Sustainable Finance Lobbying Overview: The European Banking Federation (EBF) has communicated high-level support for sustainable finance policy but, despite supporting some areas of EU regulation in this area, has lobbied to weaken a few key EU policy strands.
Top-line Messaging on Sustainable Finance Policy: EBF has stated support for the role of the finance industry in meeting EU climate goals and the Paris Agreement. While the organization has not clearly recognized the need for systemic reform to achieve a sustainable financial system, it has recognized the need for regulation to achieve certain sustainable finance objectives. EBF CEO Wim Mijs, however, has emphasized on several occasions that the banking system can only support Europe’s green transformation if accompanied by governments’ real economy policies. However, in a 2023 white paper, EBF has advocated for a “transition finance framework” at the EU level, such as benchmarks for sectoral transition pathways in line with 1.5 and standardization of transition plans.
EBF has supported the need for a regulatory framework that tackles greenwashing, but has highlighted the "short implementation timelines" and "insufficient maturity of ESG data and ESG methodologies" in the "lack of clarity and consistency" of EU regulations in a 2023 website article. In response to the European Supervisory Authorities (ESAs) in 2023 around greenwashing, EBF argued that market participants nor their actions should be assessed as greenwashing "unless they have themselves intended to mislead or been negligent”.
Position on Taxonomies: EBF was particularly engaged on the taxonomy regulation in 2019-20, offering high-level support for the policy but arguing that thresholds should be set by the market (instead of being science-driven), and in support of weaker thresholds for ‘green’ electricity generation to include natural gas. During 2021-2023, EBF supported the extension of the taxonomy to recognize transition efforts, with unclear impact on the stringency of the overall policy. In 2021, it suggested a dynamic framework for transition activities with verified plans but also stated a number of concerns in response to the EU Platform’s recommendations for technical screening criteria (TSC), such as the implementation timeline for banks, or data availability for certain objectives such as biodiversity. It also cautioned against the significantly harmful (SH) activities category, suggesting a prior discussion at the political level was necessary, and suggested a 2-year delay to implementation for financial undertakings. In 2022, EBF continued to advocate for the need of a complementary framework for transition activities in a media article and for enlarging the list of activities included in the taxonomy based on "Low environmental impact (LEnvI) activities" in a 2023 position paper.
Position on Regulated Corporate ESG Disclosure: In 2019, EBF stated support for updating guidelines for the Non-Financial Reporting Directive (NFRD) to include climate-related information but suggested that some aspects should remain voluntary. In 2020, however, EBF supported an ambitious review to the NFRD in feedback to the European Commission, including increasing the scope of mandatory disclosures and gradually increasing the range of companies covered by the regulation. In response to the Commission in 2021, it supported the Proposal for a Corporate Sustainability Reporting Directive (CSRD) but stated concerns around the “feasibility of the requirements”. It further cautioned against some elements of the proposed Draft European Sustainability Reporting Standards (ESRS) in 2022, such biodiversity and circular economy, as well as social standards regarding supply chains. However, in feedback to the European Commission’s proposal on the ESRS in 2023, it urged the Commission to make a number of disclosures mandatory irrespective of the materiality assessment, and to reconsider the voluntary social reporting disclosures relating to non-employees. In the US, EBF supported the SEC's proposed climate disclosure rule in 2022. It also largely supported the ISSB Climate Exposure Draft and in response to the Financial Stability Board (FSB) consultation on climate-related risks, it emphasized that flexibility for regulators should be maintained and that corporate reporting should be prioritized over financial institutions. In 2023, it further suggested a focus on biodiversity ecosystems, and ecosystems services in line with the Kunming-Montreal Global Biodiversity Framework (GBF) goals and targets in comments to the ISSB's new priorities.
Position on ESG Standards, Labels & Benchmarks: EBF has had a mixed position on the EU Green Bond Standard (GBS), broadly supportive of the policy in 2019 but not appearing to support ESMA-led supervision of external review providers that would require a legislative approach. In response to the Commission in 2020 it did support verification for the EU GBS. However, in a 2021 policy position, it suggested the EU GBS should allow for flexibility regarding taxonomy alignment and in a 2022 policy position, it opposed the EU Parliament’s proposal for a mandatory Green Bond Standard. EBF has mainly been supportive of the EU Ecolabel, supporting an exclusion principle for fossil fuels but has argued for a gradual approach to implementation.
