Response to consultation on draft ITS on Pillar disclosures on ESG risk
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- To avoid duplication of reporting, the instructions could include references or data points to other relevant reporting or disclosure templates in for instance FINREP or the Taxonomy when relevant.
-The link with prudential parameters (PD/Performing/non-performing) would suggest a direct relationship with climate risk, which is in fact much more complicated than just that. Combining credit risk and climate risk in one assessment may be creating a truth where there is none. Publication of these combined details may run the risk of mis-interpretation by non-expert readers. We suggest considering the inclusion of information on PD versus climate risk in Pillar 2 assessments.
- Short -term, medium-term and long-term need to be defined for comparability of public reports.
- The description of transmission channels of transition risks may benefit from the BIS’ publications in this regard.
- We regret that the impact of financed activities is not regarded, since we observe in our own business that minimizing the negative and optimizing the positive or regenerative impact of financed activities implies information about their resilience over time and as such, lower risks over time, although those reduced risks could not be measured today.We believe the requirements are too granular and not all relevant for public disclosures under Pillar 3. For public disclosure and use of the information by external stakeholders, more focus may support their decisions better.
- We suggest that the most relevant templates that both serve the purpose of the underlying regulation and are technically feasible for most banks in the internal market are:
o Template 1 is the most important one. We recommend a focus on columns a, b, l+m+n only gross amounts, o v+w+x only gross amounts, and especially the information on absolute financed emissions in column y, and the data-quality in z. This should be the basis for a public insight into the bank’s climate risk profile
o Template 2, all good, maturity insight matters for exit strategies, especially when combined with the financed emissions of each exposure as reported in template 1.
o Template 3, all good, real estate matters for an insight in a society’s progress and the bank’s share in that progress. Column k may need refinement: tonnes CO2e of financed emissions, or emissions of the property, and if the latter, over what period of time?
o Template 4 as suggested is too detailed while not serving risk insights. More feasible and valuable for the purpose of the provision may be an auditable hotspot analysis with financed emissions as reported in template 1.
o Template 5 could be effective if it were anonymized and followed a hotspot analysis to show the relative exposures in each sub-sector for a given portfolio
o Template 6 may be confined to column a only.
o Template 7 on physical risk: the extended template may be regarded as an optional reporting standard in a transition period.
o Template 8 & 9 regard the Taxonomy regulation’s reporting requirements. Please avoid duplication and use references.
o Template 10 seems redundant for now but may be refined in a later stage of sustainability reporting progress.
- Although available methodologies are not yet fully comparable among banks, this ITS may improve the comparability by requiring the use of harmonized concepts, such as the GHG Protocol. Public disclosure based on different methodologies and scope will lead to misinterpretation and could expose banks to reputation risks. At least, EBA could require banks to publish their financed emissions based on the GHG protocol. These financed emissions can serve several elements in the templates to reveal the climate risk profile of the bank.
- Given the dynamics of the relevant data, an assessment of the bank’s climate risk profile would not improve with semi-annual disclosures. Annual disclosures should serve its purpose adequately.
- We recommend adding a look-through requirement for exposures to non-EU financial entities and check the ultimately financed emissions of those entities. If the ITS focuses on polluting activities in relevant NACE codes only, banks could avoid being subject to the ITS if they transfer their fossil exposures to (non-regulated) non-EU financial entities.
- However, since there is no common language for qualitative information yet, interpretations may differ and as such be misleading.
- We would recommend EBA to focus on the most important information and refrain from requiring too detailed information. A basic qualitative description of integration of climate risks into strategy and organisation should be possible.
- We also recommend EBA to start thinking about monitoring the added value and resilience of financed activities and companies in the economies they operate in, i.e. their positive impact on society. For instance, a qualitative description of policies and longer-term objectives of the bank. As a values-based banks, we regard the balanced assessments of risks versus impact important, since we believe it supports the stability of our portfolios.
- However, we recommend adding a look-through requirement for exposures to non-EU financial entities and check the ultimately financed emissions of those entities. If the ITS focuses on polluting activities in relevant NACE codes only, banks could avoid being subject to the ITS if they transfer their fossil exposures to (non-regulated) non-EU financial entities.
- This template is the most important one. The climate risk profile of the bank would emerge from columns a, b, l+m+n only gross amounts, o, v+w+x only gross amounts, and especially the information on absolute financed emissions in column y, and the data-quality in z. This should be the basis for a public insight into the bank’s climate risk profile.
