EU banking package and sustainability

On 27 October 2021, the European Commission adopted a review of EU banking rules (the Capital Requirements Regulation – CRR – and the Capital Requirements Directive – CRD IV). These new rules will ensure that EU banks become more resilient to potential future economic shocks.

The package implements Basel III, stablishes new sustainability rules, and provides stronger enforcement tools for supervisors overseeing EU Banks.

Concerning Sustainability, it intends to strength the resilience of the banking sector to ESG risks, aligned with the Commission’s Sustainable Finance Strategy. It improves the way banks measure and manage these risks, ensuring that markets can monitor what banks are doing. This proposal will require banks to systematically identify, disclose and manage ESG risks as part of their risk management. It includes regular climate stress testing by both supervisors and banks. Supervisors will need to assess ESG risks as part of regular supervisory reviews. All banks will also have to disclose the degree to which they are exposed to ESG risks. To avoid undue administrative burdens for smaller banks, disclosure rules will be proportionate.

The proposed measures will not only make the banking sector more resilient, but also ensure that banks take into account sustainability considerations.

More on https://bit.ly/3Gsbs0T

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s