The European Banking Authority (EBA) has published its roadmap outlining its objectives and timeline for delivering mandates and tasks in sustainable finance and ESG risks.
According to the EBA, the roadmap explains the Authority’s sequenced and comprehensive approach over the next three years to integrate ESG risks considerations in the banking framework and support the EU’s efforts to achieve the transition to a more sustainable economy.
The roadmap builds on and replaces the EBA’s first action plan on sustainable finance published in December 2019. The roadmap, the EBA claims, ensures continuity of actions assumed under the previous action plan, while accommodating the necessary adjustments following the market and regulatory developments, including new mandates and new areas of focus.
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 and in their supervision, including through further developments on climate stress tests.
In the area of prudential regulation, the Authority has begun an assessment of whether amendments to the existing prudential treatment of exposures to incorporate environmental and social considerations would be justified.
Furthermore, 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 EBA said, “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.”
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