Embrace the Future of ESG Disclosures with Suade's Advanced Regulatory Solutions
Overview
Recently, the landscape of "green" activities has undergone significant changes. In the past, guidelines were broad and voluntary, but now new regulations in Environmental, Social, and Governance (ESG) have made climate change a core priority. Global standards like the International Sustainability Standards Board (ISSB) resulting from COP26 are shaping the finance industry with green-driven initiatives. Additionally, regulations such as MiFID II, SFDR, NFRD, and the focus on greenwashing by ESMA indicate a growing emphasis on precise requirements.
A significant development in this arena is the introduction of new ESG regulations by the European Banking Authority (EBA) for EU banks. These include Implementing Technical Standards (ITS) based on Articles 434a and 449a of the Capital Requirements Regulation (CRR), mandating disclosures on ESG exposures, risks, and strategies. They introduce key performance indicators, like the Green Asset Ratio (GAR) and Banking Book Taxonomy Alignment Ratio (BTAR), both based on the EU taxonomy to demonstrate institutions' alignment with sustainability goals. These disclosures will cover assets vulnerable to climate change, fossil fuel clients, financed carbon emissions, and alignment with net-zero goals. The initial preparation for these new requirements was set for the end of 2023.
Regulators focus for ESG
The EBA's stringent requirements are designed to foster consistency and comparability in disclosures. These are rooted in recommendations from the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD) and the EU Taxonomy, among others. The EBA's aim is to create a comprehensive Pillar 3 framework, incorporating all relevant disclosure requirements to streamline clarity and implementation.
Additionally, there are substantial updates in the broader ESG regulatory landscape as of 2024. The Corporate Sustainability Reporting Directive (CSRD) now requires larger EU entities to report for the 2024 financial year, with the IFRS Sustainability Disclosure Standards also coming into effect. A notable delay has been approved for sector-specific standards under the CSRD until June 2026, providing additional preparation time for companies.
Globally, there is a growing focus on diverse ESG aspects, including conflict minerals (U.S.), forced and child labour in supply chains (Canada), modern slavery (Australia, UK), and stringent environmental laws (EU). These developments underscore the complexity and global nature of current ESG compliance requirements.
How Suade can assist you in implementing
Suade's platform is tailor-made to navigate the complex ESG regulatory environment efficiently. It offers intuitive templates for quantitative disclosures on climate-related risks, enhancing reporting accuracy for institutions. The platform also includes tools for crucial ratios like the Green Asset Ratio (GAR) and Banking Book Taxonomy Alignment Ratio (BTAR), ensuring alignment with the latest disclosure requirements.
Addressing challenges such as lack of standardisation and historical data gaps in ESG reporting, Suade employs the Financial Regulatory Data Standard (FIRE). This open-source model harmonises data across reporting jurisdictions, providing consistent and quantifiable data for comprehensive ESG exposure analysis alongside your existing capital measures.
Embrace the future with Suade and revolutionise your reporting and compliance strategies in the new regulatory era. Partner with us to navigate the dynamic financial landscape confidently and pave the way for a sustainable, resilient future. Contact Suade today to discover how our platform can transform your approach to regulatory compliance in the world of ESG.