- Columns f to k, as well as p to u, require a granularity of which we question both the feasibility and the added value for the purpose of pillar 3.
- We may wish to avoid linking climate risk (a long-term risk) with credit risk (a short to medium term risk) in public disclosure, as the interpretations may be misleading.
- Although the use of NACE Codes seems logical, gaming with NACE codes may need to be avoided. After all, large companies typically perform more than one activity, and finance is often arranged through the holding company, so if only the main activity is considered we will miss insight into the transition of the company as a whole.
- At a minimum, the GHG emissions financed by financial undertakings in the European Union should be known, in order to enable (science based) targets and tracking progress towards a zero carbon economy.
- There are industry-led approaches to measure or estimate and monitor financed emissions following the GHG protocol and there’s no reason left not to start disclosing financed emissions. For example, the Partnership for Carbon Accounting Financials (PCAF) directly addresses emissions management through its Global GHG Accounting and Reporting Standard for the Financial Industry, which enables financial institutions to measure and disclose the absolute GHG emissions of their loans and investments. The Standard, which is built on and backed by the GHG Protocol, was the response to industry demand for a global, standardized GHG accounting approach. PCAF aims to trigger action through transparency, an effective antidote to greenwashing. Its primary metric for disclosure is absolute financed emissions, expressed in tonnes CO2e.
- Although methodologies for Scope 3 emissions for banks are not fully mature yet, they will only mature if regulators force the sector to go and use them and improve data-quality, while accepting lower data-quality in the meantime; this is why column z in template 1 matters: this one should show improving quality over time.
- We’d like to underline that the maturities of the loans also indicate the loyalty of the bank vis a vis their clients, which is a stabilizing factor in itself.
- An annual overview of these maturities makes sense.
- This disclosure will facilitate a more active management of physical climate risks. For Triodos Bank, as a value-based bank, accepting a certain level of physical risk exposure, e.g. a retail mortgage portfolio in flood prone regions, is weighted against the potential to create positive social impact, increased resilience against climate change and a sustainable return. Reporting on physical risks gives Triodos Bank an opportunity to engage in dialogue to promote a more holistic and sustainable approach towards Finance.
- In order to prevent double counting of acute and chronic climate change events, the climate risk data collection should be based on periodical risk assessments, benchmarked and evidenced against industry and scientific standards. An asset maybe primarily prone to acute events at first, and over time - due to climate change - it can be more prone to chronic events.
- Methodology: The nature of physical risk (e.g. droughts and heatwaves) is that the climate ‘system’ affects specific asset types across all counterparties (e.g. organic farming) in a certain location (e.g. Central Spain) during a certain period of time (e.g. summer months). Therefore, the inherent risk exposure towards physical risk can be assessed at the cross-section of industry sector, geographic area and time of year. The residual physical risk, that is the inherent risk after risk mitigation, can be determined at an asset / counterparty level. For example, certain farmers may have installed innovative irrigation and shading systems that mitigate the impact of long periods of drought and heatwaves. For these farmers, the inherent physical risk may be high, but due to effective risk mitigation, the residual physical risk level may be low.
Internal definitions and guidelines will need to be developed to determine when physical assets and sectors should be regarded as e.g. prone to climate change events, alongside with expert based standards to assess the probability of negative financial impact, based on e.g. risk maps, (trends in) actual local events and loss databases.
Based on risk maps (e.g. EC Risk Data Hub, S&P Global Risk data, UNEP Environmental Data Explorer, OECD Environment knowledge hub) and loss data of climate change events in the industry or region, a first physical risk assessment at sector level can be conducted by business representatives and risk management. The level of effective physical risk mitigation measures can be performed at an asset / counterparty level, after which an overall qualitative risk score will be assigned to the asset (e.g. low/medium/high on impact and probability). The proposed risk scores will need to be formally approved (e.g. by a risk committee) and documented. Based on a certain threshold (e.g. at least medium probability and impact) it is then determined if an exposure is defined as ‘prone’ to climate change physical risk.
The climate risk assessment will need to be conducted periodically, based on a risk assessment methodology that is benchmarked on the latest industry and scientific standards and that is reviewed periodically. In practice, high risk exposures may be reviewed on an annual basis, while low risk exposures may be reviewed once every 3 to 5 years.
