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EBA opinion on EC amendments to the Pillar 3 disclosure of ESG risks

On 17 October 2022, the European Banking Authority (EBA) published an opinion on the amendments introduced by the European Commission (EC) to the EBA final draft Implementing Technical Standards (ITS) on prudential disclosures of ESG-related information and risks. The opinion accepts the two suggested EC amendments regarding the BTAR (Banking Book Taxonomy Alignment Ratio) which are:

  1. Institutions ‘may’ choose to disclose information on the BTAR and not be required to do it on a best-effort basis.
  2. Collecting information from the appropriate counterparties will be voluntary, and the institutions need to inform the appropriate counterparties that the disclosure of mentioned information is voluntary.

The opinion highlights that the purpose of BTAR is to combat asymmetric treatment of exposures towards counterparties which could be comparable to the institution in terms of riskiness.

For this reason, EBA prefers the original wording of the ITS that asks for information disclosure to be on a best-effort basis. Nevertheless, EBA accepts the amendments proposed by the EC

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