Sustainable finance

Sustainable finance aims at integrating Environmental, Social or Governance (ESG) criteria into financial services, and at supporting sustainable economic growth. It also aims at increasing financial actors' awareness and transparency about the need to mitigate ESG risks via an appropriate management, considering in particular the longer-term nature of such risks and the uncertainty on their valuation and pricing.

In March 2018, the European Commission published its Action plan on Financing Sustainable Growth, setting an EU strategy on sustainable finance and a roadmap for future work across the financial system. On the back of this plan, the EBA prepared its own work plan and identified its key priorities. These include considerations on how ESG can be incorporated into the regulatory and supervisory framework of EU credit institutions. The EBA also has an important role in monitoring  market practices related to sustainability, and engaging with relevant stakeholders and the industry.

The sections below include relevant news and events related to the EBA's involvement in sustainable finance as well as any publication on this topic.

 

  • On 12 October 2023 the EBA published its Report on the role of environmental and social risks in the prudential framework. The Report assesses how the current prudential framework captures environmental and social risks. It also recommends targeted enhancements to accelerate the integration of environmental and social risks across the Pillar 1.

  • On 1 June 2023 the Eureopan Supervisory Authorities published their respective Progress Reports on greenwashing: EBAESMA, EIOPA. The EBA's Report provides an overview of greenwashing in the banking sector and its impact on banks, investment firms and payment service providers.

  • On 12 February 2023 the European Banking Auhtoirty launched an industry survey to receive input from credit institutions on their green loans and mortgages as well as market practices related to these loans. 

  • On 10 December 2021 the European Commission Delegated Act of 6 July 2021 supplementing Article 8 of the   Taxonomy Regulation was published in the Official Journal. This regulation specifies the content, methodology and presentation of information to be disclosed by financial and non-financial undertakings concerning the proportion of environmentally sustainable economic activities in their business, investments or lending activities. The EBA together with other ESAs provided the European Commission with their advice towards the development of this regulation.

  • On 9 December 2021, a first delegated act on sustainable activities for climate change adaptation and mitigation objectives, supplementing Taxonomy Regulation, was published in the Official Journal.

  • On 3 November 2021, the EBA published its Statement in the context of COP26, which highlights the EBA's efforts to update and enhance the entire supervisory and prudential regulatory framework in the environmental, social and governance (ESG) domain.

  • On 6 July 2021, the European Commission adopted a communication on The Strategy on Financing the Transition to a Sustainable Economy which builds on the 2018 Action Plan on Financing Sustainable Growth and puts forward four key policy areas for sustainable finance in the next years: transition finance, inclusiveness, international ambition as well as resilience and contribution.

  • On 23 June 2021, the EBA published its Report on Environmental, Social and Governance (ESG) risks management and supervision. The Report, which is a key component of the EBA’s broader ESG work, provides a comprehensive proposal on how ESG factors and ESG risks should be included in the regulatory and supervisory framework for credit institutions and investment firms.

  • On 22 June 2020 the Taxonomy Regulation was published in the Official Journal of the European Union and entered into force on 12 July 2020. The Taxonomy Regulation establishes the basis for the EU taxonomy by setting out overarching conditions (i.e., sustainable contribution to environmental objectives, no significant harming, minimum social and governance safeguards, and technical screening criteria) that an economic activity has to meet in order to qualify as environmentally sustainable.

  • On 6 December 2019, the EBA published its Action Plan on sustainable finance outlining its approach and timeline for delivering mandates related to environmental, social and governance factors. The Action plan explains the EBA’s sequenced approach, starting with key metrics, strategies, risk management and moving towards scenario analysis and evidence for any adjustments to risk weights. The Action Plan also aims to communicate key messages on the EBA’s policy direction and the expectations from financial institutions on areas where action is needed now to support the move towards more sustainable finance in the EU. Click here to see the Action Plan.

  • On 18 June 2019, the TEG on sustainable finance published three new reports:

Report on the EU taxonomy
Report on an EU Green Bond Standard
- Interim report on climate benchmarks and benchmarks’ ESG disclosures

The Commission has also published the new guidelines for companies on how to report climate-related information. These guidelines are built on the proposals made by the TEG in January 2019.

To accompany these reports and provide a venue for an open exchange with stakeholders, the Commission organised a Stakeholder dialogue on sustainable finance on 24 June 2019. The event also featured a session on the future of sustainable finance, with the ESAs participation. Click here to access the video of the event.

  • On 4 April 2019, the EBA and the European Banking Federation held a workshop on sustainable finance. This workshop highlighted the willingness of EU supervisors, regulators and banks to move forward on the various challenges related to sustainable finance and engage in a structured dialogue for incorporating sustainability into EU banks' frameworks and risk management.

    Click here to access the agenda.
    Click here to access the presentations.
    Click here to access the summary.

