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The European Banking Authority (EBA) published today its roadmap outlining the objectives and timeline for delivering mandates and tasks in the area of sustainable finance and environmental, social and governance (ESG) risks.
The roadmap explains the EBA’s approach over the next three years to integrate ESG risk considerations in the banking framework and support the EU’s efforts to transition to a more sustainable economy.
Numerous legislative acts and initiatives allocate to the EBA new mandates and tasks in the area of sustainable finance and ESG risks.
Most of these mandates and tasks are closely linked to the EBA’s broader objective of contributing to the stability, resilience, and functioning of the financial system.
These mandates and tasks cover the three pillars of the banking framework, i.e., market discipline, supervision and prudential requirements, as well as other areas related to sustainable finance and the assessment and monitoring of ESG risks.
This roadmap on sustainable finance builds on and replaces the EBA’s first action plan published in December 2019.
In the area of transparency and disclosures, the EBA will continue its work related to the development and implementation of institutions’ ESG risks and wider sustainability disclosures.
Similarly, the EBA will continue its efforts to ensure that ESG factors and risks are adequately integrated in institutions’ risk management framework.
In the area of prudential regulation, the EBA has initiated an assessment of whether amendments to the existing prudential treatment of exposures to incorporate environmental and social considerations would be justified.
Additionally, the EBA will contribute to the development of green standards and labels, and measures to address emerging risks in this field, such as greenwashing.
Finally, the EBA will be assessing and monitoring developments in sustainable finance and institutions’ ESG risk profile, including on the basis of the expected supervisory reporting.
The roadmap was developed based on the current state of the regulatory framework and reflects the EBA’s current expectations regarding specific mandates and tasks.
However, considering the ongoing regulatory developments, including the review of the banking package (CRR/CRD), the scope and timelines of specific tasks will only be fully known once the legislative processes are finalised.