On Monday 2 May the European Banking Authority (EBA) launched a consultation on the potential incorporation of a forward-looking perspective into the prudential framework. To start the discussion, EBA has published a concept paper on the role of environmental risks in the prudential framework for credit institutions and investment firms.
This paper examines whether and how environmental risks should be integrated into the Pillar I prudential framework. It also highlights the importance of collecting relevant and reliable information on environmental risks and their impact on institutions’ financial losses.
In addition to capital requirements, it underlines the need for a comprehensive regulatory approach and should be seen as part of EBA’s wider work in the area of environmental, social and management risks, which includes transparency, risk management, Pillar 2 supervision and macro-prudential capital buffers. The paper also highlights the links with the accounting framework.
The consultation is open until Tuesday 2 August 2022. It is accompanied by a virtual public hearing on Friday 17 June from 10am to 12pm.
To read the discussion paper: https://aeur.eu/f/1gf (Original version in French by Anne Damiani)