Governance, risk & compliance
‘European Taxonomy’ targets banks’ green reporting
Ramping up since 2021, the so-called ‘European Taxonomy’ is forcing the continent’s banks to transform their reporting stances. Already obliging institutions to disclose their assets across a range of metrics, an update due to come into force next year introduces a tough set of universal standards across business. But past the headlines, what exactly does the taxonomy expect banks to do? Phoebe Galbraith jumps in, talking to Torsten Jäger, head of sustainability fi nance at the German Banking Association, and Karolin Kirschenmann, a fi nance expert at the Leibniz Centre for European Economic Research.
T
he further implementation of European Taxonomy since 2021 has presented banks with new challenges. Besides the obvious obstacles – such as IT and human capital developments – collecting enough data to comply with new disclosure requirements is a major issue. And with an uptick in the issuance of green and sustainable financial products over recent years, banks are equally expected to respond to growing ESG demands from green-conscious investors. Officially adopted in 2020, the European Taxonomy fully defined environmentally sustainable economic activity, explains Torsten Jäger, head of sustainability finance at the German Banking Association, which assesses policy initiatives in the field of sustainable finance, both domestically and internationally.
The taxonomy, Jäger explains, is intended to promote ESG criteria across financial markets, and help both investors and companies make informed investment decisions. This stems from the EU’s 2019 adoption of its Green Deal, promoting greater sustainability in investments – and ultimately ensuring the bloc is carbon neutral by 2050. One key aim is a renewed sustainable finance strategy to bolster green growth, even as private investors are prodded towards supporting a carbon-neutral economy as well.
Future Banking /
www.nsbanking.com
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