The EACB considers the work of the Technical Expert Group (TEG) on climate-related disclosures as an important step to provide further guidance on how to disclose climate-related information. We welcome the possibility to answer the on-line questionnaire on the Report and we are generally satisfied with the level of alignment between the NFRD and the TCFD frameworks proposed.
We recommend however a gradual approach, in particular in a context where the ongoing work on climate-related taxonomy and other regulatory initiatives on sustainable finance have not reached the necessary maturity. For this reason starting with qualitative and forward looking information tools rather than quantitative risk-disclosure tool seems preferred. This would ensure consistency with the other set of regulatory and supervisory requirements. In particular in the context of the “Sector Specific Guidance for Banks” and disclosure on “Principle Risks and their management”, we recommend to add clarification on Type 1 disclosure, regarding ESG factors incorporation and their influence over “financial risk position” and “credit analysis” in order to avoid inconsistency or misleading information overlap between climate-related risk factors and other CRD IV Pillar 3 general risk disclosure by banks.
Concerning Scope 3 GHG emissions (regarding “all indirect emissions along a value chain”), the EACB underlines the challenges associated with it, due to the links and interdependencies with disclosure by corporate clients on their own GHG emissions. Given the recognized lack of available robust methodologies in the market, as stated in the report, we urge for further developments in this area, as to foster the comparability and completeness of such information.
In conclusion, the EACB recommends a gradual approach: there are still several open questions, starting with the development of the European taxonomy that it is still at its inception. Moreover the first annual reports complying with the NFRD are just being published this year and need to be assessed. It shall also be underlined that several initiatives at national and international level are ongoing to better integrating the climate-related risks, in particular for what concern transition risks. Co-operative banks are following with interest those reflections on the different methodologies, as they are active players in financing the energy transition. In this light further guidance, templates and testing would be necessary. For example taking into account the national and local climate-risk specificities or scenarios that may differ widely among countries and regions. We recommend the Sector guidance to be further developed to facilitate the users.
Here you will find the complete EACB answer to the Technical Expert Group questionnaire on their report on climate-related disclosures.
8 February 2019
EACB Answer to Report on climate-related disclosure (EC TEG consultation)
EACB