THE EU PLATFORM ON SUSTAINABLE FINANCE LAUNCHES ITS VERY USEFUL 'COMPENDIUM OF MARKET PRACTICES' REPORT
The EU Platform on Sustainable Finance has published its “Compendium of Market Practices on How the EU’s Taxonomy and sustainable finance framework are helping financial and non-financial actors transition to net zero.”
The report, and its annex, contain 293 pages presenting a compendium of early practices, financial products, instruments and initiatives that market participants are employing to transition their business models and investments.
The market practices reflect the contributions of seven stakeholder groups, including large corporates, credit institutions, investors, insurers, public institutions, auditors and consultants, and SMEs (small and medium-sized enterprises), including very interesting peer-to-peer recommendations.
The market practices span three areas: 1. the use of the EU sustainable finance framework for business strategy, transition planning and target setting; 2. finance and transactions; and 3. reporting, monitoring and assurance.
In Area “3. Reporting, monitoring and assurance”, there are early observations from each stakeholder group of the state of reporting by financial and non-financial actors, and of the processes in place to conduct data collection and verification. Despite remaining challenges, most market participants have started to adapt their practices to comply with the new EU sustainability reporting requirements. Investors have also initiated SFDR disclosures, including entity-level principal adverse impact (PAI) disclosures. Taxonomy alignment reporting for financial institutions is expected to improve in the coming years in parallel with corporate reporting, as data collection and verification processes are implemented. Observations described in this compendium reflect on, and include elements of, the EU Taxonomy Regulation, the SFDR, the CSRD and the Climate-related Benchmarks.
The report shows, for instance, how a bank has developed a client transition plan assessment tool designed to chart the trajectory of its clients towards achieving net zero. It comprises a set of multiple-choice questions based on the ESRS E1-1 (16) reporting standard for transition plans as well as various other reporting frameworks.
The full report and its annex can be found on the right.
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