Environmental, Social, and Governance (ESG) sustainability reporting has gained significant importance worldwide, driven by the urgency to address the climate crisis and investors’ demand for reliable data. Regulators across the globe now require companies to provide transparent disclosures on their sustainability practices. In the European Union (EU), the reporting requirements are aligned with the European Green Deal, which aims to transform the EU into a carbon-neutral, resource-efficient, and competitive economy by 2050.

Through a series of regulations and disclosure frameworks, the EU aims to encourage sustainable investments and practices, reduce environmental and social risks, and promote transparency and accountability. Companies operating in the EU are now having to adopt more sustainable practices, adapt their investment strategies and take real action to improve their ESG performance.

Alongside the CSDR, the EBA (European Banking Authority) has recently unveiled a comprehensive framework for reporting ESG factors related to banking operations. The ESG Pillar 3 disclosures have been introduced in the EBA DPM 3.3 taxonomy as a set of 10 templates covering:

1. Climate risks: Assessing exposures to sectors or assets that contribute to climate change and risk exposures subject to climate change weather events.
2. Mitigating actions: Actions that support counterparties to reduce carbon emissions.
3. Green Asset ratio: information on transitional and enabling activities that support the objectives of climate change mitigation (CCM) and adaptation (CCA).
4. Qualitative disclosures: reporting of strategies, governance arrangements, and risk management concerning environmental, social and governance risks.