EU strengthens disclosure of ESG risks in credit institutions with new requirements
Commission Implementing Regulation (EU) 2024/3172 introduces new obligations for credit institutions, which will have to disclose half-yearly information on environmental, social and governance (ESG) risks, as well as on the impacts of climate change. This regulation, applicable from January 2025, aims to improve transparency and consistency in prudential risk management.
The main purpose of Commission Implementing Regulation (EU) 2024/3172, applicable as of January 1, 2025, is to amend the rules on uniform disclosure formats applicable to credit institutions in order to improve transparency and consistency in the scope of prudential requirements applicable to credit institutions. Specifically, it repeals, on the one hand, Commission Implementing Regulation (EU) 2021/637 of 15 March 2021, and on the other hand, it establishes implementing technical rules for the application of Regulation (EU) 575/2013 of the European Parliament.
By means of Article 22 of the Commission Implementing Regulation (EU) 2024/3172, new obligations are introduced regarding the disclosure of information on environmental, social and governance risks for those qualified by the text as “large institutions”, which includes those credit institutions that have the status of global systemically important institutions (G-SIIs) and the other systemically important institutions (O-SIIs) whose determination in Spain depends on the Bank of Spain, those three institutions with the largest total value of assets in a Member State and those which total value of its assets on an individual basis or, where appropriate, on the basis of their consolidated situation, is equal to or greater than 30 billion.
In this regard, as a consequence of the application of Commission Implementing Regulation (EU) 2024/3172, the referred entities must disclose twice a year information on:
- environmental, social and governance risks
- climate change transition risk
- on climate change physical risks;
- mitigation actions associated with economic activities considered environmentally sustainable under Article 3 of Regulation (EU) 2020/852 towards counterparties subject to Article 19a or 29a of Directive 2013/34/EU, households and local governments as referred to in Part 1, point 42(b) of Annex V of Commission Implementing Regulation (EU) 2021/451, including administrative bodies and non-profit entities; and
- quantitative information on other mitigation measures and exposures to climate change related risks that do not qualify as environmentally sustainable economic activities under Article 3 of Regulation (EU) 2020/852, but which support counterparties in the transition or adaptation process for the objectives of climate change mitigation and adaptation.
Furthermore, such entities may also choose to disclose quantitative information on mitigating actions and exposures on climate change related risks associated with economic activities considered environmentally sustainable pursuant to Article 3 of Regulation (EU) 2020/852, towards counterparties that are non-financial corporations that are not subject to the disclosure obligations laid down in Articles 19a or 29a of Directive 2013/34/EU and that are not subject to the disclosure obligations laid down in Commission Implementing Regulation (EU) 2021/2178.
For the purposes of complying with the aforementioned disclosure obligations, the Commission Implementing Regulation (EU) 2024/3172 contains the informative templates that the referred entities shall periodically complete.
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