Can I Sign Louisiana Banking Presentation

Can i industry sign banking louisiana presentation later

okay good afternoon everyone it is my pleasure to welcome you all to the launch of the unified and european banking federation high-level recommendations on the application of the eu taxonomy to core banking products my name is eric usher and i head the unep finance initiative which is a un finance sector partnership working to support and help drive the sustainable finance and responsible investment agendas this much-weighted report is a result of 26 major banks eight banking associations and five observer organizations working together to test pilot and assess the complexities of applying the eu taxonomy to core banking products at unifi we see the ueu taxonomy as the backbone of a really truly transformative agenda by increasing market transparency and pointing to what is good enough from a sustainability perspective the eu taxonomy can help direct the flow of finance necessary towards green sustainable innovation in the economy what you will find in the report are eight high-level recommendations to regulators to standard setters to the banks themselves which together create concrete steps or provide concrete steps and principles for the taxonomies practical application to bank lending books this uh the report takes you through the benefits but also the main challenges that the banks have seen um uh when when applying the taxonomy and from general lending to sme financing this is really um i can say a very in-depth analysis and it it builds on all the experience of the participating banks in terms of sustainable lending um so we're seeing i think uh um quite an unprecedented momentum building up in the industry um widely around sustainability and a lot of focus here in terms of the taxonomy um since uh the launch of the principles for responsible banking um a year and a half back we now have over 200 banks who have signed up to this ambitious u.n sustainable finance framework that's 40 percent of the global industry are signed on and banks are progressively committing to accelerating the transition to a net zero carbon economy either individually or or collectively and they're setting sustainability targets and aligning their business operations and strategies with the sustainable development goals and the paris climate agreement of course all of this momentum and progress is also taking place against the demanding backdrop of the colvit 19 pandemic your loan books which reach down to smes to households which are the the bulk of the european economy um and they are going through a major crisis and banks uh are trying to support and finance them through the crisis and through this transition so it's a multiple sets of challenges both those being faced today and those also getting ready to prepare for and prevent future crises including global climate change we're certainly very proud to be participating in this initial phase to be supporting our member banks and the european commission in this effort as mentioned unify is a global organization and we're witnessing the rise of taxonomies across jurisdictions and we really hope to support our members in other parts of the world using the experience of this pilot and european leadership both in the private sector and in government to also understand how taxonomies as a tool can work elsewhere in a coordinated fashion we work with banks but also with insurers and investors and what is clear is that this framework generates huge interest uh from lenders to investors to underwriters uh really truly across the finance industry i'd like to at last to address a special thanks to those individuals that in their respective organizations and banks have participated in this pilot exercise and have delivered their recommendations on time for the commission to agree uh to integrate them uh via the eu platform sustainable finance and the eba very grateful for the very constructive collaboration with ebf colleagues particularly denise and danielle and their member associations and we're looking forward to embarking on a second phase to continue this work and welcome more banks and interested parties to join with this i passed the floor to win maze the ceo of the european banking federation i wish you all a great virtual event between today and tomorrow whim the floor is yours thank you very much eric and ladies and gentlemen good afternoon a year in sustainable finance feels like a decade for all the wrong and the right reasons for the wrong reasons because we're running out of time and the sense of urgency for our work should become bigger and bigger for the right reasons because there's no doubt as eric just said that there's a lot of interest in the taxonomy taxonomy and this is one of the fastest developing regulatory and market areas there is there is involvement of many stakeholders and again that is also for all the right reasons because we are in this together and i would never have imagined and we will hear later from martin spock i don't think he will ever have imagined that a taxonomic consultation of the commission would attract 46 000 responses i guess martin is a fast reader because we calculate that it will take a year to read for one person but luckily he has a good team with him and again a lot has changed since we last launched this project together with unpfi who i whom i'm very grateful for the cooperation one and a half years ago at that time we were talking about the eu tax taxonomy but it was a different animal from what it is today it was being developed mainly for investors and with investment activities in mind including banks acting in that capacity the traditional banking activities were not in the mandatory scope of the regulation so we were