Joint EBA & EBF Workshop on Sustainable Finance

Date: 04/04/2019 |

1. Welcome / Introduction

  • Piers Haben, Director of Banking Markets, Innovation and Consumers, EBA
  • Sebastien de Brouwer, Chief Policy Officer, EBF

2. Commission Action plan: Where do we stand?

Overview on the Commission’s Action Plan and Technical Expert Group work/deliverables

  • Martin Spolc, Head of Unit Fintech and Sustainable Finance, European Commission

3. Incorporating sustainability into EU banks’ frameworks and risk management: banks and supervisors’ practices related to ESG risks

a) Banks’ perspective: What is the understanding of ESG factors in the banking sector and how are banks addressing sustainability issues? How do banks define, identify, assess and manage ESG risks?

What are the main challenges? What could be considered best practices?

Presentation of the Survey of International Association of Credit Portfolio Managers &

Addressing and Advancing the Climate Risk Awareness

  • Som-lok Leung, Executive Director, IACPM
  • John Colas, Partner and Vice Chairman, Financial Services Americas, Oliver Wyman
  • Ilya Khaykin, Partner, Financial Services Americas, Oliver Wyman

b) Supervisors’ perspective: How do NCAs understand ESG factors/risks? What have NCAs been doing so far? Which tools could be used in the supervisory framework to ensure that EU banks take ESG factors into account?

Presentation of observed and best practices by the Network for Greening the Financial System

  • Morgan Després, Head of Secretariat, Network for Greening the Financial System

4. Disclosures

Topics for discussion:

- TEG report on climate change related disclosures and Commission’s updated Guidelines for non-financial disclosure

- Current practices on integration of ESG information in banks’ public disclosures

- Way forward:

Scope of the disclosures

How to ensure uniformity and strike the right balance between quantitative and qualitative information

Challenges for banks (e.g. regarding the disclosure of GHG scope 3 emissions)

How to facilitate the disclosure of relevant information by banks.

Link with Pillar 3 disclosures and other disclosure requirements


5. Incorporating sustainability into EU banks and supervisors’ risk management frameworks

How to assess and monitor banks’ exposures to climate - related risks

Topics for discussion:

- Current and future/potential methodologies and scenario design techniques that are or could be applied to assess and model climate risk with focus on the quantitative aspects that concern the incorporation of environmental factors into banks, central bankers’ and supervisors’ risk assessment tools.

- Main challenges of running a scenario analysis or a climate change stress test.

- Environmental risk assessment and scenario design: potential methodologies and examples of ongoing experiments

- Transition risk and physical risk: state of play, how to build relevant and achievable scenarios?

- Individual bank assessment versus analysis of exposures of the financial/banking system

- Challenges and first solutions/suggestions: definitions, data, assets classification, time horizon, IT system (…)

- Methodologies used for assessment of lending portfolios to target objectives

Presentation by DNB on scenario design for transitional risk

• Dr David-Jan Jansen, Financial Stability Division, Macroprudential Analysis and Policy Dept., De Nederlandsche Bank

6. Promoting the scaling-up of green finance: market opportunities and initiatives to support green finance

Industry to provide examples of various green/sustainable financial instruments, products and services offered as a response to green/sustainable funding needs (Green Loan origination/ Green bond issuances / Green covered bonds / Green securitisation) and possible new innovative products that are being developed or envisaged

7. Summary and way forward: EBA and EBF views

Closing of the workshop by summarising the discussions held and reflecting upon the way forward.

Exploring areas for further work and collaboration between different stakeholders, taking into consideration the EC Action Plan and other legislative/regulatory initiatives in the field of sustainable finance.

