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

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    News

    EBA Calls on Resolution Authorities to Consider Impact of COVID Crisis

    EBA published a statement on resolution planning in light of the COVID-19 pandemic.

    July 09, 2020 WebPage Regulatory News
    News

    ECB Guideline on Materiality Threshold for Credit Obligations Past Due

    ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.

    July 08, 2020 WebPage Regulatory News
    News

    FED Temporarily Revises FR Y-14 With Respect to PPP and CARES Act

    FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.

    July 08, 2020 WebPage Regulatory News
    News

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework

    July 08, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5458