voluntarily embarking on a voluntary project about the voluntary application of tax enemy for core banking products such as lending to corporates smes retail products projects export and trade finance to complement efforts of banks in the areas of risk management financial markets or portfolio alignment this taxonomy regulation now foresees a mandatory application to the uh of the eu taxonomy for banks for disclosure purposes the eba shall advise the commission about the scope of this application and what will for sure have a significant impact on the banking industry as it just needs to be the sustainable finance platform is also looking on how to further operational rationalize the usability and application of the taxonomy including for all banks business lines so while our report is thanks to the huge amount of work and efforts of banks banking associations june fi and the ebf time perfectly timed to provide an insight on the application of taxonomy for banking products and provides input to both the work of eba and to the sustainable finance platform of the commission we know very clearly that our work is not done we need to continue yes today we have reached an important milestone we like to call it the first station on our journey in a train that we are all in and this train has to be a fast train after a short stop at this station we will be embarking to continue our product again to move to the next station and then onwards on our journey for the next phase of our project we will be taking on new passengers a coalition of the willing and there are so many and we will be happy to welcome european as well as global members of the united unifi and ebf family given not only the extra territorial implication of the eu taxonomy but also its potential for global expansion to the of the projects so while the ultimate objective of the next phase of the project would be to liver to deliver more operational guidelines because there is no doubt that that is necessary to facilitate banks with the taxonomy application we have to work closely with all other stakeholders regulators the european commission and the eu platform to ensure that all the regulatory and non-regulatory initiatives are coming together in the most consistent efficient way we are all in this together yesterday i had moderated the panel on sustainability in the uh international school of law and finance of frankfurt in which i had very high level panelists and in which also madame lagarde of the ecb spoke and that message was we are always in this together and also that we need clear consistent long-term goals to work towards many of these these recommendations are also in the report that we discussed today so i am aware of the significant efforts that will be required to form uh all to ensure all the objectives of climate neutrality and the goals for sustainable economy and as i like to add myself biodiversity are meds so while the eu taxonomy sets ambitious goals and steep challenges for businesses and banks alike we see it as a driver of the crucial sustainable discussion within our discovery in the industry and with our clients so i hope you enjoy today and tomorrow and i wish you a very good trip on this train please come all aboard because we leave as we need to leave thank you very much now moving on of course if you ask yourself on how this work was overdone eric already talked about the nissa arthur mountain the is a senior advisor at the european banking federation and currently in charge of sustainable finance as i'd like to say that means there is hope still for all of us because she can do a lot she has been with the european bank federation since 2006 and she held various positions from payments to a continent accounting to prudential and she is good in all of them so she is one of the people that can help us formalize formulate this clear these clear objectives that we need to have and she is as i've always liked to work with her because she's very practical so denise you have the floor thank you very much beam for this very nice introduction and good afternoon to everyone but before introducing the panel i would like to take a few minutes to provide some insight into the report the objective of our joint project as we already heard in the resulting report is to provide a constructive input in support of the commission's agenda to facilitate the eu taxonomy implementation as eric already mentioned the report is a result of collaboration between 26 banks eight banking association and observers namely the european commission the eba efrac european investment fund and european investment bank and also principle for responsible investments the report is structured in five chapters it has been just published on both uniperfi and ebf websites so feel free to download but please don't print the first chapter introduces the new taxonomy regulation and its application to banks the second chapter is on benefits of the taxonomy implementation while the third chapter elaborates on the challenges four chapters suggest concrete steps and principles for the practical application of the taxonomy to core banking products and chapter five is on resulting recommendations we have been following a three-step approach throughout the project so based on questionnaires and to banks we undertook a gap analysis between current practices in the banks and the eu taxonomy in the second step the eu taxonomy as in the final tech report was tested by banks on realistic transactions the subsequent discussion in groups based on sectors and on product types resulted in collective recommendations now five of the recommendations are directed to regulators and legislators the first one recommends to consider the specificities of core banking products and we will