29 July 2022
The European Banking Authority (EBA) submitted today its responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards. The EBA welcomes these consultations and agrees with the need to introduce international and European standards in response to the growing demand for relevant, reliable and comparable corporate data on sustainability-related matters, and the need for a close cooperation between the ISSB and EFRAG during the finalisation of their own consultations, so as to ensure consistency. The EBA also aims at ensuring consistency between the requirements applicable to institutions under the EFRAG framework and under the Pillar 3 framework.
The EBA has a strong interest in promoting transparency and enhancing public disclosures of environmental, social and governance (ESG) risks by corporates, as one of the main ways to address the data challenges that financial institutions face when they get relevant ESG information from their counterparties for risk management and disclosure purposes.
In its responses to both consultations the EBA focused on those aspects which may be more relevant for financial institutions’ Pillar 3 disclosures and the data needs from their counterparties, as well as on the need to promote consistency with the requirements set out in the EBA’s draft Implementing Technical Standards (ITS) on Pillar 3 ESG risks.
In particular, the EBA called on the ISSB and the EFRAG to closely cooperate with each other during the finalisation of their own consultations, so as to ensure greater comparability between EU companies and the companies outside EU which will be adopting the international standards. In light of the requirements set out in the draft ITS on Pillar 3 ESG risks, the EBA also stressed the importance of enhancing the disclosure of corporates’ transition plans and of standardising the climate change-related metrics, so as to ensure the comparability and the quality of their disclosures.
The EBA has coordinated the responses with the European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA), and the European Central Bank/Single Supervisory Mechanism.
Franca Rosa Congiu