The European Commission (EC) recently released a report focusing on the integration of ESG into prudential regulation frameworks, business strategies, and investment priorities. This report highlighted that the EU lacked a common definition of ESG-related risks and that few financial institutions had a clear and well-defined strategy to manage such risks. The EC also found that banks had not integrated ESG risks into their internal risk reporting programs.
In order to accelerate progress in these areas, the Commission has encouraged banks to work together, alongside their supervisors, to develop standard definitions of ESG risks and a framework for understanding them. The report also suggested that banks should develop and make public their strategies for reporting on and managing ESG risks.
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