- Question ID
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2024_7082
- Legal act
- Regulation (EU) No 575/2013 (CRR)
- Topic
- Transparency and Pillar 3
- Article
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449a
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Regulation (EU) 2022/2453 - ITS on ESG disclosures
- Article/Paragraph
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Template 8
- Type of submitter
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Credit institution
- Subject matter
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Template 8 – GAR (%)
- Question
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In "Annex XL - Instructions for disclosure of ESG risk", the denominator of column "Proportion of new assets funding taxonomy relevant sectors" in Template 8 - GAR (%) "shall be the gross carrying amount of new covered assets from those assets, as defined in the instructions corresponding to column ‘a’ of Template 7". But in the document "Annex I - KPIs for credit institutions (Article 8 Taxonomy)" from EBA advises the Commission on KPIs for transparency on institutions’ environmentally sustainable activities, including a green asset ratio | European Banking Authority (europa.eu), the column "Proportion of new assets funding taxonomy relevant sectors" (sheet "4. GAR KPIs flow") has formulas with a difference of stocks in the denominator. What should be considered in the denominator? The gross carrying amount of new covered assets or the difference between gross carrying amount in current disclosure period (t) and previous disclosure period (t-1)? If it is "new covered assets", what exactly does it mean? Are these the exposures considered in current disclosure period (t), but not in previous disclosure period (t-1)?
- Background on the question
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Our understanding, gathered from the excel document "Annex I - KPIs for credit institutions (Article 8 Taxonomy)", has been that the flow is computed based on a difference of periods, but the instructions on Pillar 3 seem to suggest otherwise. We seek clarification on what the right interpretation is.
- Submission date
- Final publishing date
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- Final answer
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The clarification on the calculation of the flow of new exposures was provided by the Commission in its Draft Commission Notice published on 21 December 2023 (link), as regards the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of the EU Taxonomy Regulation on the reporting of Taxonomy-eligible and Taxonomy-aligned economic activities and assets.
Under question 65 it is clarified that, when computing the flow KPIs, institutions should only consider the gross carrying amount of newly incurred exposures (i.e. new loans and advances, debt securities, equity instruments), that is only new exposures that have been incurred during the year prior to the disclosure reference date, without deducting the amounts of loan repayments or disposals of debt securities/equity instruments that have occurred during the year prior to the disclosure reference date. Institutions should therefore not compute the numerator and the denominator of the flow KPI as exposures on the disclosure reference date (T) minus exposures on the disclosure reference date (T-1).
As indicated in Annex XL - Instructions for disclosure of ESG risk, instructions to template 8 - GAR (%), institutions shall disclose the GAR as referred to in Delegated Regulation (EU) 2021/2178. In this sense, the calculations under Pillar 3 framework shall be aligned with the ones performed under the Delegated Regulation (EU) 2021/2178.
- Status
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Final Q&A
- Answer prepared by
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Answer prepared by the EBA.
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