A centralized register for ESG data in the EU:
EACB, EBF, EFAMA, ESBG, IE, PE Joint Letter
BRUSSELS, 10 June 2020 – The European Banking Federation, together with five other financial industry associations, is calling for the European Commission to establish a common ESG data register in the European Union to enhance the availability of relevant and reliable ESG data, facilitate disclosure and scale-up sustainable funding.
- The data register should focus on ESG disclosure in line with Non-Financial Reporting Directive and EU taxonomy, starting with climate change adaptation and mitigation objectives, as well as ESG data necessary to financial market participants to comply with the Sustainable Finance Disclosure Regulation.
- The register should also include relevant ESG information already collected by European and national institutions such as governments, central banks, statistical bodies, etc. The EU should open up its databases that collect environmental reporting data and make those re-usable to users of non-financial information.
- Such data should be gathered and made available digitally to users of non-financial information, not only investors but also lenders, academia, researchers, authorities and others.
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]]>Publication date: 9 June 2020
EBF responded to the European Commission consultation on the Review of the Non-Financial Reporting Directive (NFRD).
Key Messages
General recommendations
- Regulation instead of Directive
- Consistency of disclosure requirements across EU legislation (alignment with EU Taxonomy Regulation, Disclosure Regulation, CRR2 Pillar 3 requirements, June 2019 EC Non-Binding Guidelines on Climate Reporting, ECB guidance) and as much as possible and appropriate in the EU context with widely adopted frameworks
What data is needed and for what purposes?
- Banks need robust, comparable and reliable data
- To identify and assess sustainability risks in lending activities
- To comply with the new disclosure obligations
- To steer portfolios towards the objectives PA and EGD
Who should report?
- All listed companies given the application of the taxonomy to all financial investments in the capital/financial market
- All large companies. The criteria for banks should be modified to include banks with more than 250 employees and more than 5 billion in total assets.
- Companies from sectors with a high transition risk (for example mining, carbon, smaller utilities ….for material risks (e.g. climate only), regardless of the size of the
- All remaining companies based on a simplified minimum reporting framework taking into account materiality, proportionality in a structured manner and possible gradual implementation (sectors with high risks first).
What should be reported?
- More detailed requirements on environmental matters
- Clear link to taxonomy (Harmonized data collection with a clear nomenclature to allow automatization; data collection templates for each economic activity)
- Standardized scenario analysis following TCFD for large companies in polluting sectors
- Alignment of strategies with 2 degrees
- Number of Key KPIs aligned with the disclosure requirements that will be specified in the Delegated Act of the Taxonomy Regulation
- Gradually, associated revenues and expenses of eligible products or activities and the associated sustainable assets (both as a percentage of the total).
- Greater focus on information and data related to societal aspects
- Governance issues as in TCFD
Need for EU central data register to facilitate disclosure
- EU to adopt strategic infrastructure project in the context of European Green Deal dataspace
- EU to build or supports, based on existing solutions and infrastructure, a central European ESG data register that would:
- Collect periodically, with the help of new reading technologies, existing climate change mitigation and adaptation data of companies under the NFRD.
- Collect other available relevant information, ESG metrics and relevant data points
- Interconnect the relevant EU and MS databases collecting ESG information (government, CB, statistical bodies)
- Enable to upload information to the register on a voluntary basis
- Data to be provided to users of non-financial information for free or at reasonable cost
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]]>EBF advisor: Denisa Avermaete
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Publication date: 2 March 2020
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Key points:
- The NFRD should take the form of a Regulation, to ensure harmonization and efficiency.
- An EU minimum reporting standard on the key data points and KPIs that are necessary to apply the taxonomy and the sustainability disclosures regulation, and more specifically to demonstrate the investment’s environmental impact should be developed .
- The EU should open up its databases that collect environmental reporting data and make those re-usable for finance providers. Data should be collected in a central EU repository and made available digitally to ensure that data are widely accessible across MS in an open source format. The EU Commission should put in place or support infrastructures to collect periodically, with the help of new reading technologies, existing climate change mitigation and adaptation data of companies that published non-financial statements under the NFRD and other available relevant information.
- Taking into account the new provisions for non-financial reporting under article 4 delta of the Taxonomy regulation, the legal act should:
1) Modify the scope in a proportionate way, to add certain categories of companies not currently covered by the NFRD as follows
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- A) the EU rules on non-financial reporting should apply to all listed companies given the application of the taxonomy to all financial investments in the capital/financial market.
- B) companies from sectors with a high transition risk (for example mining, carbon, smaller utilities, …), should also comply with reporting obligations for material risks (e.g. climate only), regardless of the size of the company. Information on climate risk is essential for TCFD reporting as integrated into the EU Non-financial reporting guidelines.
- C) A simplified minimum reporting framework or Guidelines could be considered for the remaining companies taking into account materiality, proportionality and possible gradual implementation.
Inclusion of SMEs, whose lack of data poses a problem for banks should be considered based on a minimum and possibly simplified set of information that could be provided by SMEs in a structured manner consistent with EU standards, given due considerations to proportionality and materiality.
2) Specify in more detail what non-financial information companies should report, namely a common minimum set of key performance indicators; these KPIs must be aligned with the list of Taxonomy-compliant activities and products they produce.
For more information:
Denisa Avermaete, d.avermaete@ebf.eu
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Every Friday at noon you can receive the EBF Weekly + Financial Regulation Agenda. This agenda presents an overview of upcoming European and international meetings and conferences in financial regulation, as well as important general financial and economic events and key EBF meetings for the week ahead. CLICK HERE TO SUBSCRIBE
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The EBF Morning Brief is published Monday through Friday morning and brings you the top banking headlines, relevant announcements from the EU institutions and the latest from the EBF and its members, national banking associations in 32 countries in Europe. CLICK HERE TO SUBSCRIBE
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