despite the limited uplift in readiness, the research does show that some progress is being made. Not only has the percentage of companies in the Leader category grown, but the average score of those Leaders has also increased, with a 6% rise. The average score for the middle cohort of companies – Advancers – has also risen by 3%.

However, there is a widening gap between these groups and Beginners - where the average score has fallen by 6%. The report warns that these companies are reaching the point where concerted action is needed.

The higher a company’s revenue, the more likely it is to be advanced in its ESG assurance preparations. At companies with revenues of over US$100bn, the score peaks at 69.5 (on a 0-100 scale), while for those with revenues under US$5bn it is 39.3.

Geographically, France tops the scores (52.4) as it did in 2023, while Germany has moved up strongly to second place (52.3) and Japan is third (50.2).

The benefits of becoming ready for ESG assurance go far beyond mere compliance. Key expected benefits include greater market share (56%), decreased costs (48%), and new business models (46%).

For Leaders, the benefits increase the further they get in the process, with scores this year rising significantly compared to last year across benefits such as decreased costs (+18 ppts), better product/service quality (+12), reduced business risks (+11), improved staff engagement (+8), better credit rating (+8), and expanded market share (+6).

With supplier information and data key to many aspects of ESG, such as calculating Scope 3 carbon emissions, companies are increasing their demands of suppliers. Among Leaders, over four in ten (42%) now place robust, product-specific requirements on their suppliers, up from 28% in 2023. More Leaders request suppliers to provide ESG data into their own systems (64%) and integrate ESG screening into supplier onboarding (48%). There has also been a rise in Leaders requesting the supplier obtain ESG assurance, although this is still at relatively early stages, increasing from 10% to 23%.

But this is another area where the gulf between Leaders and Beginners shows through. Most Beginners (78%) still only have basic requirements of their suppliers, such as anti-bribery and corruption stipulations in contracts and legal documents – unchanged from last year.

The findings, presented in KPMG’s annual ESG Assurance Maturity Index, are based on responses from 1,000 senior executives and board members at organizations across industries, global regions and revenue sizes.

 

Bank of Ghana completes cross-border trade using digital credentials

Bank of Ghana (BoG) in collaboration with the Monetary Authority of Singapore (MAS) has successfully completed the first proof of concept (POC) under Project DESFT (Digital Economy Semi-Fungible Token) which demonstrated the use of digital credentials for international trade and cross-border payments.

Project DESFT, an initiative by BoG and the private sector, was initiated in June 2023. The DESFT solution comprises the following:

• Universal Trusted Credentials (UTCs) – A digital trusted credential framework and standard that enables licences, certificates, and trade records to be represented and exchanged. This had been earlier developed by the United Nations Development Programme (UNDP), with support from MAS, BoG and other global organisations.
• Central Bank Digital Currency (CBDC) - The Ghanaian CBDC, (eCedi) infrastructure was designed and developed by G+D, while Fidelity Bank Ghana provided banking services and facilitated eCedi exchange transactions.
• Stablecoin – The Singapore dollar-pegged stablecoin issued by StraitsX was used for digital payments based on the Purpose Bound Money (PBM) concept.
• Trade marketplace – a trade marketplace was provided by local SME platforms, with integrated cross-border trade connectivity supported by Proxtera.
• Escrow arrangement – The DESFT solution by Ample FinTech based on the PBM concept, facilitates payment upon successful verification of digital credentials and trade fulfilment.

The project's first phase involved the design and development of a trusted credential system aimed at enhancing the participation of Ghanaian Micro, Small and Medium-sized Enterprises (MSMEs) in international trade. This allows trade partners and financial institutions to efficiently verify the authenticity of trade information, thereby reducing the friction and cost for MSMEs in developing regions to participate in global trade.

Expanding on this groundwork, the second phase of Project DESFT culminated in the successful execution of a cross-border trade between Ghana and Singapore in April 2024, leveraging the DESFT solution.

The live trade transactions demonstrated the feasibility of using the proposed Ghanaian domestic retail CBDC platform, the eCedi in cross-border transactions. BoG says this affirms the potential of the eCedi system for future interoperability with various cross-border credential and payment platforms. The prospective introduction of the eCedi is poised to enhance Ghana’s payment ecosystem.

The next phase of Project DESFT will build upon its current achievements and focus on highly automated digital credential processes, programmable payments across multiple digital currencies, and support for supply chain finance.

