On 1 March 2021, the European Banking Authority (EBA) issued a consultation paper on draft implementing technical standards (ITS) on Pillar 3 disclosures on environmental, social and governance (ESG) risks. The draft ITS put forward comparable disclosures that show how climate change may exacerbate other risks within institutions’ balance sheets, how institutions are mitigating those risks, and their green asset ratio on exposures financing taxonomy-aligned activities, such as those consistent with the Paris Agreement goals.
The consultation paper puts forward the tables, templates and associated instructions that institutions shall use in order to disclose relevant qualitative information on ESG risks, and quantitative information on climate change related risks, including transition and physical risks and mitigating actions, in accordance with Article 449a of the Capital Requirements Regulation. When developing the consultation paper, the EBA has worked in parallel on the EBA advice to the European Commission on key performance indicators and methodology for disclosures under Article 8 of the Taxonomy Regulation. The consultation paper should be read in conjunction with the advice in order to get a more comprehensive picture of the ESG disclosure framework for banks.
The deadline for comments on the consultation paper is 1 June 2021. A public hearing will be organized on the form of a webinar on 26 March.