Featured Product

    Eurosystem Responds to Recent EC Consultations on Sustainable Finance

    June 08, 2020

    ECB published feedback from Eurosystem on the EC consultations on the renewed sustainable finance strategy and the revision of the Non-Financial Reporting Directive. The Eurosystem welcomes both the EC consultations. The Eurosystem highlighted that it stands prepared to provide technical expertise to EC in its competence areas and to contribute, within the limits of its mandate, to the further development of sustainable finance and the monitoring and management of risks related to climate change.

    The Eurosystem emphasizes the following five key messages:

    • Efforts to address the existing information gaps are welcome and fundamental to the renewed sustainable finance strategy. Sustainable finance requires a clear link to be established between the funds raised and the impact in terms of sustainability of the investment that those funds are meant to finance. Closing the gaps is a necessary pre-condition for the entire sustainability agenda to succeed. This requires a revision of corporate disclosure. It also requires standardized and commonly agreed definitions. In this respect, the EU Taxonomy is an essential milestone to provide clarity and certainty on the definition of sustainability. Finally, it requires the development of reliable, verifiable, and transparent EU standards for sustainable financial products.
    • To realize its full potential, sustainable finance needs to be embedded in a policy context that is conducive to a long-term reorientation of the financial sector and the economy. This requires effective and credible incentives to guide economic decisions, along with a stable and predictable long-term strategy. 
    • Climate change and environment-related risks necessitate appropriate risk monitoring and risk management frameworks. 
    • Sustainable finance has close links to other policy priorities, in particular Capital Markets Union, and synergies should be exploited. Common standards for sustainable financial products can be a powerful driver of financial integration. The Capital Markets Union can contribute to sustainable finance objectives by making it easier for investors to seek sustainable investment opportunities across Europe. The Capital Markets Union can also enhance the risk-sharing capacity of the financial system in EU in the face of the climate challenge.
    • Sustainable finance is a global issue that requires close international coordination to promote internationally consistent frameworks and prevent regulatory fragmentation. 

    The Eurosystem feedback on the Non-Financial Reporting Directive largely echoes the recently published views of ESAs, emphasizing the need for standardized, proportional, and mandatory disclosures. The Eurosystem welcomes initiatives to harmonize and further detail the reporting standards as well as establish a verification process of reporting by companies. The Eurosystem supports the inclusion of forward-looking information under harmonized reporting standards as well as information on governance, management procedures, and targets. It also promotes the development of loan-level reporting standards that facilitate the compliance of financial institutions with the reporting requirements under the Non-Financial Reporting Directive. Granular data provide an unprecedented level of detail for analyzing credit intermediation and defining related indicators. Thus, standardized and widely adopted loan-level reporting standards would facilitate credit institutions’ reporting of non-financial information related to their balance sheet exposure, for example the GHG emissions of their clients. 

    Finally, the response notes that ECB would appreciate being involved in the development of an EU non-financial reporting standard, as suggested in the public consultations document. In light of its supervisory tasks, including the assessment of safe and prudent risk management by financial institutions and the assessment of banks’ regulatory disclosures, ECB stands ready to share expertise in the development of an EU non-financial reporting standard and to contribute to any emerging aspect that falls within its fields of advisory competence.

     

    Related Links

    Keywords: Europe, EU, Banking, Insurance, Securities, Sustainable Finance, Climate Change Risk, ESG, European Green Deal, Green Finance, Reporting, Disclosures, Non-Financial Reporting, EC, ECB

    Featured Experts
    Related Articles
    News

    EC Regulation Sets Out Standards for Reporting and Disclosure of MREL

    EC published the Implementing Regulation 2021/763 that lays down implementing technical standards for supervisory reporting and public disclosure of the minimum requirement for own funds and eligible liabilities (MREL).

    May 12, 2021 WebPage Regulatory News
    News

    APRA Decides to Standardize Submission Date for Quarterly Reporting

    APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.

    May 11, 2021 WebPage Regulatory News
    News

    ECB Working Group Publishes Recommendations on EURIBOR Fallbacks

    The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).

    May 11, 2021 WebPage Regulatory News
    News

    Bundesbank Publishes Supporting Documentation for Reporting by Banks

    Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.

    May 11, 2021 WebPage Regulatory News
    News

    EBA Publishes Phase 1 of Reporting Framework 3.1

    EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).

    May 10, 2021 WebPage Regulatory News
    News

    APRA to Finalize Capital Adequacy Standard Revisions by January 2022

    Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA

    May 10, 2021 WebPage Regulatory News
    News

    ESMA Issues Guidelines on Outsourcing to Cloud Service Providers

    ESMA published the final guidelines on outsourcing to cloud service providers.

    May 10, 2021 WebPage Regulatory News
    News

    EBA Publishes Data on Deposit Guarantee Schemes

    EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.

    May 10, 2021 WebPage Regulatory News
    News

    OSFI Sets Out Plan for Future Guidance on Managing Technology Risk

    OSFI has set out the schedule for release of draft guidance on the management of technology risks by federally regulated financial institutions and private pension plans.

    May 10, 2021 WebPage Regulatory News
    News

    MAS Updates Housing Loan Rules, Proposes Corporate Governance Guidance

    MAS updated rules for new housing loans by banks and finance companies.

    May 10, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6964