be talking later on in the panel about it second recommendation is on the need for consistency between your taxonomy and other legislation including that at national level recommendation number three is not calling for global taxonomy but for global alignment of taxonomies facilitation of international data collection and comparability mechanism this would facilitate the application of the eu taxonomy beyond eu borders the fourth recommendation is calling for considerations to address the timing mismatch between corporate data availability and bank's ability to apply the taxonomy and also to disclose against it recommendation number five address is one of the key challenges which is common across sectors we recommend public authorities to develop tools to improve collection and handling of data to facilitate the application of the eu taxonomy such as for example the eu central data register the sixth recommendation is for owners of standards and frameworks labels and certification scheme that should provide clarification on the alignment with the utaxonomy or on the gap and finally two recommendations for bank themselves one is to start collecting data on a best effort basis for tax economy relevant information as part of new origination in line with internal strategies and priorities and recommendation number eight is calling for industry guidelines for the implementation and application of the eu taxonomy to core banking products this is actually a recommendation to ourselves as veeam already announced we are going to follow up this recommendation in the next phase of the project in collaboration with relevant stakeholders from private sectors and also from public authorities let me now introduce our panelists i just mentioned the need to collaborate with public authorities so let me start welcoming first the regulator in the room slavka ili head of banking markets innovation and products at the european banking authority we have daniela di triggeristic daniela is a climate change specialist at the european investment bank then we have lucille welcome danielle then we have lucille de la jean here she's a director of regulatory strategy associate general welcome lucille and then anthony bellabriga anthony is a global head of responsible business at bbva he's also the chair of the ebf system of our finance working group and the unified banking committee so thank you very much to all for joining and special thanks to tony for improving our gender balance of our panel tony if i may start directly the discussion with you the very first conclusion as we have as we have heard and recommendation of the report to regulators is to consider the specificities of the core banking products would you please elaborate a bit what are these specificities and why would that be different from investment products and what actually do banks expect the regulators or the legislators to do about it okay denissa well first of all let me congratulate university and ebf and 26 banks for this great initiative and the presentation today and congratulations to the team here at dbf but also at universe 5 with with lod and for inviting me also in this panel well in our opinion we think that there are two main specificities for banks when applying the taxonomy the first one is a difference between clients for banks or investors for investors and a different scope to apply the taxonomy we need to cover as banks a wider scope of companies not only listed corporates or institutions but also smes where practically no data will be available and households so and also without mandatory information from our clients taxonomy assessment will be very difficult though and will create what could create a symmetry between banks this wider scope means an increased level of complexity about stock exposures for banks we are not talking about a few thousands of corporate clients but hundreds of thousands or millions of customers this complexity is even greater if you want to apply the your taxonomy not only to the remission but to the flow or to the stock exposure so the second specificity is about specific financial solutions that we have in banking for users perceives loans or for launch for corporate purposes we expect to be solved by the platform in the working that is they are starting now on usability for banks now that we really appreciate but there are other specific solutions for banks that are getting more and more popular that that should be taken into account such as the kpi yes yielding loans no products that in our opinion can embed easy targets in decision making and definitely can promote sustainable development in this case we see two use cases no one when targets are reflected in the technical screening criteria but will not be compliant now but will be met within a certain time f ame we should see how to cover them as they will push our clients to be more committed and aligned with the taxonomy at the end of the day and the second use case is when targets of these loans are not defined under the umbrella of the technical screening criteria for activities defined by the taxonomy but as a company as a whole a good example could be a company that set net zero targets by 2050 at an aggregated corporate level this is not defined the current scope of the taxonomy and should be developed by the platform on usability to conclude with this i think different scopes different products or specific products it is very important for us for banks the role of the plant for unsustainable finance defining usability as knx steps this is where we are open obviously to engage we are already engaging with them and we are very happy to provide our support in this topic thank you tony daniela you have been part of this project and uh we have benefited from