Banks call for effective solution to enable sustainability reporting for financial institutions

AFME has responded to the EC’s consultation on the ESRS (eventid=21472). The ESRS aims to improve the availability of sustainability information, reduce information gaps, and enhance the usability of the EU sustainable finance framework. AFME emphasizes the need to strike a balance between streamlining reporting obligations and strengthening disclosures to counter greenwashing and enable financial institutions to fulfill their own reporting requirements and make informed investment decisions.
AFME highlights the importance of addressing the issue of omitted relevant metrics by counterparties, which could hinder financial institutions‘ ability to comply with their reporting requirements. They urge the EC to provide a solution that enables effective reporting even when certain data points are omitted due to not being assessed as material by the counterparty. This is crucial because financial institutions need the complete information, including those considered material by their counterparties, for quantitative reporting under Pillar 3 and the SFDR. AFME cautions against relying on proxies or estimates, as they may expose firms to liability risks.
In their response, AFME proposes recommendations to strike a balance between flexibility and phase-ins while meeting regulatory expectations and disclosure requirements for financial institutions. They also suggest improving interoperability between ESRS and international standards by strengthening engagement with the ISSB and developing tools to help companies navigate the differences between EU and global standards.