- Extended template & transitional period: The reporting requirement should be set with an appropriate transition period allowing (groups of) banks and data suppliers to develop robust and efficient methodologies to measure and report on climate change physical risk. The extended template, for example, could be made optional during this transition period.
- In general, by all means, we believe that as 450 million EU citizens, their corporates and governments, must do all we can to avoid climate events from happening. This implies first and foremost to stop financing harmful activities.
- Avoiding climate risk from materializing is possible by (1) transparency and awareness i.e. obligatory monitoring of climate impact in any of the relevant metrics of the taxonomy, if material for the financed activities, which is what this ITS will achieve, (2) positive impact finance, i.e. only financing activities with added value for people and regenerative for the planet, (3) steering policies, i.e. a higher carbon price etc.
- Moreover, if banks publish their GAR in their annual report to comply with the TR, then also including it in pillar 3 would be redundant.
- We question the relevance of disclosing the GAR biannually.
- The Pillar 3 framework on prudential disclosures on ESG risks should allow investors and stakeholders to compare the sustainability performance of institutions and of their financial activities.
- Although scenario analyses and forward-looking information is crucial for a bank’s viability over time, the comparability between banks should be confined to core elements.
- Including this type of complex information may thus be more confusing than disciplining and we suggest leaving it in pillar 2 and the SREP.
- Instead, we would recommend including a publication of a bank’s objectives and positive impact policies, in order to inform stakeholders about the longer-term impact that the bank pursues with its finance activities.
Question 1: Are the instructions, tables and templates clear to the respondents?
- Not all instructions are. We would welcome an explanation of the rationale behind publishing certain details of information, as well as a rationale for publishing those on a more than annual basis.- To avoid duplication of reporting, the instructions could include references or data points to other relevant reporting or disclosure templates in for instance FINREP or the Taxonomy when relevant.
-The link with prudential parameters (PD/Performing/non-performing) would suggest a direct relationship with climate risk, which is in fact much more complicated than just that. Combining credit risk and climate risk in one assessment may be creating a truth where there is none. Publication of these combined details may run the risk of mis-interpretation by non-expert readers. We suggest considering the inclusion of information on PD versus climate risk in Pillar 2 assessments.
- Short -term, medium-term and long-term need to be defined for comparability of public reports.
- The description of transmission channels of transition risks may benefit from the BIS’ publications in this regard.
Question 3: Do the respondents agree that the new draft ITS fits the purpose of the underlying regulation?
- We agree that the draft ITS is a good start to fulfill the purpose of Article 449a CRR. Measuring and monitoring financed emissions is the first step towards impact-awareness in banks. We do look forward to next stages of comparable disclosure of other environmental impact, such as on biodiversity (link to PBAF).- We regret that the impact of financed activities is not regarded, since we observe in our own business that minimizing the negative and optimizing the positive or regenerative impact of financed activities implies information about their resilience over time and as such, lower risks over time, although those reduced risks could not be measured today.We believe the requirements are too granular and not all relevant for public disclosures under Pillar 3. For public disclosure and use of the information by external stakeholders, more focus may support their decisions better.
- We suggest that the most relevant templates that both serve the purpose of the underlying regulation and are technically feasible for most banks in the internal market are:
o Template 1 is the most important one. We recommend a focus on columns a, b, l+m+n only gross amounts, o v+w+x only gross amounts, and especially the information on absolute financed emissions in column y, and the data-quality in z. This should be the basis for a public insight into the bank’s climate risk profile
o Template 2, all good, maturity insight matters for exit strategies, especially when combined with the financed emissions of each exposure as reported in template 1.
o Template 3, all good, real estate matters for an insight in a society’s progress and the bank’s share in that progress. Column k may need refinement: tonnes CO2e of financed emissions, or emissions of the property, and if the latter, over what period of time?
o Template 4 as suggested is too detailed while not serving risk insights. More feasible and valuable for the purpose of the provision may be an auditable hotspot analysis with financed emissions as reported in template 1.
o Template 5 could be effective if it were anonymized and followed a hotspot analysis to show the relative exposures in each sub-sector for a given portfolio
o Template 6 may be confined to column a only.
o Template 7 on physical risk: the extended template may be regarded as an optional reporting standard in a transition period.
o Template 8 & 9 regard the Taxonomy regulation’s reporting requirements. Please avoid duplication and use references.
o Template 10 seems redundant for now but may be refined in a later stage of sustainability reporting progress.
