EU banking supervisor The European Banking Authority (EBA) announced the publication of its new “Roadmap on Sustainable Finance,” detailing its 3-year priorities and plans in the areas of sustainable finance and in supporting and monitoring the integration of ESG risk considerations in the banking framework.
Key focus areas outlined in the new EBA roadmap include improving transparency on ESG issues, ensuring that ESG-related risks are integrated in financial institutions’ risk management frameworks, and addressing greenwashing risks.
According to the EBA, the new roadmap comes as “ESG risks are changing the risk picture for the financial sector, including banking, calling for assertive actions by all stakeholders,” and as regulators and supervisors engage in addressing the challenges posed by ESG risks, and with their role in “supporting the transition to a more resilient and sustainable European financial sector.”
The roadmap outlines the key objectives for the EBA’s sustainable finance actions over the next three years, across categories including Transparency and Disclosure, Risk Management and Supervision, Prudential Treatment of Exposures, Stress-Testing, Standards and Labels, Greenwashing, Supervisory Reporting, and ESG Risks & Sustainable Finance Monitoring.
The EBA said that one of its key priorities will be the continuation of its work on the development and implementation of banks’ ESG risks and wider sustainability disclosures. Additional actions highlighted in the roadmap include the development of a set of EU-level harmonized rules to ensure robust management of ESG risks by institutions, further development of climate stress tests, examining whether a dedicated prudential treatment of exposures related to ESG issues is justified, assessing ESG standards and labels, identifying measures to address greenwashing risks, and the use of stress testing and scenario analysis for risk assessment and monitoring.
Click here to access the EBA Roadmap on Sustainable Finance.