Leading investment and research provider MSCI has launched a new solution to help banks report on European Banking Authority’s (EBA) mandatory ESG and climate-related risk disclosures.
The solution aims to support granular reporting demanded by the EBA’s implementing technical standards (ITS) on Pillar 3 disclosures on ESG risks.
Furthermore, this new solution will also help banks report on Task Force on Climate-related Financial Disclosures (TCFD) Recommendations and measure the alignment of financing activities with the EU taxonomy.
The Pillar 3 ESG disclosure requirements come into effect this year, with reporting on some aspects beginning in 2023 and other phases over time.
In-scope banks are the ones who trade securities on a regulated market of any EU member state and must report climate-related risks in four main categories:
- ● Exposure to climate-related assets and assets subject to climate change-related risks (transition and physical);
- ● Support for counterparties through the low-carbon transition and in climate adaptation;
- ● Key performance indicators on sustainable finance activities based on the EU taxonomy regulation;
- ● How banks integrate ESG considerations into their governance, business, strategy and risk management.
“The introduction of the European Banking Authority’s Pillar 3 ESG risk disclosure requirements and increasing stakeholder demands is putting greater scrutiny on financial institutions to measure climate risk transparency across their banking book. With this new disclosure framework in place, banks need to take urgent measures to ensure that they are meeting the regulatory requirements set out by EBA standard, as well as other region and country-specific frameworks. The new solutions from MSCI will help banks to familiarize themselves with the EBA’s expectations and their disclosure obligations.”
Eric Moen, Head of ESG and Climate, at MSCI.
Source: MSCI