Reed Smith Client Alerts

On April 21, 2023, the European Central Bank (ECB) published its third report reviewing the disclosure of climate-related and environmental (C&E) risks by European banks. The report refers to 103 significant institutions (SIs) and 28 less significant institutions (LSIs).

Authors: Felicitas Scriba

A severe lightning storm with power outages cause of the storm.

The ECB report concludes that while banks have disclosed more information on climate and environmental risks over the past year, the quality of this information is still insufficient to meet the new regulatory standards. Nevertheless, the standards achieved so far within the EU are higher than those of comparable non-EU institutions.

These standards build on the Taxonomy Regulation adopted by the European Commission in 2021. In 2022, the Corporate Sustainability Reporting Directive (CSRD) made this more specific and more stringent, particularly with regard to disclosure requirements and sustainability reporting. The review is also due in part of the fact that by the end of June 2023, European banks must comply with tighter EU rules on disclosures of climate and environmental risks under the implementing technical standards (ITS) on Pillar 3 disclosures. The ECB’s assessment focuses on the existence, justification and soundness of the banks’ disclosures.