ESG Disclosure: Regulatory Framework and Challenges for Italian Banks

In December 2022, the Bank of Italy published an in-depth study entitled ‘ESG disclosure: regulatory framework and challenges for Italian banks’ (hereinafter also referred to as the ‘Document’). The Document is divided into six sections and discusses the current state of the art of the regulatory framework regarding the disclosure of ESG factors by banks and financial institutions, as well as the challenges Italian banks will face in the short term.

The Document opens with a brief introduction highlighting the crucial role of “climate-related” information and data – in which, among other things, it points out that the availability of high quality data is fundamental to the outlined framework1 – and emphasises the attention paid by national and supranational authorities, such as the Banca d’Italia and the European Central Bank (“ECB”), aimed at strengthening both the dialogue with the domestic industry and the assessment of the progress achieved by supervised entities.

In particular, the Document:
(i) summarises the main regulatory requirements for ESG disclosure;
(ii) performs a gap analysis between the ESG disclosure requirements dictated by the European Banking Authority (“EBA”) under Pillar 3 (hereinafter also “Pillar 3”) and those suggested by the European Sustainable Reporting Standards (“ESRS”) issued by the European Financial Advisory Group (“EFRAG”)
(iii) considers the main supervisory initiatives adopted to date and makes some reflections on the main challenges facing Italian banks.

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