Featured Product

    FI Report Outlines Work on Sustainability Issues in Financial Sector

    March 18, 2021

    FI published a report that outlines the sustainability issues are related to the financial sector and lists examples of what FI is working on in this area. The report covers work of FI with future EU regulations, work in the area of a global standard for sustainability reporting, and assessing sustainability risks in the credit portfolio of banks. Another report from FI discusses internal carbon pricing as way to help to manage transition risk and to encourage reduced carbon emissions by firms.

    The FI report on sustainability issues notes that, during 2020, FI investigated the extent to which the financial firms are measuring and reporting climate-related risks and climate effects. The Swedish regulator also assessed how assets in insurance undertakings align to the climate goals in the Paris Agreement, as part of which countries worldwide agreed to keep global warming well below 2 degrees. During 2021, FI will include a sustainability perspective when reviewing business models and credit risks of banks. It  will review the extent to which banks consider sustainability risks when assessing the profitability of their business plans and in their risk management. FI will also analyze sustainability risks in the credit portfolios of banks.

    Additionally, new EU regulations entering into force this year will have a major impact on the role of financial market in the area of sustainability. The new EU regulation introduces requirements on enhanced transparency for investment activities of financial firms. Similar requirements are expected for the lending activities of banks and FI is encouraging banks to pre-empt the coming regulations. It is important that banks start to report more on their exposure to climate risks. This requires that banks use tools for analysis, for example Paris Agreement Capital Transition Assessment or PACTA, to gain a better overview of climate risks and how well their credit portfolios align with climate goals. Furthermore, to reduce emissions, the price on emitting carbon needs to increase in many parts of the world. To better understand and manage the transition risk associated with future price increases, FI advocates that firms use internal carbon pricing and disclose information on this.

    As a supervisory authority, one of the most important focus areas for FI is related to sustainability reporting by firms. Stricter reporting requirements for firms in general are a condition for financial firms as intermediaries to be able to live up to the high demands on transparency of financial exposures. It needs to be easier for investors and other stakeholders to understand and compare information about a firm’s climate exposures and work to transition. FI has, therefore, taken an active role in an ongoing international cooperation to develop a global standard based on the TCFD recommendations. FI is also pushing for more firms to start reporting in accordance with these recommendations.

     

    Related Links

    Keywords: Europe, EU, Sweden, Banking, Reporting, ESG, Credit Risk, TCFD, PACTA, Climate Change Risk, Transition Risk, Carbon Pricing, FI

    Featured Experts
    Related Articles
    News

    ESAs Issue Multiple Regulatory Updates for Financial Sector Entities

    The three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.

    November 15, 2022 WebPage Regulatory News
    News

    FSB and NGFS Publish Initial Findings from Climate Scenario Analyses

    The Financial Stability Board (FSB) and the Network for Greening the Financial System (NGFS) published a joint report that outlines the initial findings from climate scenario analyses undertaken by financial authorities to assess climate-related financial risks.

    November 15, 2022 WebPage Regulatory News
    News

    FSB Issues Reports on NBFI and Liquidity in Government Bonds

    The Financial Stability Board (FSB) published a letter intended for the G20 leaders, highlighting the work that it will undertake under the Indian G20 Presidency in 2023 to strengthen resilience of the financial system.

    November 14, 2022 WebPage Regulatory News
    News

    ISSB Makes Announcements at COP27; IASB to Propose IFRS 9 Amendments

    The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.

    November 10, 2022 WebPage Regulatory News
    News

    IOSCO Prioritizes Green Disclosures, Greenwashing, and Carbon Markets

    The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.

    November 09, 2022 WebPage Regulatory News
    News

    EBA Finalizes Methodology for Stress Tests, Issues Other Updates

    The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups

    November 09, 2022 WebPage Regulatory News
    News

    EU Finalizes Rules Under Crowdfunding Service Providers Regulation

    The European Union has finalized and published, in the Official Journal of the European Union, a set of 13 Delegated and Implementing Regulations applicable to the European crowdfunding service providers.

    November 08, 2022 WebPage Regulatory News
    News

    OSFI Sets Out Work Priorities and Reporting Updates for Banks

    The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.

    November 07, 2022 WebPage Regulatory News
    News

    APRA Finalizes Changes to Capital Framework, Issues Other Updates

    The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.

    November 03, 2022 WebPage Regulatory News
    News

    BIS Hub and Central Banks Conduct CBDC and DeFI Pilots

    The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.

    November 03, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8596