The European Banking Authority (EBA) printed as we speak its roadmap outlining the goals and timeline for delivering mandates and duties within the space of sustainable finance and environmental, social and governance (ESG) dangers.
Quite a few legislative acts and initiatives allocate to the EBA new mandates and duties within the space of sustainable finance and ESG dangers. Most of those mandates and duties are intently linked to the EBA’s broader goal of contributing to the steadiness, resilience, and orderly functioning of the monetary system. These mandates and duties cowl the three pillars of the banking framework, i.e., market self-discipline, supervision and prudential necessities, in addition to different areas associated to sustainable finance and the evaluation and monitoring of ESG dangers.
This roadmap on sustainable finance builds on and replaces the EBA’s first motion plan on sustainable finance printed in December 2019. The roadmap ensures continuity of actions assumed underneath the earlier motion plan, whereas accommodating the required changes following the market and regulatory developments, together with new mandates and new areas of focus.
Within the space of transparency and disclosures, the EBA will proceed its work associated to the event and implementation of establishments’ ESG dangers and wider sustainability disclosures. Equally, the EBA will proceed its efforts to make sure that ESG components and dangers are adequately built-in in establishments’ danger administration framework and of their supervision, together with by way of additional developments on local weather stress assessments. Within the space of prudential regulation, the EBA has initiated an evaluation of whether or not amendments to the present prudential remedy of exposures to include environmental and social issues can be justified. Moreover, the EBA will contribute to the event of inexperienced requirements and labels, and measures to handle rising dangers on this discipline, reminiscent of greenwashing. Lastly, the EBA will likely be assessing and monitoring developments in sustainable finance and establishments’ ESG danger profile, together with on the idea of the anticipated supervisory reporting.
The roadmap was developed primarily based on the present state of the regulatory framework and displays the EBA’s present expectations concerning particular mandates and duties. Nonetheless, contemplating the continued regulatory developments, together with the assessment of the banking bundle (CRR/CRD), the scope and timelines of particular duties will solely be totally recognized as soon as the legislative processes are finalised.
The EBA’s mandates and duties within the space of sustainable finance and ESG dangers are set out within the following legislative acts:
Regulation (EU) No 1093/2010 (EBA Founding Regulation)
Regulation (EU) No 575/2013 (Capital Necessities Regulation – CRR) and Directive (EU) 2013/36 (Capital Necessities Directive – CRD)
Regulation (EU) 2019/2033 (Funding Companies Regulation – IFR) and Directive (EU) 2019/2034 (Funding Companies Directive – IFD)
Regulation (EU) 2017/2402 (Securitisation Regulation)
Regulation (EU) 2019/2088 (Sustainable Finance Disclosure Regulation – SFDR)
Regulation (EU) 2020/852 (Taxonomy Regulation)
Company Sustainability Reporting Directives (CSRD)
Along with these legislative acts, the EBA obtained duties immediately from the European Fee within the context of its Technique for Financing the Transition to a Sustainable Financial system.
Because the banking bundle (CRR/CRD) is at the moment present process a revision, the EBA expects further mandates within the space of ESG dangers stemming from these revised legislative acts. These envisaged new or modified mandates are included within the roadmap to the extent they’re anticipated primarily based on the legislative proposals. Nonetheless, their actual scope and deadline will solely be totally recognized as soon as the ultimate texts are agreed and adopted.