Question ID
2023_6843
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Transparency and Pillar 3
Article
449a
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) 2021/637 - ITS with regard to disclosures of information referred to in Titles II and III of Part Eight CRR
Article/Paragraph
18a and Annex II
Name of institution / submitter
French Banking Federation / Karen Degouve
Country of incorporation / residence
France
Type of submitter
Industry association
Subject matter
Template 3 / Level of NACE codes to use
Question

In Template 3, different levels of NACE code are indicated (level 1, 2, 3 or 4). What does this mean in practice, should banks report their full exposures falling under each level, or should exposures be reported in one category only? For example, for the fossil fuel sector a level-one NACE code is indicated (NACE code “6”) along with level 2 and 3 NACE codes (NACE code 61, 610…) – should exposures reported under code 610 also be included in exposures reported under 61 and 6?

Please note that some NACE codes are overlapping (e.g. NACE code 8 is proposed for fossil fuel combustion and NACE code 89 is proposed for cement) – should exposures reported under 89 also be included in exposures reported under 8?

Background on the question

It is unclear what should be reported under each level of NACE code, hence clarification is needed.

Submission date
Final publishing date
Final answer

According to point (a) of paragraph 4 in the instructions of Template 3 “Banking book - Indicators of potential climate change transition risk: Alignment metrics” in Annex XL of Regulation (EU) 2021/637 (ITS on Pillar 3 disclosures), it is specified that in column (b) institutions shall disclose the subsectors within the sectors indicated in column (a). In Annex XXXIX of ITS on Pillar 3 disclosures, under Template 3 there is a list of NACE sectors to be considered to be included in column (b) of the template.

It is not mandatory to include all of these NACE sectors listed under Template 3, nevertheless these shall be all taken into account, when determining the final subsectors to be disclosed in column (b).

The level of the NACE codes used for a particular subsector shall be determined by its materiality, based on the related exposures to be disclosed in column (c). In case a subsector represented by a level 4 NACE code considered to be material on its own, then the institution shall disclose that level 4 NACE code in the template for that alignment metric. In case a subsector only considered to be material once the related exposures are aggregated under the level 2 NACE code, the institution shall use that level of NACE code for that particular subsector.

When determining the relevant subsectors for the template, taking into account the abovementioned materiality approach for the metrics, institutions are not required to allocate exposures exclusively to only one NACE code or only to one specific level of NACE code within the same sector. For example, if NACE code 6 considered to be material, but at the same time NACE code 610 also considered to be material on its own, they shall be disclosed in separate rows and exposures under NACE code 610 shall be also included under NACE code 6. The institution may use such a graphic expression in column (b), from which it is clear, that exposures under NACE code 610 are subordinated to exposures under NACE code 6.

Status
Final Q&A

Disclaimer

The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.