EBA Pillar 3 initiative accelerates: banks gear up for ESG and green reporting

Posted on September 15, 2023 by Editor

The European Banking Authority (EBA) has set its Environmental, Social, and Governance (ESG) Pillar 3 disclosure rules in motion. A recent article from Wolters Kluwer takes a deep dive into the latest requirements.

The article is cautioning that financial institutions should take action to prepare their systems, build ESG expertise, and embed collaboration in the run up to green reporting requirements.

EBA’s Pillar rules, effective for large Tier 1 financial institutions since the close of 2022, are now poised to extend to all EU banks by 2025. The driving force behind this initiative is a growing focus on sustainability and transparency in the financial sector.

EBA’s ESG Pillar 3 disclosure framework necessitates comprehensive reporting on various ESG-related facets. These include climate-related transition and physical risks, institutions’ support for counterparts in transitioning to a carbon-neutral economy, and qualitative insights into how ESG is embedded in governance, strategy, and risk management. To facilitate the transition to this framework, the EBA has introduced measures allowing institutions to adapt gradually between 2023 and 2025.

Furthermore, EBA’s objective extends to plans to require the complete set of Pillar 3 disclosures in XBRL format. This will feed into the European Centralised Infrastructure of Data (EUCLID) and in due course, the European Single Access Point (ESAP). The ESAP is set to become a central hub for accessing financial and sustainability-related information from EU companies, aligning with the broader goals of the European Green Deal initiative.

As the deadline approaches, banks are urged to take swift action to prepare for the latest mandates.

Read more here.

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