On March 1, 2021, the European Banking Authority (EBA) released its consultation regarding draft technical standards for Pillar 3 disclosures of environmental, social and governance (ESG) risks, including reporting templates and instructions.
The European Union's Capital Requirements Regulation (EU) No. 575/2013 (CRR) includes under Article 449a the requirement to disclose prudential information on ESG risks, including transition and physical risk—a requirement addressed to large institutions with securities traded on a regulated market of any member state. These disclosure requirements are applicable from June 2022 on an annual basis during the first year and biannually thereafter.
CRR Article 434a requires the EBA to develop draft implementing technical standards (ITS) specifying these disclosure requirements in a way that conveys sufficiently comprehensive and comparable information for users of that information to assess institutions' risk profiles.
In the consultation, the EBA proposes a sequential approach for the implementation of the prudential disclosure requirements under CRR Article 449a, starting with quantitative information on climate change-related risks, including transition and physical risks; on the implementation of a Green Asset Ratio (GAR) on EU taxonomy1-aligned activities, which translate the Paris agreement into action; and on other mitigating actions; and qualitative disclosures for ESG risks.
Responses to the consultation are required on or before June 1, 2021.
Footnotes
Originally published 4 March 2021
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2020. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.