your experience in aligning the eib tracking methodology to the eu taxonomy do you recognize the issues that we just outlined or are there any specificities that would apply to development banks uh thank you denise and again also from my side thank you for inviting me to represent the eib in this event and i mean yes surely we recognize a lot of the issues tony outlines we have gone and in fact we are still going through the process of aligning our own climate and environmental sustainability tracking to the eu taxonomy and you know even for us with the department full of sector specialists this is a challenging uh process and while many of our projects are clearly defined projects that do fall in the scope of the sectors the taxonomy covers we also do roughly a third of our lending through intermediaries and this is mainly in the form of loans for smes with commercial banks so the issues tony that you have outlined and the recommendations that the working group put forward in this report they are very important and they are extremely relevant for us because in the light of our climate targets also our work with banks will in future have to increasingly focus on on green investments and this means for us that the underlying green investments will have to follow the eu taxonomy as we have committed all our financing um will and it has become very clear from early discussions that we are having with our partner banks that uh there is a substantial amount of support uh needed in particular when it comes to translating the taxonomy principles to loans targeting smes and as the eu climate bank we see that there's a strong role for the erb to champion the adoption of the eu taxonomy in the markets as a framework to track and trace green investments and to offer help and the support that the banks need to dedicate a growing portion of their lending to green investments that are taxonomy compliant and this support is coming and in fact is already there in the form of sharing our experience providing technical advice in the form of technical assistance and developing the tools that are also mentioned in the recommendations the tools that allowed mainstreaming of the eu taxonomy across the relevant client groups so the point i want to make is that you the banks out there you're certainly not alone there will be institutions like us to provide support and certainly um we will provide support not only to our clients but also to the clients of our clients and and beyond there are already several ongoing eib initiatives including an advisory facility to accelerate the use of green bonds and loans to finance green activities and there's a substantial support package targeting specifically banks that's funding consultancy services two interested banks and the development of a set of tools including e-learning an online library of guidance material and several green eligibility check and reporting tools always the objective to encourage and to facilitate eu taxonomy in application so please do reach out to us if you recognize that that you have a need for this type of support and we will be happy to engage and and to discuss and see how we can take on board the recommendations from the report and best support uh you and the working group going forward in the eu taxonomy adoption process we certainly will do thank you very much as you actually said indeed sharing experience learning from each other this was one of the objectives also of this project um lucille if i may turn to you um you know um what what would you your main participate in this project what are your main initial observation what would you recommend to a bank that have not yet started or is at very early stage of the implementation process thank you daniza and good afternoon everybody so maybe it's important uh to mention that this has been a very uh useful concrete experience of the applicability of the eu taxonomy for society general but also for the participating bank and we we thank warmly the unified and ebf for putting that great coalition together and we are looking forward to the phase two of this project um in a nutshell uh what this experience of the applicability of the taxonomy revealed together is that we are all strongly motivated to use the taxonomy as a fundamental tool to win our activities and serve our clients transition and when you see the bunch of practical case studies that we've put together i think you can be convinced of how motivated we are and uh and we thank again as in epiphany and ebf for putting those use cases available to all via the report um so vim already mentioned as well as eric all the great merits of the eu taxonomy but indeed associated general we are very enthusiastic by this common sustainability language that provide clear sustainability targets and from this perspective we would like to sign the european commission the tag and also we are very grateful to the platform on sustainable finance for all the efforts that are currently dedicating uh to to move forward and we know there are plenty of things to do um but having said that uh and as tony mentioned as well as daniella we can reasonably be saying that we've been facing exactly similar type of difficulties to make that tool as efficient and practical as we want it to be and those challenges are already commonly known now within the policy making community and within the financial industry and the report details them very well but in a nutshell just to share our experience we have tested the taxonomy on our credit portfolio for the energy sector but also for the automotive sector real estate and manufacturing and the conclusion we've reached are quite interesting in terms of technical screening criteria we have observed that the data was available for 60 of