S&P webinar: Data collection the challenge for banks to meet ESG reporting rules

European banks face a challenge collecting climate-related risk data from their small and medium-sized enterprise clients, the French Banking Federation (FBF) said during a June 28 S&P Global Market Intelligence and European Banking Federation webinar.

The FBF has worked with banks to develop questionnaires to help gather this data as they push to meet European Banking Authority environmental, social and governance reporting rules, according to the federation's sustainable finance head Karen Degouve.

In January 2022, the EBA published new standards for ESG risk disclosures under the umbrella of the Basel III banking reforms. The ESG requirements fall under Pillar 3, which promotes market discipline through public disclosures.

This "requires banks to collect ESG information from all their clients. There's no distinction between the different size of client," Degouve said. This is a challenge because smaller clients have not historically been collecting this data, meaning banks have had to develop the capacity to gather the information.

Key takeaways:

  • The European Banking Authority's Pillar 3 disclosures have created significant data collection requirements for banks.
  • Getting quality proxy data can be tough for lenders.
  • Different methodologies in how the information is collected makes comparison difficult.


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