Responsible banking practices study 2021
Financial institutions increasingly recognise that climate change and other environmental, social and corporate governance risks jeopardise the world’s economy and financial system.
Finance for good
Sustainability has become a leading strategic priority for the financial sector. Climate change, in particular, is widely recognised as a major threat to the stability of the world economy.
Around the globe, investor, stakeholder and customer demands are pushing businesses to pay more attention to ESG factors when it comes to their commercial decisions and overall business strategy. Regulatory initiatives are similarly being adopted worldwide, requiring firms to account for their greenhouse gas emissions and more. One thing is certain: the financial sector needs to play a leading role in helping businesses and economies shape a practical roadmap to achieve net-zero carbon emissions by 2050.
To help provoke debate, discussion and progress on #FinanceForGood practices, Mazars is committed to sharing expertise on the adoption of sustainable practices, and partners with industry leaders and think tanks to conduct in-depth research on the state of play of the financial sector. Discover our full, and continually updated, selection of #FinanceForGood insight and perspectives below.
Tackling climate change: Mazars - OMFIF Report
Mazars and the Official Monetary and Financial Institutions Forum (OMFIF) are proud to have come together to produce a global report providing unique insight on current and upcoming financial regulatory evolutions aimed at tackling climate change. What policy adjustments are being undertaken in different jurisdictions around the world to assess and control climate risks? How are these actions...
Sustainable finance policy tracker
Financial services organisations around the world are rethinking how they work in order to better embed sustainability into their business models. At the same time, climate stress tests are entering the mainstream in many jurisdictions. But even though regulation is fast developing, there is still a lack of consistency in the methods used and the extent of the commitments.
Mazars supports the FAST-Infra initiative
Mazars is proud to announce its active support to FAST-Infra, the ‘Finance to Accelerate the Sustainable Transition-Infrastructure’ initiative and its contribution to the development of the Sustainable Infrastructure (SI) Label – a consistent, globally applicable labelling system designed to identify and evaluate sustainable infrastructure assets.
Sustainable finance series: Why does it matter?
20/03/2023 The momentum towards a low-carbon economic system is only set to grow. Financial services firms are pivotal actors in the transition; consequently, increasing demands are being put on them to demonstrate their sustainable finance activities and credentials. This blog explains what sustainable finance is and why it matters to financial services firms.
Sustainable finance: Driving credible ESG actions
15/03/2023 Implementing credible environmental, social and governance (ESG) actions requires successful enablers. So how can firms identify these enablers and, crucially, remove barriers to implementation? If we take our latest C-Suite Sustainability Barometer, we can see that out of the over 1,100 businesses accounted for in the survey, 75% are planning to increase their investment in...
Climate change valuation adjustment: CDS curve
08/02/2023 The global climate crisis has triggered the financial sphere to address the way in which it conducts business. Climate risk consideration is currently growing in the banking industry but should also be considered by banks in the Credit Valuation Adjustment (CVA) when pricing derivatives.
The Fed's pilot climate scenario analysis exercise
20/01/2023 The Federal Reserve Board (Fed) has shared instructions on its pilot climate scenario analysis exercise (CSA). Six of the largest U.S. banks, i.e., Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo are participating in the exercise and are requested to submit their results along with documentation by July 31, 2023. The analysed results and...
The impact of ESG on financial assets under IFRS
12/01/2023 In our last article on sustainability-linked financing, we highlighted the accounting issues related to these contracts that are currently being debated between stakeholders. The most critical issue is the classification of loans or bonds that reference the borrower or issuer’s environmental, social and governance (ESG) key performance indicators (KPIs) on the balance sheet of...
COP27: stepping up the role of finance
22/12/22 A lot of attention at COP27 was focused on the likelihood of keeping global warming to 1.5 °C, in line with the goals of the 2015 Paris Climate Agreement. The consensus was that we are in real danger of falling off track. Few nations revised their nationally determined contributions to reduce their carbon footprint compared to COP26, and the final COP27 text failed to make further...
The FED consults on climate financial risks
21/12/2022 On 8 December 2022, the Federal Reserve Board (Fed) published its proposed principles to provide a high-level framework for managing climate-related financial risks. This proposal is for large banking organizations with consolidated total assets greater than USD$100 billion. However, it was recognized many other financial institutions (FIs) would benefit from this guidance as they...
ECB 2022 thematic review on climate-related risks
19/12/2022 The European Central Bank (ECB) has expressed a significant supervisory concern surrounding more than half of supervised banks in terms of the progress made on fulfilling the expectations specified in the Guide on climate-related and environmental risks. The ECB recently concluded its 2022 thematic review of the banking sector’s alignment with supervisory expectations. This review...
