FINANCIAL SERVICES
Due diligence and performance improvement for investors
Financial Services
Sustainable investment is not a new topic, but the burgeoning environmental, social and governance (ESG) agenda is both intensifying the need for robust ESG due diligence in financial transactions and opening the door for innovative new approaches for using finance to drive positive social and environmental outcomes.
For some time now in the finance sector there has a strong focus on the ‘E’ and ‘G’ in ESG and much less focus on the ‘S’. This is because social issues can be complex and difficult to measure, and therefore challenging to price into a deal. Consequently, the due diligence questions that many investors and financiers are asking of their investees or customers are insufficient to enable finance providers to adequately understand potential risks associated with their transactions.
Furthermore, for investors and financiers in the mining and metals, agriculture or fashion sectors the rapid evolution of responsible supply chain standards, industry initiatives and compliance requirements means it is becoming harder for diversified financial institutions to keep fully appraised of risk saliency in complex supply chains and the strengths and weaknesses of different certification and audit standards that investees or customers might be using.
We bring insights and pragmatic, practical advice to companies in the finance sector, based on our extensive, on-the-ground experience of assessing and implementing responsible business practices in a wide range of sectors and geographies.
Assess risks
Assess risksFor investors and financiers, we provide focused support for ESG due diligence that large global consultancy firms are unable to offer. Our focus on responsible supply chains means that in addition to familiarity with commonly applied standards such as the IFC Performance Standards, we bring unique insights into sector-specific standards and of how to deliver effective due diligence in supply chains – an area that is not effectively addressed under the IFC standards. We help clients in all stages of the deal cycle to understand the scope and saliency of human rights, modern slavery and other responsible business conduct risks that impact the operations of their investment companies and portfolios.
- Through a Human Rights Risk Assessment (HRRA), we help investors, financiers, asset managers, and portfolio companies, to understand the extent to which a business or acquisition target is impacted by, or may contribute to, human rights or wider related social and environmental risks. Where risks are identified, we help determine what mitigation actions may be required.
- We conduct Human Rights Impact Assessments (HRIA) for investors, financiers, and asset managers at all stages of a deal cycle to provide an in-depth investigation and analysis of where there have been – or could be – adverse impacts to the rights of workers, communities, or other stakeholders as a result of the target or portfolio company’s business activities.
- We conduct site-based due diligence assessments of the environmental, social and governance (ESG) performance of portfolio or target companies against good practice frameworks such as the OECD due diligence guidelines or the IFC Performance Standards.
Build management systems
Build management systemsWe help financiers, investors, and asset managers to build confidence in the ability of their portfolio companies’ risk management performance and readiness for evolving compliance requirements related to supply chain due diligence. We build and implement responsible sourcing risk management systems that are fit for purpose and aligned with international good practices.
- We benchmark management systems and operating practices for portfolio companies against the requirements of responsible sourcing standards or assurance frameworks and advise on the steps necessary to close any gaps and pass an audit.
- We support in developing, monitoring or independently assessing conditions for Sustainability Linked Loans that are linked to the achievement of responsible business-related targets.
- We design and implement responsible sourcing management systems for portfolio companies including writing policies and procedures, developing risk assessment and risk management processes, identifying risks when onboarding suppliers and reporting to support compliance with due diligence requirements such as the German Supply Chain Act and the forthcoming EU Corporate Sustainability Due Diligence Directive.
Enhance capability and impact
Enhance capability and impactInformed by our work with the OECD, the European Commission and other policymakers, we support investors and financiers in understanding market and regulatory requirements for responsible sourcing.
- We support constructive engagement and collaboration by investors with portfolio companies by providing briefings and capacity building to enable ESG analysts to have more informed and effective engagement with their clients on technical aspects of responsible sourcing and compliance requirements for due diligence.
- We also help to support the continuous improvement of responsible sourcing management systems and work with stakeholders, including portfolio companies, to create positive impact.
“Working with Kumi provided us with valuable context and opportunities to broaden our understanding of the complexities surrounding conflict minerals in the semiconductor industry. Our partnership has helped us have more effective conversations with both companies and fellow investors, in a collaborative drive for more transparent supply chains free from social and environmental abuses.”
Christopher McGoldrick, Senior Investment Analyst, Stewart Investors
“Kumi team are pragmatic, logical and no-nonsense. They understand complex supply chains and deliver difficult topics with lucidity and sensitivity. Refreshing to deal with this calibre of consultant, no management speak, deliver what they say they will, on-time and with a smile!”
Emma Tooley, ESG Supply Chain, Emirates Global Aluminium
“Kumi rightly deserve their reputation as leading experts on the practical application of the OECD Due Diligence Guidelines by companies and policymakers.”
Guus Houttuin, former Senior Trade Advisor to the European External Action Service and former Chair of the OECD Multi-stakeholder Steering Group on responsible minerals
“Kumi’s assessment of our current status against the requirements of the Copper Mark was very helpful in enabling us to understand where we need to prioritise our efforts as we work towards achieving certification against this important standard. The Kumi team were a pleasure to work with.”
Jasmine Abrahams, Vice President, Sustainability, Ivanhoe Mines
“The due diligence Kumi delivered was comprehensive, the findings clearly presented, and the recommendations led to practical risk mitigation measures with our supplier.”
Sergio Marini, Director Ethics and Compliance, LVMH
“Kumi evaluated our responsible sourcing program against the OECD guidelines and provided a clear gap assessment with actionable recommendations on how to improve. They quickly grasped our operational and sustainability context, which made it easy to communicate and work with them.”
Sustainability Unit, OneMed
“Kumi Consulting developed an assessment framework for the Maturity Assessment Tool of the International RBC Agreement for the Metals Sector that is objective, practicable and of a sound quality. The framework will assist companies in understanding what is expected from them in the OECD Guidelines.”
Independent Secretariat of the International RBC Agreement for the Metals Sector, Social and Economic Council of the Netherlands
“Trafigura is one of the largest physical commodities trading groups in the world. Kumi has provided Trafigura, as well as its commercial partners, with strategic guidance, technical advice and practical support – often working within challenging environments and always in support of a demanding client.”
James Nicholson, Head of Corporate Responsibility, Trafigura
“Kumi advised us on how to address non-conformances identified during an RMAP audit, providing very clear guidance on how to update and strengthen our company’s responsible sourcing management system and due diligence processes.”
Jamie Beliño, Compliance Officer, Al Etihad Gold DMCC