 

The US dollar is likely to stay “stronger for longer”

The US dollar has traded in a strong and tight range versus most of its major peers in 2024, and there's little reason to expect it to weaken appreciably anytime soon, according to Kamakshya Trivedi, Goldman Sachs Research’s head of global foreign exchange, interest rates, and emerging markets strategy research. 

Trivedi points to the following factors that are likely to continue to support the dollar through the next 12 months: 

• The US economy: Despite high interest rates, economic data keeps coming up strong. 
• A patient Federal Reserve: The US central bank wants to ensure inflation has been tamed before cutting rates, and the dollar could move even higher if the Fed's global counterparts cut first.   
• The upcoming US election: Trivedi says that apart from which party wins, it's probably as important for the dollar whether there's a divided or unified government. A clean sweep in Washington may make big fiscal expansionary measures more likely, resulting in a stronger US currency.

“Overall, we will continue to live in a strong US dollar world, with a number of risk factors that should support the dollar,” Trivedi noted. “Any erosion in the dollar's strong valuation will likely be gradual.”

 

BNP Paribas and BPCE create strategic payments partnership 

BNP Paribas and BPCE have entered into a strategic partnership project to take a major step in the payments field by jointly acquiring the best technology for processing payments for cardholders and merchants.

This processor would handle all card payments from BNP Paribas and Groupe BPCE in Europe, accounting for 17 billion transactions, and could also be opened to other banks. This would make it the largest processor in France, both Groups share the ambition to make it one of the top three processors in Europe.

Given the unprecedented development of payment infrastructures and future prospects, the two banks say it is essential to invest in a way that is commensurate with the challenges. The partnership project announced between BNP Paribas and BPCE aims to respond to ongoing market developments, in particular those relating to the digitalisation of payment systems, the virtualisation of debit cards and promotion of instantaneous transactions. 

The agreement strengthens the partnership that already links the two banks within Partecis for the development of payment processing software. They intend to expand and consolidate this into an international reference payment processor.

The common processor would have a technological platform (operations, back-office activities and development), capable of integrating the best technological standards for payments, the growing usage of digitalisation (acceleration of mobile payments, expansion of e-commerce, demand for immediacy) and the innovations brought about by domestic and international schemes (Carte Bancaire, Visa, Mastercard, EPI/Wero).

 

Aussie businesses amp up green investments 

Data from NAB shows that many small and medium-sized businesses are continuing to invest in new or used energy-efficient equipment, with the value of the bank’s Green Finance for Vehicles & Equipment loan book growing 80% compared to the same period last year.

The data shows significant demand for electric vehicles, with finance growing 51%, as well as solar panels, up 33%. Electric buses specifically, although off a low base, have also seen strong uptake, growing 168%.

The data highlights Australian businesses increasing efforts to improve their sustainability credentials, while also reducing business costs.

The top growth by state in NAB’s business finance for green equipment saw green investments in Western Australia grow by 305%, New South Wales go up 82%, Tasmania increase by 78%, and Victoria, up 51%.

“With higher interest rates and stubborn inflation, many businesses are continuing to operate in a higher cost environment and are searching for cost savings,” NAB Business Banking Executive Brett Moore said. “Last month the Treasurer handed down the 2024 budget with one of the highlights for qualifying small businesses being the extension to the AU$20,000 instant asset write off for eligible assets – accessible to around four million Australian businesses.” 

 

Afreximbank signs agreement for US$100m trade finance facility to DRC’s Rawbank

African Export-Import Bank (Afreximbank) has signed an agreement for a US$100m trade finance facility in favour of Rawbank to assist the bank increase trade flows into and out of the Democratic Republic of Congo (DRC).

The facility, the largest trade finance facility ever provided by Afreximbank to a commercial bank in the DRC, is also expected to help reduce pressure on the country’s balance of payments using the trade finance instrument offered by the Afreximbank Trade Finance Facility (AFTRAF) programme. It will also create business opportunities for Rawbank and its clients while supporting the economic development of the DRC.

“We are very pleased to deploy this important facility in the DRC to support such a strategic partner as Rawbank,” said Haytham Elmaayergi, Executive Vice President, Global Trade Bank, Afreximbank. “Our partnership with Rawbank will be further strengthened to support economic development in the DRC. Our synergies can only help to build the Africa we want by unleashing the full potential of intra-African and global trade for the benefit of our people.”  

He noted that AFTRAF was structured to provide trade confirmation services, trade confirmation guarantees and irrevocable reimbursement undertakings to clients, adding that it was designed to counter the recurring trend of reduction or withdrawal of trade lines to African banks by the international banks following the de-risking process.