Following the adoption of the Paris Agreement on climate change and the UN 2030 Agenda for Sustainable Development in 2015, governments worldwide have been advancing efforts to transition to low-carbon and more circular economies. In Europe, the European Green Deal aims to make the continent the first climate-neutral region by 2050. The financial sector is expected to play a pivotal role in achieving this goal, as outlined in the European Commission’s action plan on financing sustainable growth.
The shift to a low-carbon and circular economy presents both risks and opportunities for the economy, and financial institutions. Additionally, physical damage resulting from climate change and environmental degradation can significantly impact both the real economy and the financial system.
Supervisory Authorities are closely monitoring developments that could impact institutions within the euro area. The European Commission’s action plan on financing sustainable growth seeks to reallocate financial flows towards sustainable investments, integrate sustainability into risk management practices, and promote greater transparency and long-term thinking. Within the banking sector, the European Banking Authority (EBA) has been tasked with several mandates to explore how environmental, social, and governance (ESG) risks can be integrated into the three pillars of prudential supervision. In response, the EBA has released an Action Plan on sustainable finance and a Discussion Paper on incorporating ESG risks into the regulatory and supervisory framework.
NFR ESG & Sustainable Finance:
Our ESG and Sustainable Finance team assists clients in understanding and complying with both current and upcoming regulatory requirements. Our experts help clients map and analyse ESG risks and develop effective mitigation strategies. We also provide additional ESG expertise and capacity to support clients during periods of high workload or while developing their ESG frameworks.
Navigating the complex regulatory landscape can be challenging, especially given the lack of clear guidance on materiality and proportionality, as well as conflicting EU objectives, such as energy independence versus financing of energy companies. Despite these challenges, our clients must determine applicable requirements. We anticipate an increasing demand for capacity as regulations like the Taxonomy Regulation, SFDR, CSDDD, and CSRD drive the integration of ESG into risk management, reporting, and governance processes.
Some of our ESG & Sustainable Finance services:
- Requirement mapping
- Reporting and disclosures
- Materiality assessments
- GAP Analysis
- EU Taxonomy alignment
- ESG as a service/Outsourcing
- Due-diligence
- Risk & Scenario Analysis