- Although available methodologies are not yet fully comparable among banks, this ITS may improve the comparability by requiring the use of harmonized concepts, such as the GHG Protocol. Public disclosure based on different methodologies and scope will lead to misinterpretation and could expose banks to reputation risks. At least, EBA could require banks to publish their financed emissions based on the GHG protocol. These financed emissions can serve several elements in the templates to reveal the climate risk profile of the bank.
- Given the dynamics of the relevant data, an assessment of the bank’s climate risk profile would not improve with semi-annual disclosures. Annual disclosures should serve its purpose adequately.
- We recommend adding a look-through requirement for exposures to non-EU financial entities and check the ultimately financed emissions of those entities. If the ITS focuses on polluting activities in relevant NACE codes only, banks could avoid being subject to the ITS if they transfer their fossil exposures to (non-regulated) non-EU financial entities.
Question 4: Do the respondents agree that the tables with qualitative information proposed capture properly the information that institutions should provide?
- The tables leave ample room for banks to disclose their policies and approaches with respect to the other sustainability indicators and as such we appreciate that.- However, since there is no common language for qualitative information yet, interpretations may differ and as such be misleading.
- We would recommend EBA to focus on the most important information and refrain from requiring too detailed information. A basic qualitative description of integration of climate risks into strategy and organisation should be possible.
- We also recommend EBA to start thinking about monitoring the added value and resilience of financed activities and companies in the economies they operate in, i.e. their positive impact on society. For instance, a qualitative description of policies and longer-term objectives of the bank. As a values-based banks, we regard the balanced assessments of risks versus impact important, since we believe it supports the stability of our portfolios.
Question 5: Regarding template 1 – ‘Banking book - Climate change transition risk: Quality of exposures by sector’, do the respondents agree with the proposals in terms of sector and subsector classification included in the rows of the template and the indentification of the most exposed sectors in columns f to k and p to u?
- We appreciate that the EBA chose to confine the disclosure requirements to the most problematic sectors as identified in the taxonomy. Managing what matters most may make a bigger difference than producing information on the comprehensive set of NACE codes.- However, we recommend adding a look-through requirement for exposures to non-EU financial entities and check the ultimately financed emissions of those entities. If the ITS focuses on polluting activities in relevant NACE codes only, banks could avoid being subject to the ITS if they transfer their fossil exposures to (non-regulated) non-EU financial entities.
- This template is the most important one. The climate risk profile of the bank would emerge from columns a, b, l+m+n only gross amounts, o, v+w+x only gross amounts, and especially the information on absolute financed emissions in column y, and the data-quality in z. This should be the basis for a public insight into the bank’s climate risk profile.
- Columns f to k, as well as p to u, require a granularity of which we question both the feasibility and the added value for the purpose of pillar 3.
- We may wish to avoid linking climate risk (a long-term risk) with credit risk (a short to medium term risk) in public disclosure, as the interpretations may be misleading.
- Although the use of NACE Codes seems logical, gaming with NACE codes may need to be avoided. After all, large companies typically perform more than one activity, and finance is often arranged through the holding company, so if only the main activity is considered we will miss insight into the transition of the company as a whole.
Question 6: Do the respondents agree with the proposal included in templates 1 and 3 to disclose information on scope 3 emissions and with the transitional period proposed?
- The scale of the climate challenge is massive and the role of the financial sector in accelerating the transition to a net-zero emissions economy is essential. According to the latest RAN-report, five years after the Paris Climate Agreement was reached in 2015, the largest banks have still invested nearly USD $3.8 trillion into the fossil fuel sector with no downward trend and no assessment of the climate impact of that finance. This status quo will never lead to Paris alignment, highlighting the importance of carbon accounting, especially in the financial sector.- At a minimum, the GHG emissions financed by financial undertakings in the European Union should be known, in order to enable (science based) targets and tracking progress towards a zero carbon economy.
- There are industry-led approaches to measure or estimate and monitor financed emissions following the GHG protocol and there’s no reason left not to start disclosing financed emissions. For example, the Partnership for Carbon Accounting Financials (PCAF) directly addresses emissions management through its Global GHG Accounting and Reporting Standard for the Financial Industry, which enables financial institutions to measure and disclose the absolute GHG emissions of their loans and investments. The Standard, which is built on and backed by the GHG Protocol, was the response to industry demand for a global, standardized GHG accounting approach. PCAF aims to trigger action through transparency, an effective antidote to greenwashing. Its primary metric for disclosure is absolute financed emissions, expressed in tonnes CO2e.
