The European Banking Federation (EBF) responded to the European Commission consultation on the Review of the Non-Financial Reporting Directive (NFRD).
- Regulation instead of Directive
- Consistency of disclosure requirements across EU legislation (alignment with EU Taxonomy Regulation, Disclosure Regulation, CRR2 Pillar 3 requirements, June 2019 EC Non-Binding Guidelines on Climate Reporting, ECB guidance) and as much as possible and appropriate in the EU context with widely adopted frameworks
What data is needed and for what purposes?
- Banks need robust, comparable and reliable data
- To identify and assess sustainability risks in lending activities
- To comply with the new disclosure obligations
- To steer portfolios towards the objectives PA and EGD
Who should report?
- All listed companies given the application of the taxonomy to all financial investments in the capital/financial market
- All large companies. The criteria for banks should be modified to include banks with more than 250 employees and more than 5 billion in total assets.
- Companies from sectors with a high transition risk (for example mining, carbon, smaller utilities ….for material risks (e.g. climate only), regardless of the size of the
- All remaining companies based on a simplified minimum reporting framework taking into account materiality, proportionality in a structured manner and possible gradual implementation (sectors with high risks first).
What should be reported?
- More detailed requirements on environmental matters
- Clear link to taxonomy (Harmonized data collection with a clear nomenclature to allow automatization; data collection templates for each economic activity)
- Standardized scenario analysis following TCFD for large companies in polluting sectors
- Alignment of strategies with 2 degrees
- Number of Key KPIs aligned with the disclosure requirements that will be specified in the Delegated Act of the Taxonomy Regulation
- Gradually, associated revenues and expenses of eligible products or activities and the associated sustainable assets (both as a percentage of the total).
- Greater focus on information and data related to societal aspects
- Governance issues as in TCFD
Need for EU central data register to facilitate disclosure
- EU to adopt strategic infrastructure project in the context of European Green Deal dataspace
- EU to build or supports, based on existing solutions and infrastructure, a central European ESG data register that would:
- Collect periodically, with the help of new reading technologies, existing climate change mitigation and adaptation data of companies under the NFRD.
- Collect other available relevant information, ESG metrics and relevant data points
- Interconnect the relevant EU and MS databases collecting ESG information (government, CB, statistical bodies)
- Enable to upload information to the register on a voluntary basis
- Data to be provided to users of non-financial information for free or at reasonable cost