Position on Integrating ESG into Investor Duties: In response to the Commission in 2020, EBF supported delaying the implementation of policy around incorporating ESG factors into investor duties until a taxonomy was in place. In response to the ESA’s Sustainable Finance Disclosure Regulation (SFDR) consultation on investor ESG disclosure in 2020, EBF also argued against the stringency of proposed indicators. In feedback to the European Commission in 2023, EBF stated concerns with the alignment between the Sustainable Finance Disclosure Regulation (SFDR) and the European Sustainability Reporting Standards (ESRS). EBF suggested that, in the case that materiality assessments remain as proposed in the final ESRS, this is reflected in changes to requirements to the financial sector under the SFDR and Implementing Technical Standards (ITS) on Pillar 3. It stated a similar position in comments to the ESAs joint consultation on the review of the SFDR in 2023, arguing that mandatory indicators under the SFDR should be aligned with the ESRS. It also suggested a phased-in approach for Principal Adverse Impacts (PAIs) and did not support the proposed social indicators.
Position on the integration of ESG factors into risk management, prudential regulation & stress testing: In a 2021 consultation response, EBF appeared not to support EBA’s suggestions for incorporating climate risk into Pillar 3 disclosures. In 2022, it also did not support EBA’s approach in addressing environmental risk through the consideration of enhancements within the existing Pillar 1 framework. In a joint letter with BusinessEurope to the EU Parliament in 2022, it restated this position, arguing that a Pillar 1 charge would “raise the costs for businesses who are in the process of improving their environmental performance, thus making it even more difficult to meet the public policy objectives for carbon neutrality”. As reported in the media in 2022, EBF also opposed the EU Parliament's tabled amendment to increase risk weight for new and existing fossil fuel exposures. At the global level, in response to the Basel Committee on Banking Supervision (BCBS) consultation on climate-related risks in 2022, EBF suggested gradual implementation and the need for more data on the impact of climate change, also advocating against stress testing leading to changes in capital requirements. It reinstated this position in response to the FSB in 2022, arguing against the need for climate risk capital adjustments and consideration of ESG in systemic risk buffers.
Transparency: EBF has clearly disclosed its positions on all sustainable finance policies relevant to its operations and has clearly detailed engagement activities undertaken to influence these policies. It is also transparent about its members, including which companies and individuals hold key positions in the executive committee, but does not appear to disclose members of key committees or working groups.
Sustainable Finance Lobbying Overview: The European Banking Federation (EBF) has communicated high-level support for sustainable finance policy but, despite supporting some areas of EU regulation in this area, has lobbied to weaken a few key EU policy strands.
Top-line Messaging on Sustainable Finance Policy: EBF has stated support for the role of the finance industry in meeting EU climate goals and the Paris Agreement. While the organization has not clearly recognized the need for systemic reform to achieve a sustainable financial system, it has recognized the need for regulation to achieve certain sustainable finance objectives. EBF CEO Wim Mijs, however, has emphasized on several occasions that the banking system can only support Europe’s green transformation if accompanied by governments’ real economy policies. However, in a 2023 white paper, EBF has advocated for a “transition finance framework” at the EU level, such as benchmarks for sectoral transition pathways in line with 1.5 and standardization of transition plans.
EBF has supported the need for a regulatory framework that tackles greenwashing, but has highlighted the "short implementation timelines" and "insufficient maturity of ESG data and ESG methodologies" in the "lack of clarity and consistency" of EU regulations in a 2023 website article. In response to the European Supervisory Authorities (ESAs) in 2023 around greenwashing, EBF argued that market participants nor their actions should be assessed as greenwashing "unless they have themselves intended to mislead or been negligent”.
Position on Taxonomies: EBF was particularly engaged on the taxonomy regulation in 2019-20, offering high-level support for the policy but arguing that thresholds should be set by the market (instead of being science-driven), and in support of weaker thresholds for ‘green’ electricity generation to include natural gas. During 2021-2023, EBF supported the extension of the taxonomy to recognize transition efforts, with unclear impact on the stringency of the overall policy. In 2021, it suggested a dynamic framework for transition activities with verified plans but also stated a number of concerns in response to the EU Platform’s recommendations for technical screening criteria (TSC), such as the implementation timeline for banks, or data availability for certain objectives such as biodiversity. It also cautioned against the significantly harmful (SH) activities category, suggesting a prior discussion at the political level was necessary, and suggested a 2-year delay to implementation for financial undertakings. In 2022, EBF continued to advocate for the need of a complementary framework for transition activities in a media article and for enlarging the list of activities included in the taxonomy based on "Low environmental impact (LEnvI) activities" in a 2023 position paper.