- Although methodologies for Scope 3 emissions for banks are not fully mature yet, they will only mature if regulators force the sector to go and use them and improve data-quality, while accepting lower data-quality in the meantime; this is why column z in template 1 matters: this one should show improving quality over time.
Question 7: Do respondents agree that information in terms of maturity buckets by sector proposed in template 2 is relevant to understand the time horizon of when the institution maybe more exposed to climate change transition risk?
- Yes, we agree. A 5-year maturity of an exposure towards a highly polluting company implies lower transition risk than one of 20 years.- We’d like to underline that the maturities of the loans also indicate the loyalty of the bank vis a vis their clients, which is a stabilizing factor in itself.
- An annual overview of these maturities makes sense.
Question 8: Do respondents agree that information in terms of alignment metrics and relative scope 3 emissions proposed in template 4 is relevant to understand and compare the transition risk phased by institutions? What are the respondents’ considerations with regard to the alignment metrics proposed and the sectors that should be covered by this disclosure? Do respondents agree with the transitional period proposed?
In our view, the added value of template 4 is limited. Although alignment metrics may seem informative to some, in our view a better risk profile for risk management and disclosure purposes would be given with hot spot analyses using financed emissions per sector. After all, zero carbon in 2050 is the target for everyone.Question 9: Regarding the same template 4, what are the respondents’ considerations with respect to the choice of the 2 degrees reference scenario, would respondents opt for a different scenario?
If any scenario, we would favor always comparing against the 1.5 degrees Celsius scenario, and none other. Zero carbon in 2050 is the target for everyone, so a strategy for reducing emissions based on hot spot analyses with financed emissions would be both more feasible and valuable.Question 10: Do respondents agree that information proposed in template 5 is relevant to understand the level of climate change transition risk and that information on exposures towards the most polluting companies is a good complement to the sectorial information included in other templates? Specific feedback is sought on possible alternative formats for the presentation of the information required in template 5. In particular, the EBA seeks feedback on whether aggregate information on exposures towards th
We wonder whether the purpose of pillar 3 is about naming clients. Template 5 could be effective if it were anonymized and followed a hotspot analysis to show the relative exposures in each sub-sector for a given portfolio.Question 11: What are respondents view on the way template 6 reflects how the trading book of institutions may be impacted by climate change transition risk? Do respondents agree that the threshold proposed to determine which institutions have to disclose this template is the appropriate threshold? Feedback on whether there are alternative ways to present information on the trading book that may allow for a better understanding of how climate change transition risk may impact the trading portfolio.
The most simple approach to the trading book may be sufficient for pillar 3 disclosure, so gross amounts per NACE code.Question 12: Do respondents agree that the information included in template 7 is appropriate to understand how and to what extent the institution may be exposed to climate change physical risk and that the differentiation between a simplified and an extended template is necessary in the short/medium term?
- We agree that the information included in template 7 is appropriate to understand how and to what extent the bank and - at a consolidated European level - the financial system are exposed to climate change physical risk.- This disclosure will facilitate a more active management of physical climate risks. For Triodos Bank, as a value-based bank, accepting a certain level of physical risk exposure, e.g. a retail mortgage portfolio in flood prone regions, is weighted against the potential to create positive social impact, increased resilience against climate change and a sustainable return. Reporting on physical risks gives Triodos Bank an opportunity to engage in dialogue to promote a more holistic and sustainable approach towards Finance.
- In order to prevent double counting of acute and chronic climate change events, the climate risk data collection should be based on periodical risk assessments, benchmarked and evidenced against industry and scientific standards. An asset maybe primarily prone to acute events at first, and over time - due to climate change - it can be more prone to chronic events.
Question 13: Regarding template 7, specific feedback is asked regarding the methodologies and data sources that institutions may use to identify the relevant geographies. Feedback is also required on the content and disclosures proposed in the extended version of the template and on the transitional period proposed.
