ESMA issued a comment letter to EC, welcoming its proposal to update the non-binding guidelines on non-financial reporting with the introduction of a specific supplement addressing climate-related disclosures. ESMA made some recommendations on how the guidelines can be further developed to promote higher quality disclosures.
On February 20, 2019, EC consulted on update of the non-binding guidelines on non-financial reporting. ESMA recommends the EC to ensure that when reviewing the guidelines, an appropriate balance is achieved across requirements relating to the various non-financial matters, with the aim to avoid the issue that focus on a specific matter, such as climate change, detracts from attention to the necessary disclosures on the other non-financial matters. While generally supporting the proposals in the consultation document, ESMA would like to highlight the following key areas where the proposed approach to update the guidelines could be further improved:
- While ESMA welcomes the EC clarification on how the notion of materiality in the Non-Financial Reporting Directive (NFRD), as transposed into local law, should apply to climate-related disclosures, it believes that the clarifications included in the consultation would also be beneficial for the main text of the guidelines. Therefore, ESMA encourages EC to incorporate these clarifications into the existing section of the guidelines relating to material information.
- The consultation document proposes to structure the climate-related requirements into "Type 1" and "Type 2" disclosures, wherein Type 1 disclosures would represent more basic or minimum disclosures that issuers are expected to provide in all cases in which climate-related matters are material, while Type 2 disclosures would only be intended to provide more enhanced information. ESMA recommends expanding the disclosures that are currently proposed as Type 1 with some of the requirements that are currently only classified as Type 2 (detailed suggestions in this regard are proposed in the Annex to the comment letter). In addition, ESMA suggests considering the applicability of the proposed structure to the other disclosure requirements in the guidelines.
- ESMA, building on the enforcement experience of non-financial statements, highlights additional areas for improvement related to the NFRD. In its view, without an increase in the specificity of the requirements in the NFRD, any amendment to the guidelines, even if helpful, is unlikely to result in a significant shift toward more consistent and enforceable non-financial reporting.
Keywords: Europe, EU, Banking, Securities, Sustainable Finance, Non-Financial Reporting, Climate-Related Disclosures, Non-Binding Guidelines, EC, ESMA
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.
The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.
The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.
The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.
The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.
The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.
The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.