The Pillar 3 DA foresees the publication of three qualitative sections which require the application, in particular, of Regulation (EU) no. 2022/2453. From the examination of this A discrepancy has been observed between the delegated regulation and its annexes I (which includes the text of the original annex XXXIX) and II (which contains the text of the original annex XL) regarding what is reported in table 2 of the Annex XXXIX and what is described in the instructions for table 2 of Annex XL about letter d) relating to Governance on social risk. In particular:- In Annex XXXIX table 2 - Qualitative information on social risk in line d) for the Governance aspects, it is specified what information must be published: the "Responsibilities of the management body for setting the risk framework, supervising and managing the implementation of the objectives, strategy and policies in the context of social risk management covering counterparties' approaches to: (i) Activities towards the community and society, (ii) Employee relationships and labor standards, (iii) Customer protection and product responsibility, (iv) Human rights". The focus of the information appears to be on the approaches that the Bank's counterparties (customers and suppliers) take towards the community and society, its relationships with employees and compliance with labor standards, customer protection and product liability and human rights, posing an indirect risk for the financial institution.- In Annex XL the instructions for compiling the tables and models referred to in Annex XXXIX provide that "in accordance with Article 449a of Regulation (EU) No 575/2013, in conjunction with Article 435(1), point ( b), and Article 435(2), points (a), (b) and (c), of that Regulation, institutions shall describe how their management body is involved in the supervision and management of social risks. That information shall cover the rationale of the approach taken by the management body and take into account a number of social factors. Those factors include the institution’s engagement towards the community and society, its relationships with employees and compliance with labor standards, customer protection and product responsibility, and human rights.” In this case there would be a direct risk for the Bank. The art. 18 bis point 1 a) of Regulation (EU) 2022/2453 also establishes that, in relation to information on environmental, social and governance risks, entities (intended as financial institutions) publish "qualitative information on environmental, social and governance risks using tables 1, 2 and 3 set out in Annex XXXIX to this Regulation and following the instructions set out in Annex XL to this Regulation”.Should table 2 Annex XXXIX be filled reporting direct or indirect risks?
- Legal act: Regulation (EU) No 575/2013 (CRR)
- COM Delegated or Implementing Acts/RTS/ITS/GLs: Regulation (EU) 2022/2453 - ITS on ESG disclosures
