DFS21_Main Stage_Tom Van den Berghe_Febelfin_211130

1. Digital Finance Summit – 30/11/2021
ESG regulation in the banking sector
tom.van.den.berghe@febelfin.be

2. 2 |
Focus on 2 angels of impact
Digital Finance Summit – 30/11/2021
Impact on product offering Impact on reporting
ESG

3. 3 |
1
Impact on
product offering
Digital Finance Summit – 30/11/2021

4. 4 |
Growing market
Digital Finance Summit – 30/11/2021
— Strongly growing demand from
investors for ‘sustainable’ or
‘ESG’ investment products
— Strongly growing market of ESG
products
Flows to SRI funds, in billion USD. Source: Morningstar

5. 5 |
What is (un)sustainable ?
Digital Finance Summit – 30/11/2021
— No clear definition of ‘sustainable’/’unsustainable’
— Sustainability is complex and diverse
— Legal framework not (yet) adequate
— Confusion & misalignment
— Loss of trust & integrity
— Market fragmentation
Legislative and private initiatives & solutions

6. 6 |
a) Client’s sustainability preferences
Digital Finance Summit – 30/11/2021
Suitabl
e
product
— MiFID update
 Take sustainability preferences into account in the
advisory process and portfolio management
 Avoid mis-selling practices and greenwashing
— What does client expect from its portfolio:
 How green?
 How much impact?
 What to exclude?
 Suitable product offering
Investor
profile
Knowledge
and
experience
Financial
situation
Investment
objectives
Sustainability
preferences

7. 7 |
b) Towards Sustainability label
Digital Finance Summit – 30/11/2021
— Label for ‘Sustainable’ financial products
— Mitigate confusion by retail and institutional investors
— Avoid greenwashing
— Move the whole market towards more sustainability
 A minimal norm with rather strict conditions
 Encouragement to go beyond
 No niche, but a sustainable product for all investor profiles
— Independent governance, supervision & verification

8. 8 |
Broad market adoption of the label
Digital Finance Summit – 30/11/2021
Involved institutions
 85+ financial institutions
 Banks, asset managers,
insurance companies,
private bankers, etc
 Indexproviders, rating
agencies
from many countries
 Belgium
 Luxembourg
 France
 The Netherlands
 Germany
 Ireland
 Nordics
 United Kingdom
 Switzerland
 US
 Australia

9. 9 |
Labelled products
Digital Finance Summit – 30/11/2021
Product types Numbers
 Most comprehensive label in Europe
See full list on: www.towardssustainability.be > Products
€500+
bill.
600+ products
labelled
As of
11/2020

10. 10 |
2
Impact on
reporting
Digital Finance Summit – 30/11/2021

11. 11 |
Objectives of EU Sustainable Finance
Digital Finance Summit – 30/11/2021
Reorienting capital to
sustainable economic activities
• EU Taxonomy
• EU Green Bonds Standard
• EU Climate Benchmarks
• MiFID Sustainability Preferences
Disclosure of the sustainability
of business & products
• Sustainable Finance Disclosures
• Corporate Sustainability Reporting
• Corporate Due Diligence and Corporate
Accountability
Management of sustainability
risks
• ECB Climate Stress Tests
• CRR Pillar 3 disclosures
• EBA guidelines on loan origination
Improved financing solutions for
sustainable projects & businesses
Transparency about positive &
negative sustainability impact
Account for riskiness of
unsustainable activities & businesses
Reporting ESG data needs

12. 12 |
Manifold ESG disclosure obligations
Timing
Scope
Data
Source: EBA
Digital Finance Summit – 30/11/2021

13. 13 |
ESG data flow
Digital Finance Summit – 30/11/2021
Central
ESG data
repository
Audit/Assurance
Geolocation
Energy Performance
Economic activities
GHG Emissions
Green Investments
Companies &
Households
Financial
Institutions
ESG Data
R
E
P
O
R
T
I
N
G
• ECB Climate Stress Test
• EU Taxonomy
• SFDR
• …
!?
!?

14. 14 |
ESG data challenges
Digital Finance Summit – 30/11/2021
Company ESG information
— How to obtain the data ?
— How to ensure quality of data ?
— How to store and share data ?
— How to uniformly process and report data ?
— How to organise this efficiently ?

15. Belgian Financial Sector Federation
www.febelfin.be