  • In December 2018, the EBA joined the Network for Greening the Financial System (NGFS) , i.e. a network of central banks and supervisors whose purpose is to help strengthen the global response required to meet the goals of the Paris agreement  and to enhance the role of the financial system to manage environmentally and climate-related risks.
    Click here to access the NGFS website.
    Click here to access the first NGFS comprehensive report.
     
  • In June 2018, to advance the work on sustainable finance, the European Commission has set up a Technical Expert Group (TEG) and the EBA is a member of the group. The role of the TEG is to assist the Commission in the development of a unified classification system for sustainable economic activities (“EU Taxonomy”), an EU green bond standard, methodologies for climate benchmarks and disclosures for benchmarks, and to provide guidance to improve corporate disclosure of climate-related information.

Publications

2023

 

The EBA recommends enhancements to the Pillar 1 framework to capture environmental and social risks

12 October 2023


ESAs Responses* to the call for Evidence on greenwashing

*Certain responses have not been published on request from the respondent. In addition, certain responses have been partially redacted because they could potentially be offensive or defamatory, or are unrelated to the topic of the survey or confidential. In all cases, the views expressed in the responses are solely those of the respondents. Just like with any other consultation or call for evidence conducted by the ESAs, publication of the responses by the EBA shall not be taken as an endorsement of any kind by the EBA.

13 July 2023


ESAs present common understanding of greenwashing and warn on related risks

1 June 2023


2022

 

The EBA publishes its roadmap on sustainable finance

13 December 2022


ESAs launch joint Call for Evidence on greenwashing | ESAs Responses*

*Certain responses have not been published on request from the respondent. In addition, certain responses have been partially redacted because they could potentially be offensive or defamatory, or are unrelated to the topic of the survey or confidential. In all cases, the views expressed in the responses are solely those of the respondents. Just like with any other consultation or call for evidence conducted by the ESAs, publication of the responses by the EBA shall not be taken as an endorsement of any kind by the EBA.

15 November 2022


EBA reasserts its commitment to contribute to a more resilient and sustainable financial system

9 November 2022


EBA publishes Report on the integration of ESG risks in the supervision of investment firms

24 October 2022


ESAs propose disclosures for fossil gas and nuclear energy investments

30 September 2022


ESAs issue report on the extent of voluntary disclosure of principal adverse impact under the Sustainable Finance Disclosure Regulation

28 July 2022


ESAs provide clarifications on key areas of the RTS under SFDR

2 June 2022


EBA launches discussion on the role of environmental risks in the prudential framework

2 May 2022


ESAs issue updated supervisory statement on the application of the Sustainable Finance Disclosure Regulation

24 March 2022


EBA recommends adjustments to the proposed EU Green Bond Standard as regards securitisation transactions

2 March 2022


EBA publishes binding standards on Pillar 3 disclosures on ESG risks

24 January 2022

2021

EBA publishes results of EU-wide pilot exercise on climate risk

21 May 2021


EBA reaffirms its commitment to support green finance in view of the UN Climate Change Conference

3 November 2021


ESAs propose new rules for taxonomy-related product disclosures

22 October 2021


EBA updates on monitoring of Additional Tier 1 instruments and issues recommendations for ESG-linked capital issuances

24 June 2021


EBA publishes its Report on management and supervision of ESG risks for credit institutions and investment firms

23 June 2021


ESAs consult on Taxonomy–related product disclosures

17 March 2021


EBA launches public consultation on draft technical standards on Pillar 3 disclosures of ESG risks

1 March 2021


EBA advises the Commission on KPIs for transparency on institutions’ environmentally sustainable activities, including a green asset ratio

1 March 2021


ESAs issue recommendations on the application of the Regulation on sustainability-related disclosures

25 February 2021


The three European Supervisory Authorities publish Final Report and draft RTS on disclosures under SFDR

4 February 2021

2020

The EBA launches consultation to incorporate ESG risks into the governance, risk management and supervision of credit institutions and investment firms

3 November 2020


EBA seeks input from institutions on their ESG disclosure practices

17 September 2020


EBA supports EU Commission’s actions towards a more sustainable European economy

16 July 2020


EBA proposes enhanced standardisation of disclosure requirements laid down in the Non-Financial Reporting Directive

11 June 2020

2019

The EBA calls on banks to consider long-term horizons in their strategies and business activities

18 December 2019


EBA pushes for early action on sustainable finance

6 December 2019

Infographics

EBA Mandates on sustainable finance                  EBA Timeline on sustainable finance 

 

EBA Mandates on sustainable finance                  EBA Timeline on sustainable finance 

 Factsheets

ESG risks management and supervision factsheet
 
 Environmental social and governance Pillar 3 disclosures
  
   

[en]: PDF

 

[en]: PDF