EBA and EBF views on:

o Lessons drawn from the discussions

o Areas for public policy outputs

o Areas for banks to work on

o Priorities and work/resources to leverage on

•  Slavka Eley, Head of Banking Markets, Innovation and Products, EBA

•  Antoni Ballabriga, Global Head of Responsible Business, BBVA & Chair of the EBF Sustainable Finance WG

1. Welcome / Introduction

  • Piers Haben, Director of Banking Markets, Innovation and Consumers, EBA
  • Sebastien de Brouwer, Chief Policy Officer, EBF

2. Commission Action plan: Where do we stand?

Overview on the Commission’s Action Plan and Technical Expert Group work/deliverables

  • Martin Spolc, Head of Unit Fintech and Sustainable Finance, European Commission

3. Incorporating sustainability into EU banks’ frameworks and risk management: banks and supervisors’ practices related to ESG risks

a) Banks’ perspective: What is the understanding of ESG factors in the banking sector and how are banks addressing sustainability issues? How do banks define, identify, assess and manage ESG risks?

What are the main challenges? What could be considered best practices?

Presentation of the Survey of International Association of Credit Portfolio Managers &

Addressing and Advancing the Climate Risk Awareness

  • Som-lok Leung, Executive Director, IACPM
  • John Colas, Partner and Vice Chairman, Financial Services Americas, Oliver Wyman
  • Ilya Khaykin, Partner, Financial Services Americas, Oliver Wyman

b) Supervisors’ perspective: How do NCAs understand ESG factors/risks? What have NCAs been doing so far? Which tools could be used in the supervisory framework to ensure that EU banks take ESG factors into account?

Presentation of observed and best practices by the Network for Greening the Financial System

  • Morgan Després, Head of Secretariat, Network for Greening the Financial System

4. Disclosures

Topics for discussion:

- TEG report on climate change related disclosures and Commission’s updated Guidelines for non-financial disclosure

- Current practices on integration of ESG information in banks’ public disclosures

- Way forward:

Scope of the disclosures

How to ensure uniformity and strike the right balance between quantitative and qualitative information

Challenges for banks (e.g. regarding the disclosure of GHG scope 3 emissions)

How to facilitate the disclosure of relevant information by banks.

Link with Pillar 3 disclosures and other disclosure requirements

 

5. Incorporating sustainability into EU banks and supervisors’ risk management frameworks

How to assess and monitor banks’ exposures to climate - related risks

Topics for discussion:

- Current and future/potential methodologies and scenario design techniques that are or could be applied to assess and model climate risk with focus on the quantitative aspects that concern the incorporation of environmental factors into banks, central bankers’ and supervisors’ risk assessment tools.

- Main challenges of running a scenario analysis or a climate change stress test.

- Environmental risk assessment and scenario design: potential methodologies and examples of ongoing experiments

- Transition risk and physical risk: state of play, how to build relevant and achievable scenarios?

- Individual bank assessment versus analysis of exposures of the financial/banking system

- Challenges and first solutions/suggestions: definitions, data, assets classification, time horizon, IT system (…)

- Methodologies used for assessment of lending portfolios to target objectives

 

Presentation by DNB on scenario design for transitional risk

• Dr David-Jan Jansen, Financial Stability Division, Macroprudential Analysis and Policy Dept., De Nederlandsche Bank

 

6. Promoting the scaling-up of green finance: market opportunities and initiatives to support green finance

Industry to provide examples of various green/sustainable financial instruments, products and services offered as a response to green/sustainable funding needs (Green Loan origination/ Green bond issuances / Green covered bonds / Green securitisation) and possible new innovative products that are being developed or envisaged

 

7. Summary and way forward: EBA and EBF views

Closing of the workshop by summarising the discussions held and reflecting upon the way forward.

Exploring areas for further work and collaboration between different stakeholders, taking into consideration the EC Action Plan and other legislative/regulatory initiatives in the field of sustainable finance.

EBA and EBF views on:

o Lessons drawn from the discussions

o Areas for public policy outputs

o Areas for banks to work on

o Priorities and work/resources to leverage on

•  Slavka Eley, Head of Banking Markets, Innovation and Products, EBA

•  Antoni Ballabriga, Global Head of Responsible Business, BBVA & Chair of the EBF Sustainable Finance WG