The European Banking Authority (EBA) has welcomed the consultations on sustainability-related disclosure standards and agrees with the need to introduce international and European standards.

In response to the consultations from the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG), the EBA said the standards were needed in response to the growing demand for relevant, reliable and comparable corporate data on sustainability-related matters.

It also stated there was the need for close cooperation between the USSB and EFRAG during the finalisation of their own consultations to ensure consistency.

The EBA also highlighted the importance of ensuring consistency between the requirements applicable to institutions under the EFRAG framework and under the pillar 3 framework.

The authority has a “strong interest” in promoting transparency and enhancing public disclosures of environmental, social and governance (ESG) risks by corporates, as one of the main ways to address the data challenges that financial institutions face when they get relevant ESG information from their counterparties for risk management and disclosure purposes.

In its responses to both consultations, the EBA focused on the aspects that were likely to be more relevant for financial institutions’ pillar 3 disclosures and the data needs from their counterparties, as well as on the need to promote consistency with the requirements set out in the EBA’s draft Implementing Technical Standards (ITS) on pillar 3 ESG risks.

The EBA called on the ISSB and the EFRAG to cooperate with each other during the finalisation of their own consultations, with the aim of ensuring greater comparability between EU companies and the companies outside the EU that will be adopting the international standards.

In light of the requirements set out in the draft ITS on pillar 3 ESG risks, the EBA also stressed the importance of enhancing the disclosure of corporates’ transition plans and of standardising the climate change-related metrics, so as to ensure the comparability and the quality of their disclosures.

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