April 2024
The Swiss Finance Council co-signed a response to the EBA’s Consultation on Draft Guidelines on the management of ESG risks under the Capital Requirements Directive (CRD 6)
We have raised a number of points in our response, where we believe institutions require greater clarity and flexibility:
- We call for the EBA to provide further clarity on the interplay of the CRD 6 prudential transition plan requirements with other transition planning obligations, in particular those under the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD), and EBA Pillar 3. It is crucial that the EBA clarify how the prudential transition plans can fit into and leverage other transition plan requirements, to avoid duplication of requirements and enable global banks to set out groupwide transition planning and risk management approaches, where applicable.
- We would welcome further clarifications regarding the Guidelines’ approach to considering ESG risks and management, as well as setting time horizons. In the broader market, methodologies for the management of climate-related risks are much more advanced compared to other environmental risks, and compared to social and governance risks more generally. We believe the EBA should provide a more adaptable approach and timeline in relation to social and governance risks in particular.
- Institutions should also be granted discretion in determining the materiality of ESG risks, in setting their own time horizons and interim milestones, and in identifying metrics and targets that best fit their business model and management of their own ESG transition risks.