On 13 December last year, the European Banking Authority (EBA) published its roadmap on Sustainable Finance outlining the objectives and key milestones for delivering its various mandates and actions in the field, building on and replacing the EBA’s first action plan published in December 2019.

This new action plan covers 8 main areas:

1. Transparency and disclosures

§  Develop disclosure templates on ESG risks

§  Provide further recommendations to improve financial market participants’ practices under the Sustainable Finance Disclosure Regulation (SFDR)

§  Support the European Commission (EC) to ensure a proper and consistent application of Taxonomy-related disclosures.

2. Risk management and supervision

§  Provide further guidance to ensure robust and harmonised practices in the assessment and management of ESG risks (including transition plans)

§  Include more granular requirements on the treatment of ESG risks in the Supervisory Review and Evaluation Process (SREP)

3. Prudential treatment of exposures

§  Formulate recommendations on whether a dedicated prudential treatment of assets and activities associated with environmental and social objectives/impacts would be justified

4. Stress-testing

§  Provide guidance on how to test institutions’ resilience to climate change and to long-term negative impacts of ESG factors

§  Develop guidelines for supervisory ESG stress testing, starting with climate risks

5. Standards and labels

§  Continue its work on EU Green Bond standards

§  Assess the relevant and need for additional EU standard for sustainable financial products/instruments

6. Greenwashing

§  Provide insights on greenwashing specific forms and dimensions

§  Evaluate greenwashing risks within the EU banking sector

§  Identify existing market practices, regulatory frameworks and supervisory tools to address greenwashing

§  Provide recommendations to the EC to further address greenwashing

7. Supervisory reporting

§  Allow effective and efficient supervisory processes of ESG risks through the collection of uniform, consistent and granular information that competent authorities will need to carry out their monitoring and supervision tasks

8. ESG risks and sustainable finance monitoring

§  Support the setup of a monitoring system to assess material risks and monitor developments of sustainable finance

§  Contribute to the EC’s systematic monitoring of climate-related financial stability risks.

Most aspects of the EBA mandates are monitored and discussed in the respective ABBL working groups. Should you need to know more about ABBL activities in one specific area, you can contact: