NEW REPORT AVAILABLE!

Report of the C-ESG Risk Roundtable Data Workstream

BRUSSELS, 29 November 2023 – This report is a result of the joint work of the WS members facilitated by Nordea Bank Abp in its role as Data WS (DWS) chair. The objective of the report was to identify commonly applied practices for addressing data and methodological uncertainties associated with disclosures against the Implementing Technical Standards (ITS) on prudential disclosures and ESG risks (Pillar 3). Identifying practices across a selection of banks aimed at facilitating more transparent crossbank disclosures by industry, and in doing so mitigate a lack of comparability and/or potential greenwashing for the uncertainties in scope.  

The targeted suggestions presented in this report are on a metric-specific level, with the following four metrics of the ITS on Pillar III: 

• Financed emissions 
• Physical Hazard Exposures 
• Green Asset Ratio (GAR) 
• Top 20-carbon intensive firms 

The starting point for all banks seeking to disclose against these and other relevant ESG-related metrics is a low-quality data environment, often mixed with fragmented or limited methodological guidance. Metric specific maturity varies across the industry, which can be explained by the various regulatory disclosure timelines. As banks seek to quantify their exposures for each metric under such uncertainties, the development of disclosure practices remains challenging compounded by limited comparability, impacting risk management, and potentially greenwashing perceptions for internal data or methodological choices.  

Despite the observed challenges, participating banks in the DWS were relatively well-aligned in terms of their approaches to the identified challenges to their respective Pillar III disclosures.  

 As the common practices for all metrics become more established, progress across financial institutions’ disclosures will become inevitable. Banks also believe that methodological guidance may be further developed, focusing on the areas of uncertainty presented in this report. 

Replays from the launch event can be found here