ESMA published a consultation on the disclosure requirements applicable to credit ratings. The paper consults on Credit Rating Agency (CRA) guidelines aimed to improve the quality and consistency of disclosures of environmental, social, and governance (ESG) factors when considered as part of a credit rating action. ESMA will accept responses to the consultation by March 19, 2019 and it expects to publish the final report by July 30, 2019.
The consultation paper proposes measures in the following areas:
- Guidance to improve the quality and consistency of the information that is disclosed alongside the issuance of a credit rating in a publicly available press release
- Guidance to improve the transparency of credit rating press releases concerning the extent to which sustainability factors have been considered as part of a credit rating
- A cost-benefit analysis of the Guidelines in Annex I of the consultation paper
The guidance is intended to improve the quality of disclosures by CRAs in a manner that provides the users of credit ratings with greater transparency on whether Environmental, Social, or Governance factors were considered a key underlying element of a credit rating issuance. Although this is not a subject that is addressed explicitly under the CRA Regulation, ESMA recognizes that, in context of the EC Action Plan for sustainable finance, it is desirable to provide some guidance to the industry to ensure that the quality of disclosures can support investors needs in light of the greater focus that is now being placed on sustainability factors in investment decisions. The guidelines are in line with the EC Action Plan on sustainable finance.
Comment Due Date: March 19, 2019
Keywords: Europe, EU, Banking, Insurance, Securities, CRA Regulation, CRA, Disclosures, ESG, Sustainable Finance, ESMA
Previous ArticleSRB on 2019 Priorities for MREL, SRF, and Resolvability Assessment
PRA published a statement that explains when to expect further information on the PRA approach to transposing the Capital Requirements Directive (CRD5), including its approach to revisions to the definition of capital for Pillar 2A.
EIOPA is consulting on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive as well as on the methodologies to build these ratios.
SRB published the work program for 2021-2023, setting out a roadmap to further operationalize the Single Resolution Fund and to achieve robust resolvability of banks under its remit over the next three years.
ECB finalized guidance on the way it expects banks to prudently manage and transparently disclose climate and other environmental risks under the current prudential rules.
BCBS published a technical amendment to the capital treatment of securitizations of non-performing loans by banks.
BoE announced that the Data and Statistics Division is planning to move collection of statistical data to the BoE Electronic Data Submission (BEEDS) portal.
APRA published the updated reporting standards and guidance for the collection of Economic and Financial Statistics (EFS), following a consultation process. Also published was a response letter to the feedback received on the proposal for amending the EFS reporting standards and guidance.
EC is consulting on a draft delegated regulation to supplement the Taxonomy Regulation (2020/852) by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as environmentally sustainable.
The IFRS Foundation published material highlighting the ways in which existing requirements in IFRS standards require companies to consider climate-related matters when their effect is material to the financial statements.
FSB published a progress report on the implementation of reforms to major interest rate benchmarks, including the London Inter-bank Offered Rate (LIBOR) benchmark.