our exposure but not necessarily with the similar level of granularity that is provided into the taxonomy but we think it is encouraging for the energy sector we form the data with a good quality same for automotive but less for the real estate sector and far less for the iron and steel sector where the data is is kind of missing more importantly and antonio underlines it already um we the the biggest challenge is actually the absence of evidence on the of companies alignment with a do not significantly armed criteria and the minimum social safeguards and we are expecting that these data challenges will be further exacerbated as you mentioned therefore for application of the taxonomy on smes also for the application on retail customer mortgages and autoloans and i'm not even talking about the activities that are outside of the eu because obviously they do not significantly our principles are based on eu norms mostly and based on new norms so we can't expect activities you would be would be consistent with that at least on the on the short term um also what would be very helpful in the future for the applicability of the taxonomy is to have more clarity on the activity segmentation of our clients and this is key for the application of the taxonomy and our general purpose loans the report underlines very well saying that it's a bit i mean a bit more than 50 percent of buying balance sheets in europe that are composed of general purpose loans with unspecified our use of proceeds so it would be very helpful to have this segmentation based on the same nice classification granularity as a taxonomy nowadays you ask her if i could give one recommendation um and i think if there is one to make is to have a flexible approach from the dns and minimum social safeguards that i think all my peers will agree on that having proxies based on the country of location and assumed compliance of clients with relevant legislation with the dnsh would be very helpful we can obviously complement with information provided by existing environmental and social uh external external tools we have not have been minds rep risk which could be very helpful for the minimum social safeguards and i mean this is the the only solution we see because we've tested some of the very best practices uh to apply uh i mean to see how companies can be aligned with the dns in particular we have been relying on on expert judgment we have been gathering the deal leveling our information from past deals we have also information on certain of our clients already we have also been on the case by case disease checking uh environmental and social policies in our clients website and the least we can say is that this exercise is incredibly resource and time consuming because we need to have an entity identity approach and as tony mentioned it seems a bit um not very much realistic uh to to to exercise it on uh on all uh our bunch of clients large corporate but also smes and a retail um so as underlining the report uh and this is a recommendation you're making to banks is we need to work and this will be the objective phase two uh we need to have commonly agreed industry guidelines to assist us in the pragmatic application of the taxonomy the taxonomy is no longer voluntary for banks it is becoming mandatory with with the forthcoming grenade ratios so we have no choice we definitely need to work together and find pragmatic solutions to those those obstacles thank you very much lucille for this uh for this insight very helpful um you mentioned it we mentioned it several times i think he couldn't be more explicit that when we embark on this project it was a voluntary application now the rules of the game are changing the eba is working on the advice to the commission that will specify the scope of the mandatory application for banks um there were some references to the taxonomy also in the eba discussion paper on this so slaughter turning to you how does the eba seize the use of taxonomy by banks now thank you good afternoon to all of you and first of all uh also congratulations to the unemployment ebf on on this report and on all the work done there it's certainly very helpful contribution into the discussion on the use of taxonomy and thank you for inviting me here today yes so we are currently finalizing the advice on article 8 so on mandatory use of taxonomy for banking sector and investment firms for reporting on taxonomy alignment and i have to say that uh basically all the issues identified in this report published today are the same one we are we were facing when preparing this advice and those issues are there and we actually are trying to propose solutions on how to overcome some of these issues for the purpose of the disclosures not for the for the everyday uh business and product uh product design which i will be talking about in a second so um first of all uh the article aid alignment we understand it uh basically as the green asset ratio which banks will have to disclose and on which the eba is talking about for some time as a good metric for disclosure so we are actually very positive about um about these disclosures and ability to contribute into calibration of the green asset ratio for for the purpose of article 8. so recognizing the same challenges which are in the report uh as no new exposures not not available data for smes and some some corporates and also the time time between disclosures and available information we actually are suggesting different uh practical solutions including sequential approach starting with portfolios for which data are available also recommending extending the scope of the nfre disclosures and building banks disclosures on obligations of corporates and sms to disclose while also motivating banks to of course collect