Legal & Regulatory News

European Commission publishes study assessing the integration of ESG factors into the EU banking prudential framework

On 27 August 2021, the European Commission released an expansive study entitled, 'Development of Tools and Mechanisms for the Integration of ESG Factors into the EU Banking Prudential Framework and into Banks' Business Strategies and Investment Policies' (the Study).

The Study provides a comprehensive overview of current practices and identifies a variety of best practices within European banks' risk management processes for the integration of ESG risk factors. It uses a collection of information aggregated from a large number of stakeholders, highlighting an expansive spectrum of views which generally conclude that the pace of ESG integration needs to be accelerated. The Study explains that enhancements in ESG definitions, measurement methodologies and associated quantitative indicators will be needed, amongst other things, to support any such acceleration.