- Data sources: A mapping of the gross carrying amount of the financed object or project, the client ID, the NACE code and the geographical location / physical address is the basis of the physical risk assessment.- Methodology: The nature of physical risk (e.g. droughts and heatwaves) is that the climate ‘system’ affects specific asset types across all counterparties (e.g. organic farming) in a certain location (e.g. Central Spain) during a certain period of time (e.g. summer months). Therefore, the inherent risk exposure towards physical risk can be assessed at the cross-section of industry sector, geographic area and time of year. The residual physical risk, that is the inherent risk after risk mitigation, can be determined at an asset / counterparty level. For example, certain farmers may have installed innovative irrigation and shading systems that mitigate the impact of long periods of drought and heatwaves. For these farmers, the inherent physical risk may be high, but due to effective risk mitigation, the residual physical risk level may be low.
Internal definitions and guidelines will need to be developed to determine when physical assets and sectors should be regarded as e.g. prone to climate change events, alongside with expert based standards to assess the probability of negative financial impact, based on e.g. risk maps, (trends in) actual local events and loss databases.
Based on risk maps (e.g. EC Risk Data Hub, S&P Global Risk data, UNEP Environmental Data Explorer, OECD Environment knowledge hub) and loss data of climate change events in the industry or region, a first physical risk assessment at sector level can be conducted by business representatives and risk management. The level of effective physical risk mitigation measures can be performed at an asset / counterparty level, after which an overall qualitative risk score will be assigned to the asset (e.g. low/medium/high on impact and probability). The proposed risk scores will need to be formally approved (e.g. by a risk committee) and documented. Based on a certain threshold (e.g. at least medium probability and impact) it is then determined if an exposure is defined as ‘prone’ to climate change physical risk.
The climate risk assessment will need to be conducted periodically, based on a risk assessment methodology that is benchmarked on the latest industry and scientific standards and that is reviewed periodically. In practice, high risk exposures may be reviewed on an annual basis, while low risk exposures may be reviewed once every 3 to 5 years.
- Extended template & transitional period: The reporting requirement should be set with an appropriate transition period allowing (groups of) banks and data suppliers to develop robust and efficient methodologies to measure and report on climate change physical risk. The extended template, for example, could be made optional during this transition period.
- In general, by all means, we believe that as 450 million EU citizens, their corporates and governments, must do all we can to avoid climate events from happening. This implies first and foremost to stop financing harmful activities.
- Avoiding climate risk from materializing is possible by (1) transparency and awareness i.e. obligatory monitoring of climate impact in any of the relevant metrics of the taxonomy, if material for the financed activities, which is what this ITS will achieve, (2) positive impact finance, i.e. only financing activities with added value for people and regenerative for the planet, (3) steering policies, i.e. a higher carbon price etc.
Question 14: Regarding templates 8 and 9, do respondents consider that this template should be enriched including information not only on assets aligned with the taxonomy but also in the interest income generated by those assets? Do respondents agree with the timeline proposed and transitional period proposed for the disclosure of these templates?
- No, we support the simple disclosure of the GAR using outstanding capital in those investees, we don’t see the additional informational value of income information. We don’t really see interest income as a relevant factor.- Moreover, if banks publish their GAR in their annual report to comply with the TR, then also including it in pillar 3 would be redundant.
- We question the relevance of disclosing the GAR biannually.
Question 15: Specific feedback is required from respondents on the way template 10 is defined, and on whether there is additional information that should be added. Feedback is sought on alternative disclosure formats that may contribute to a more standardised and comparable disclosure.
For now, in order to achieve more standardised and comparable climate risk disclosures the focus should be on finding a comparable accounting standard for the emissions.Question 16: Finally, respondents feedback on whether the draft ITS should include a specific template on forward looking information and scenario analysis, beyond the qualitative information currently captured in the tables and templates under consultation and the information required in template 4.
- The Pillar 3 disclosure framework promotes transparency as a main driver of market discipline in the financial sector, to reduce the asymmetry of information between credit institutions and users of information, and to address uncertainties on potential risks and vulnerabilities faced by banks.- The Pillar 3 framework on prudential disclosures on ESG risks should allow investors and stakeholders to compare the sustainability performance of institutions and of their financial activities.
- Although scenario analyses and forward-looking information is crucial for a bank’s viability over time, the comparability between banks should be confined to core elements.
- Including this type of complex information may thus be more confusing than disciplining and we suggest leaving it in pillar 2 and the SREP.
- Instead, we would recommend including a publication of a bank’s objectives and positive impact policies, in order to inform stakeholders about the longer-term impact that the bank pursues with its finance activities.