The data landscape for environmental, social and governance (ESG) risks remains “incomplete”, despite significant improvements in data availability and accessibility in recent years, the European Banking Authority (EBA) has revealed in a report published on Monday 24 February (see EUROPE 13586/21).
External Credit Assessment Institutions (ECAIs) are increasingly assessing ESG risks, although progress varies according to exposure classes. Data availability, quality and granularity remain among the biggest challenges for developing more advanced approaches. The methodologies are most advanced in the assessment of transition risk in corporate portfolios, where EBA has observed certain elements of standardisation, such as the use of sector classification, greenhouse gas emissions and transition plans as the main sources of information.
According to EBA, key policy initiatives such as the Corporate Sustainability Reporting Directive (CSRD), greater transparency in ESG scoring methodologies and ECAI credit risk ratings should further improve this landscape and alleviate the difficulties.
Read the report: https://aeur.eu/f/fn9 (Original version in French by Anne Damiani)