IFRS series on sustainability-linked financing
Welcome to our series on sustainability-linked financing. Our aim is to issue a series of publications discussing the IFRS-related accounting implications around this evolving and constantly debated topic. The series will provide insight into these implications and any developments from a practical perspective for both financing institutions as well as for borrowers.
Green taxonomy trends facing real estate sector
25/10/22 The European Union (EU) has taken the first step in directing capital investments toward so-called sustainable activities with the introduction of the Green Taxonomy on 1 January 2022. For the real estate sector, the objective is to measure the share of eligible activities contributing to the first two climate objectives – the mitigation of climate change and adaptation to climate change.
FED announced a pilot climate scenario exercise
13/10/2022 The Federal Reserve Board (FED) will commence its first bottom-up climate scenario analysis exercise at the beginning of 2023, as announced on September 29. The exercise will be exploratory in nature and will not result in extra capital requirements. The list of designated participants consists of six of the largest U.S. banks, i.e., Bank of America, Citigroup, Goldman Sachs,...
Changes to the NGFS’s benchmark climate scenarios
28/09/2022 The Network for Greening the Financial System (NGFS) published an amended, third set of climate scenarios on 6 September 2022. The key updates include incorporation of countries’ commitments to reach net-zero emissions, increased sectoral granularity and improved representation of physical risk, including acute risks.
Reliable information key to the insurance sector
20/09/2022 The objective of the European Union’s Taxonomy regulation, in force since 1 January 2022, is twofold for the insurance and reinsurance sector. First, to measure the share of investments devoted to financing economic activities eligible for the taxonomy, known as the Investment Ratio. Second, to measure the share of gross premiums written in eligible non-life insurance, or Non-life...
Banks grapple with GAR objectives
13/09/2022 In force since 1 January 2022, the European Union’s Taxonomy regulation aims to support the market for green finance. More specifically, greater transparency in the market will help prevent greenwashing by providing information to investors about the environmental performance of assets and economic activities of financial and non-financial information.
Results of the ECB 2022 climate risk stress test
12/09/22 The first supervisory climate risk stress test (2022 CST) conducted by the European Central Bank (ECB) has concluded with official results and findings made public on 8 July 2022. The exercise has complemented the broader ECB’s agenda to assess the readiness of banks in Europe to manage climate-related and environmental risks. The 2022 CST was a novel and challenging exercise for many...
Climate risk in the banking prudential framework
20/07/2022 Climate change is now firmly in the focus of prudential regulators and supervisors across the globe. Against this background, the European Banking Authority (EBA) is mandated to assess whether a dedicated prudential treatment of exposures related to assets or activities associated substantially with environmental and social objectives would be justified. Based on its findings, the...
France steps up sustainable transformation
20/06/2022 France’s innovative and incentivising Action Plan for Business Growth and Transformation (PACTE) law lays the legal foundations for corporate social responsibility. With more than 400 companies established as “sociétés à mission” – mission-led businesses – by the end of 2021, this new scheme is an undeniable success. The number of mission-led companies has doubled in a year and is...
Sustainable finance regulation in insurance sector
26/04/22 The European Green Deal aims to achieve climate neutrality by 2050 and create a modern, competitive and resource-efficient economy. To meet its objectives, the European Commission has begun to restructure the non-financial reporting requirements for companies. Although some of the requirements were partially implemented in 2021, this is only the beginning of a real sea change for all...
Banks' step up efforts on climate disclosures
11/04/22 In March 2022, the European Central Bank (ECB) published its second snapshot of climate-related and environmental risk disclosure levels among significant institutions under its direct supervision. In line with the results of the first snapshot published in November 2020 – regarded as the baseline measurement – none of the institutions in scope for this second review met the minimum...
The SEC releases proposed climate disclosure rules
23/03/2022 On 21 March 2022, the US Securities and Exchange Commission (SEC) released proposed climate-disclosure rules of a historic nature in “The Enhancement and Standardization of Climate-Related Disclosures for Investors.”
Banks making headway on ESG and climate risk
11/03/2022 While gaps in data remain a challenge for fully assessing and quantifying climate change risk, 65% of banks now use climate scenario analysis for their risk management framework, according to Mazars Responsible Banking Benchmark Study 2021.
Banks road test sustainability strategies
04/03/2022 Most banks now identify environmental targets for their activities, but only 24% of them have set net zero financed emissions targets in line with the Paris Agreement objectives, according to Mazars Responsible Banking Benchmark Study 2021[1]. In addition, the identification of social targets as a long-term sustainability strategy continues to lag environmental targets set.
Embarking on an ambitious common climate framework
03/03/22 As part of the European Green Deal, the European Union intends to encourage green investments and prioritise the revision of the Non-Financial Reporting Directive (NFRD). The European or Green Taxonomy, which sets out a precise classification of sustainable activities with the strategic objective of redirecting capital flows towards those activities from 2022, is a result of this...
The move to mandatory sustainability disclosure
11/02/2022 Sustainability disclosure and reporting standards aim to foster transparency of banks’ environmental, societal and governance (ESG) risks, opportunities and impacts. Disclosures seek to explain the implications of ESG matters on banks’ business performance and risks, enhance portfolio transparency and overall exposure for external stakeholders, and describe how ESG is managed.
An evolving sustainability governance landscape
28/01/2022 Banks have been steadily allocating formal responsibility for sustainability-related matters within their board and management functions and adopting specific oversight processes. However, those responsibilities and who is accountable can differ depending on the prevailing regulatory environment, geographic location or board and management’s preferences.
What can banks expect on sustainability?
27/01/2022 The growing importance of sustainability issues and the role of credit institutions in financing transformation places climate and environmental risks at the core of regulatory and supervisory scrutiny today. For some years now, the Network for Greening the Financial System (NGFS), comprising central banks and national supervisory authorities, has been working to enhance...
The FSOC weighs in on climate risk
02/11/2021 The Financial Stability Oversight Council (FSOC) was established under the Dodd-Frank Wall Street Reform and Consumer Protection Act as a result of the 2007-2008 US financial crisis. A first of its kind, the 15-member council is tasked primarily with identifying growing systemic risks to US financial stability and proposing coordinated regulatory responses to both preempt emerging...
Tracking the green transition with OMFIF
29/09/2021 There is no longer any question about whether to transition from brown to green finance – only how. Easy access to climate risk data and global regulation promises to help policymakers see the big picture and better understand what is missing in order to make the transition a success.
ACPR climate stress test pilot exercise results
22/09/21 Climate change introduces considerable economic challenges. On the one hand, financial institutions must contribute to the transition to a low-carbon and balanced economy to effectively combat global warming. On the other hand, the financial sector is exposed to climate-related and environmental risks and therefore needs to implement appropriate risk management practices within a...
Fostering a culture of sustainability
17/09/2021 The tone at the top typically establishes the foundations and values upon which a culture of sustainability is built. Developed at board level and communicated consistently across an organisation, ESG values need to be reflected in a bank’s governance structure if they are to last.
ESG investing: Three risks to consider
15/09/2021 The continued popularity of funds with an environmental, social and governance (ESG) focus has put global ESG assets on track to exceed $53tn by 2025, up from nearly $38tn at the end of 2020(1).
The case for improving sustainability disclosures
09/09/2021 Developing innovative products and harmonised frameworks across banking activities is crucial to achieving sustainable finance objectives and contributing to global transition targets. Yet, a lack of standardised reporting frameworks means identifying and comparing sustainable products and services remains a challenge.
ESG investing: From buzzword to mainstream
07/09/2021 A growing interest in environmental, social and governance (ESG) issues is driving record inflows into the ESG-led investment sector. During 2020, sustainable funds available to European investors attracted net inflows of €233bn1, which saw assets under management hit the $1.1tn milestone, accounting for almost 10% of total European fund assets.
Getting granular on emissions disclosure
06/09/2021 Banks are adopting risk management practices that account for climate-related risks in response to growing recognition that climate change negatively impacts operations and revenues.
PD in the context of climate risk
27/07/2021 Recently, initiatives to tackle climate-related and environmental risks in the financial services industry have begun across the world. These initiatives followed the adoption of the United Nations Paris Agreement on climate change, the 2030 agenda for Sustainable Development and the European Green Deal.
How to close the sustainable infrastructure gap
15/06/21 Infrastructure is of paramount importance to global economic development and sustainability. It underpins access to essential goods and services and will enable vulnerable countries to adapt to weather-related risks from climate change.
Benchmarking responsible banking: key figures
12/03/2020 Banks across the world are facing complex sustainability questions, from assessing climate-related risks to maximising green financing opportunities. Up against an unprecedented pandemic, investors, regulators and banks continue to firmly acknowledge the importance of solving environmental, social and governance (ESG) issues.
