We have expanded the list of climate policies we assess company engagement with to incorporate land-use related policy, referring to legislative or regulatory measures to enhance and protect ecosystems and land where carbon is being stored. Assessments under this category are currently underweighted in terms of their contribution to the overall company metrics. This weighting will be progressively increased over the next 6 months.
We adjusted the terminology used to describe the queries running down the left-hand side of our scoring matrix and added additional explanatory text to the info-boxes. This has no impact on the scores and methodology. It has been done following user feedback to improve clarity.
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 several 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 in several occasions that the banking system can only support Europe’s green transformation if accompanied by governments’ real economy policies.
Position on Taxonomies: EBF was particularly engaged on the taxonomy regulation in 2018-20, offering high-level support for the policy but arguing that thresholds should be set by the market (instead of being science-driven), suggesting it should only be applied to products marketed as sustainable rather than the whole market, opposing its extension to cover environmentally harmful activities and arguing for weaker thresholds for ‘green’ electricity generation to include natural gas. It reinforced this position and suggested an appropriate identification of neutral or in-transition activities in response to the Commission in 2020. During 2021-2022, EBF supported the extension of the taxonomy to recognize transition efforts, with unclear impact on the stringency of the overall policy. In 2021, it further 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.
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 disclosure requirement standards in 2022, such biodiversity and circular economy, as well as social standards regarding supply chains. EBF reinforced this position in 2022 in policy positions. In 2022 media releases, EBF also cautioned against the Green Asset Ratio (GAR) and highlighted the need for data to be useful and relevant, and suggested a voluntary reporting standard for non-listed SMEs and 1-year lag for financial companies. During 2022, EBF has also been active around non-EU and global standards. In the US, EBF supported the SEC's proposed climate disclosure rule. 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.
Position on ESG Standards, Labels & Benchmarks: EBF has had a mixed position on the EU Green Bond Standard, 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 SFDR consultation on investor ESG disclosure in 2020, EBF also argued against the stringency of proposed 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 the EBA’s suggestions for incorporating climate risk into Pillar 3 disclosures. In 2022, it also did not support the EBA’s approach in addressing environmental risk through the consideration of enhancements within the existing Pillar 1 framework. At the global level, in response to the Basel Committee on Banking Supervision (BCBS) consultation on climate-related risks, 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.
Lobbying 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 their members, including which companies and individuals hold key positions in the executive committee, but does not appear to disclose members of key committees.