BPFI Sustainable Finance Insight Series – EBA

BPFI were delighted to welcome the European Banking Authority (EBA) to discuss its sustainable finance mandate at two recent webinars.

The two separate BPFI webinars saw Pilar Gutierrez, Senior Policy Expert with the EBA presenting members with a comprehensive look at ESG disclosures obligations that impact on financial institutions and Fabien Le Tenier, Policy Expert on Sustainable Finance at the EBA giving his views on the EU Taxonomy as a tool for bank disclosures. These webinars included Citi (Ilan Jacobs) presenting on impact of the EU Taxonomy and Sustainable Finance Platform, and PwC (Deirdre Timmons) looking at key element of climate-reporting frameworks, a theme our Sustainable Finance Insight Series will return to this week.

As financial institutions come to terms with the dizzying pace of new legislation arising from the European Commission’s Sustainable Finance Action Plan, 2018, soon to be updated via its new Revised Sustainable Finance Strategy, they are concerned with overlapping areas of disclosures regulation: the Taxonomy Regulation, new Nonfinancial Reporting Directive (NFRD) on sustainability, EBA prudential disclosures and the Sustainable Finance Disclosures Regulation (SFDR).

As well as its Implementing Technical Standards on Pillar 3 ESG disclosures under CRR, currently under consultation, EBA has provided the European Commission with advice on alignment with  Article 8 of the Taxonomy Regulation: Gutierrez explained the EBA recommendation that banks and investments firms subject to disclosures under NFRD, disclose their ‘green asset ratio ‘on taxonomy- aligned exposures – this will indicate the extent to which the financing activities of their banking books are aligned with the Taxonomy.  The EBA’s expert discussions confirmed that ESG factors are a core element of banking regulation. The EBA’s final ESG Factors report, due in June 2021, will be a critical document for BPFI members to guide their integration of ESG factors into their business models.

Louise O’Mahony

Head of Sustainable Banking, BPFI