EBA: management and supervision of ESG risks
12/03/21 European sustainable finance regulations evolved considerably in 2020, and the European Banking Authority (EBA) is continuing this trend into 2021. It recently published a discussion paper assessing the potential inclusion of Environmental, Social and Governance (ESG) risks in the supervisory review and evaluation process (SREP) performed by national competent authorities (NCAs)
A toolkit for responsible investment decisions
04/03/21 Clarity of information provided to various stakeholders is a growing issue for financial organisations. Despite the efforts to increase transparency in recent years, historically, this has not always ensured the clarity of the information published. It’s a factor that has contributed to limiting public confidence in responsible investment. This is because it is only relatively recently...
How the insurance sector is meeting ESG challenges
04/03/21 When taking environmental, social, and long-term asset portfolio issues into consideration, insurance companies must assess the specific risks they face. As a result, the associated obligations of transparency mean that the entities concerned must adapt their risk management policies.
The impact of sustainable finance on insurers
04/03/21 Amid a global pandemic and a rising threat of climate change, today’s society expects financial organisations to uphold strong environmental and societal values. Given their critical role in the growth of the economy and citizens’ lives, insurers face close scrutiny.
The importance of CSR for real estate strategies
09/02/21 The pandemic has had a significant impact on our entire ecosystem. We have seen global CO2 emissions fall by a record 7% in 20201 benefiting the environment. Yet, at the same time, we have seen adverse consequences for the mental health of staff working remotely, with almost half (49%) of those working from home saying they have felt lonely or isolated2. Certainly, while previously...
The bank making a trillion-dollar investment
02/12/2020 Climate change has ruinous effects on the environment and is increasingly understood to be a major threat to economic stability. Financial institutions around the world, in response, are taking action by offering investment and lending products linked to clients’ sustainability credentials and achievements. In a recent interview with Mazars, Zoë Knight, Group Head of the HSBC Centre...
Challenges of the sustainable finance regulations
13/10/20 As the world gears up for the transition to net-zero, the European Union is setting ambitious targets with respect to its own environmental footprint. For instance, by 2030 the EU is looking to reduce European greenhouse gas emissions by at least 55% compared to 1990 levels; increase the share of renewables within Europe’s total energy consumption to 32%; and achieve energy savings of...
Banks’ response to climate change risk
Sustainable finance is expected to be a crucial factor in the post Covid-19 economic recovery period and regulators are encouraging banks to actively embed climate-related risks in their business operations and risk management frameworks. Against this backdrop, Mazars has analysed how 30 of the largest banks worldwide have been responding to climate-related financial risks.
ECB: aiming to improve gender diversity
11/06/20 American entrepreneur, Malcolm Forbes, once described diversity as “the art of thinking independently together”. Today, diversity is beginning to emerge as a quintessential workforce norm and institutions have started to acknowledge the differences in their staff compositions that are deeply ingrained in the fabric of their organisational culture. With many challenges remaining, the...
Gender Balance Index 2020 launches
Gender balance in central banks is improving but progress is slow, reveals index and report from Mazars and the Official Monetary and Financial Institutions Forum (OMFIF). The OMFIF Gender Balance Index tracks the presence of men and women in senior positions at central banks, sovereign funds and public pension funds. The study, now in its seventh year, scores and ranks institutions based on...
Are stringent gender diversity measures required?
20/05/20 Gender equality, while not systematically embedded in national laws, is clearly set in European law. The Capital Requirements Regulation (CRR) requires financial institutions to adopt a policy promoting diversity within their management bodies and, for the most significant ones, to set targets to reach gender-balanced boards.
Responsible banking practices study 2019
With Environmental, Social and Governance factors, and responsible banking practices more broadly becoming an essential focus for the banking industry, Mazars has assessed how banks are embedding sustainability into their commercial practices.
Responsible banking during the pandemic
15/05/20 What is the purpose of a bank? Does it have a responsibility to society at large, over and above its duties to its shareholders, customers and employees?
Financial regulation, Covid-19 and Climate change
04/05/2020 At first glance, regulatory authorities appear to have deprioritised the issue of climate change. However, a closer look would suggest otherwise and climate change in reality remains a key long-term priority of national and European regulators.
Developing a framework for climate-related risk
08/04/2020 As climate-related threats increasingly dominate our environment, attention is now turning to the impact on global financial stability. Mark kennedy looks at the effect on the financial services industry and how the regulatory landscape is likely to change.
Time to rethink risk
31/03/2020 Why integrating ESG should be a strategic priority in financial services.
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