ESG for banks and financial intermediaries

ESG

On March 31st, 2023, supervised intermediaries submitted to the Bank of Italy an Action Plan approved by their Boards of Directors to achieve full alignment with supervisory expectations on climate and environmental risks. The Action Plan is only a first step that starts a gradual alignment path within a supervisory dialogue between supervisors and intermediaries

THE MATCH HAS JUST BEGUN. IMMEDIATELY AFTER SUBMITTING THE ESG ACTION PLAN TO THE BANK OF ITALY, INTERMEDIARIES MUST PROVIDE AS PART OF THE ICAAP/ILAAP REQUIREMENTS FOR THE START OF THE SREP 2023 CYCLE THE FIRST INFORMATION ON THE INTEGRATION OF CLIMATE RISK INTO THE PROCESSES FOR ASSESSING THE ADEQUACY OF INTERNAL CAPITAL AND LIQUIDITY

Early in 2023, the Bank of Italy asked all banking and financial intermediaries for an action plan to achieve full alignment with supervisory expectations on climate and environmental risks in the coming years.

In implementing the actions, banks will have to act on two fronts. On the one hand, adopting actions on the internal organisation that produce impacts on the environment (e.g. reduction of energy consumption, paper-water-waste consumption, reduction of greenhouse gases and actions on capital properties); on the other hand, implementing actions that produce impacts on businesses, customers and financial investments (policies to increase GAR, disbursement of ESG-compliant loans, investment of the proprietary portfolio and placement of green financial products to customers).

In this area, many banks are experiencing difficulties due to a lack of knowledge on the subject among employees, corporate bodies and corporate clients. This is a new exercise for banks in a subject that has so far been far removed from traditional supervisory rules. Moreover, today there is still a data-gap resulting from the lack of portfolio time series and comparables.

In order to support banks to better address the scenarios in their action plans, RSM has developed four specialised support interventions.

Our Services

ESG Training Plans at all organisational levels

RSM is able to prepare specific in-house training plans and masters courses tailored to the needs of each intermediary that allow for the acquisition of skills at all levels: Board of Directors, Board of Statutory Auditors, Management, Operational Areas, Commercial Network.

Mapping of credit exposures "Taxonomy Aligned"

As part of the obligations under the delegated act pursuant to Art. 8 of the Taxonomy Regulation, credit institutions that are currently subject to the DNF publication requirement (from 2026 with the CSRD Directive, the requirement will extend to all banks) must provide for the financial year 2023 the assets aligned according to the EU Taxonomy ("Taxonomy Aligned"). RSM supports banks in mapping their "Taxonomy Aligned" exposures against the technical screening requirements by adopting the DNSH mechanism where required.

Enhancement of the credit assessment offices

Exploiting the synergies arising from the integration of the different competences, RSM is able to issue a Reliance Letter to the Bank on the consistency of the parameters (KPIs) of the lending business with the EU Taxonomy Aligned criteria. The Reliance Letter constitutes a key document to be included in the application file. In the specific context of Green Loans to be disbursed or Green Bonds to be signed, RSM's support may extend to the identification of the "Taxonomy Aligned" KPI to be included in the clauses of the credit agreement.

Mandatory Sustainability Reporting (CSRD)

With the CSRD Directive from 2026 onwards, the obligation for credit institutions to disclose a Sustainability Report for Limited Assurance is triggered. RSM accompanies those obliged to CSRD to prepare themselves in time by gradually enhancing the ESG accounting process through the following services: