Reuters will publish “pioneering” climate data on major EU banks

Author: Huw Jones

LONDON (Reuters) – Large European Union banks will have to show how they can help or hinder the bloc from meeting its climate goals by publishing “leading” indicators from 2024, EU bank watchdog said on Monday.

The European Banking Authority (EBA) sets environmental, social and governance (ESG) templates for 150 major banks, such as Deutsche Bank (DE :), to be completed annually by SocGen and UniCredit.

This will allow investors to compare each bank’s exposure to pollutants and environmentally friendly companies, and lend control to how quickly lenders switch to sustainable business models.

“We are at the forefront here with templates and key performance indicators to ensure that banks do this consistently when they disclose something,” said Pilar Gutierrez, head of the EBA outreach unit.

The final approval of the EU executive, the European Commission, will be required.

The EBA said the templates will cover major bank books that include loans. He rejected an initial plan after the short-term nature of the industry’s concerns about the inclusion of trading book assets such as stocks and bonds.

From 2023 onwards, banks will be required to report their exposure to carbon-intensive activities and assets that may be at risk of flooding and fires as a result of climate change.

They will also need to provide details on their exposure to fossil fuel customers, the greenhouse gas emissions they are financing, and their compliance with zero net targets by 2050.

GRAPHIC – EBA ESG Graphic

https://fingfx.thomsonreuters.com/gfx/mkt/klpykqwbxpg/EBA%20Graphic%20on%20ESG%20Templates.PNG

BI RATIO

The demands open new avenues around the world, forcing banks to publish two new ratios from 2024 onwards.

The Green Asset Ratio (GAR) shows the “green” assets of a bank in proportion to all assets, and green is defined by including it in the EU “taxonomy” or checklist.

The Banking Book measures the taxonomy alignment ratio (BTAR) of how a bank’s activities contribute to the EU’s climate goals by showing the extent to which they finance environmentally sustainable activities.

The European Financial Markets Association, an industry organization, has approved the https://www.reuters.com/article/us-climate-change-eu-banks-idUSKCN2AT1XU GAR additional time, which the EBA initially stated. will be presented this year.

“However, we would continue to notice our broader concern with the outreach framework, as disclosure based on estimates or proxies may have low comparability and usability,” the AFME said in a statement.

Banks will publish targets for GAR, BTAR and greenhouse gas emission reductions by 2030.

Both ratios will put pressure on companies to adopt more sustainable business strategies and help eliminate potential “green cleaning” or excessive environmentally friendly activities.