EBA publishes final draft ITS on Pillar-3 disclosure of ESG risk information

2022/01/24

The European Banking Authority (EBA) published its final draft implementing technical standards (ITS) on Pillar-3 disclosures on environmental, social and governance (ESG) risks, which set mandatory and consistent disclosure requirements, including granular templates, tables, and associated instructions, in line with Article 434a of the Capital Requirements Regulation (CRR). The draft ITS set out comparable quantitative disclosures on climate-change related transition and physical risks, including information on exposures towards carbon-related assets and assets subject to chronic and acute climate-change events. They also include quantitative disclosures on institutions’ mitigating actions supporting their counterparties in the transition to a carbon-neutral economy and in the adaptation to climate change. The draft ITS include key performance indicators (KPIs) on institutions’ assets-financing activities that are environmentally sustainable according to the EU taxonomy, e.g., a green asset ratio (GAR) and a banking book taxonomy alignment ratio (BTAR). And, the draft ITS provide qualitative information on how institutions are embedding ESG considerations in their governance, business model, strategy, and risk-management framework. Proportionality measures include transitional periods and the use of estimates.