Position on Regulated Corporate ESG Disclosure: In 2019, EBF stated support for updating guidelines for the Non-Financial Reporting Directive (NFRD) to include climate-related information but suggested that some aspects should remain voluntary. In 2020, however, EBF supported an ambitious review to the NFRD in feedback to the European Commission, including increasing the scope of mandatory disclosures and gradually increasing the range of companies covered by the regulation. In response to the Commission in 2021, it supported the Proposal for a Corporate Sustainability Reporting Directive (CSRD) but stated concerns around the “feasibility of the requirements”. It further cautioned against some elements of the proposed Draft European Sustainability Reporting Standards (ESRS) in 2022, such biodiversity and circular economy, as well as social standards regarding supply chains. However, in feedback to the European Commission’s proposal on the ESRS in 2023, it urged the Commission to make a number of disclosures mandatory irrespective of the materiality assessment, and to reconsider the voluntary social reporting disclosures relating to non-employees. In the US, EBF supported the SEC's proposed climate disclosure rule in 2022. It also largely supported the ISSB Climate Exposure Draft and in response to the Financial Stability Board (FSB) consultation on climate-related risks, it emphasized that flexibility for regulators should be maintained and that corporate reporting should be prioritized over financial institutions. In 2023, it further suggested a focus on biodiversity ecosystems, and ecosystems services in line with the Kunming-Montreal Global Biodiversity Framework (GBF) goals and targets in comments to the ISSB's new priorities.
Position on ESG Standards, Labels & Benchmarks: EBF has had a mixed position on the EU Green Bond Standard (GBS), broadly supportive of the policy in 2019 but not appearing to support ESMA-led supervision of external review providers that would require a legislative approach. In response to the Commission in 2020 it did support verification for the EU GBS. However, in a 2021 policy position, it suggested the EU GBS should allow for flexibility regarding taxonomy alignment and in a 2022 policy position, it opposed the EU Parliament’s proposal for a mandatory Green Bond Standard. EBF has mainly been supportive of the EU Ecolabel, supporting an exclusion principle for fossil fuels but has argued for a gradual approach to implementation.
Position on Integrating ESG into Investor Duties: In response to the Commission in 2020, EBF supported delaying the implementation of policy around incorporating ESG factors into investor duties until a taxonomy was in place. In response to the ESA’s Sustainable Finance Disclosure Regulation (SFDR) consultation on investor ESG disclosure in 2020, EBF also argued against the stringency of proposed indicators. In feedback to the European Commission in 2023, EBF stated concerns with the alignment between the Sustainable Finance Disclosure Regulation (SFDR) and the European Sustainability Reporting Standards (ESRS). EBF suggested that, in the case that materiality assessments remain as proposed in the final ESRS, this is reflected in changes to requirements to the financial sector under the SFDR and Implementing Technical Standards (ITS) on Pillar 3. It stated a similar position in comments to the ESAs joint consultation on the review of the SFDR in 2023, arguing that mandatory indicators under the SFDR should be aligned with the ESRS. It also suggested a phased-in approach for Principal Adverse Impacts (PAIs) and did not support the proposed social indicators.
Position on the integration of ESG factors into risk management, prudential regulation & stress testing: In a 2021 consultation response, EBF appeared not to support EBA’s suggestions for incorporating climate risk into Pillar 3 disclosures. In 2022, it also did not support EBA’s approach in addressing environmental risk through the consideration of enhancements within the existing Pillar 1 framework. In a joint letter with BusinessEurope to the EU Parliament in 2022, it restated this position, arguing that a Pillar 1 charge would “raise the costs for businesses who are in the process of improving their environmental performance, thus making it even more difficult to meet the public policy objectives for carbon neutrality”. As reported in the media in 2022, EBF also opposed the EU Parliament's tabled amendment to increase risk weight for new and existing fossil fuel exposures. At the global level, in response to the Basel Committee on Banking Supervision (BCBS) consultation on climate-related risks in 2022, EBF suggested gradual implementation and the need for more data on the impact of climate change, also advocating against stress testing leading to changes in capital requirements. It reinstated this position in response to the FSB in 2022, arguing against the need for climate risk capital adjustments and consideration of ESG in systemic risk buffers.
Transparency: EBF has clearly disclosed its positions on all sustainable finance policies relevant to its operations and has clearly detailed engagement activities undertaken to influence these policies. It is also transparent about its members, including which companies and individuals hold key positions in the executive committee, but does not appear to disclose members of key committees or working groups.