On March 1, 2021, the European Banking Authority (EBA) released its consultation regarding draft technical standards for Pillar 3 disclosures of environmental, social and governance (ESG) risks, including reporting templates and instructions.

The European Union's Capital Requirements Regulation (EU) No. 575/2013 (CRR) includes under Article 449a the requirement to disclose prudential information on ESG risks, including transition and physical risk—a requirement addressed to large institutions with securities traded on a regulated market of any member state. These disclosure requirements are applicable from June 2022 on an annual basis during the first year and biannually thereafter.

CRR Article 434a requires the EBA to develop draft implementing technical standards (ITS) specifying these disclosure requirements in a way that conveys sufficiently comprehensive and comparable information for users of that information to assess institutions' risk profiles.

In the consultation, the EBA proposes a sequential approach for the implementation of the prudential disclosure requirements under CRR Article 449a, starting with quantitative information on climate change-related risks, including transition and physical risks; on the implementation of a Green Asset Ratio (GAR) on EU taxonomy1-aligned activities, which translate the Paris agreement into action; and on other mitigating actions; and qualitative disclosures for ESG risks.

Responses to the consultation are required on or before June 1, 2021.


1 See: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en.

Originally published 4 March 2021

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