data internally and try to build database the same direction as the report says in a similar way for for the retail exposures we are only building with on those portfolios where some uh kind of taxonomy relevant information might exist but the question was and that the last one story is very important on his use of ranges of estimates and proxies which is a necessary stuff where data are not available and on which more technical work needs to be done but uh coming to a question denisa on whether eba already see the use of taxonomy in the report on a consultation paper on the esg risk management we are making three very specific references to the use of taxonomy and we are trying to inspire banking sectors to look also to that direction so first of all uh taxonomy criteria can be well used when banks are internally developing their ehd indicators and criteria they will be using for risk management approaches of esg risks because you know that's that can be very helpful already to look on the type of criteria for what is considered as sustainable second is using taxonomy when setting strategic objectives and targets because the taxonomy alignment can can be effectively used for very smart objectives which are measurable and on which banks can monitor and having it aligned with taxonomy is also making sure that it's aligned with 2030 and 2050 eu targets so and the third one is the design of sustainable products which is going forward for new exposures as green bones green loans sustainability loans all those products which banks are now working on so of course it's very useful to to build it on taxonomy and the last one i would mention is also potential use of the taxonomy for scenario analysis and stress testing and as you know the eba is just now finalizing the pilot sensitivity analysis where we already asked these volunteering banks to provide the first mapping of certain exposures to uh to the taxonomy and then we will be exploring further how taxonomy could be efficiently used when working with scenarios and some buckets of exposures so this is where i would stop for the moment thank you thank you very much well it's reassuring to hear that the issues identified in the report are shared although not surprising obviously and also good to hear that they might be hopefully solutions for that uh so we are looking forward to works like um with you on that uh if i may turn now to tony um actually the lucille already mentioned one of the recommendations you would choose as the as the top um while i recognize that all are important some may take a bit longer or could be more challenging to address which of the recommendations you believe should be addressed as a matter of priority that would substantially improve the operationality of a taxonomy or maybe it's a combination of all yes uh yes theresa um no coming back to the recommendations but before to move on the on your question i i would like to use uh uh have a minute to to comment on the on the on the on the slap comments no remarks about the work that they are doing and and the transition that we have now uh becoming mandatory no detection amino we have seen that the applying taxonomy is very challenging for for the flow for the origination but this is even more challenging for the stock no where where where it's not a long question of reporting because user proceeds of past loans is even more great and also that's uh in one side this is something that important for us and also we celebrate that the eba is considering additional information about sustainable finance that maybe is not taxonomy compliant but can promote financing transition that's the last consultation regarding the recommendations uh i would like to highlight that uh well um all are i portant obviously all very important but maybe there are some of them that are very critical or specific for banks in terms of timing also as well no so the the the two connected the one and the eight are very well connected so on the one we ask that regulators and legislators should take into account the specificities of the banking solutions now and as i said before it is critical now the work of the platform of sustainable finance we are really optimistic as they have created a specific subgroup on banking and usability which we celebrate and as i said before well we are going to engage we are starting engagement with them uh and following this phase two uh that is very critical and i think this report would be a great baseline for this dialogue and then the recommendation eight that relates to what we have to do as banks know uh and this idea that also was uh introduced by lucille about that this you know to implement the taxonomy to specific products no focusing on methodologies and reporting guidelines i think that these are the two main specific recommendations for banks that are very relevant also the recommendation seven uh when we say we ask to start [Music] at the sooner the better no that's a collection of information that we have as banks and do our best force to apply taxonomy i think this is very relevant so the best recommendation for banks could be start the sooner better in our case at bvi we have done this exercise trying to adapt our internal standard following economy although it's not all information available we have added specific products we have adapt some criterias for non-new activities but at the end of the day we already piloted taxonomy in our in our flow so i think that's the most relevant relevant recommendations for that for the report from the report thank you um lucille tony already mentioned um transition finance you have been all also talking about the lot of activities um that banks are doing um to like different activities banks are doing to um to help the transition um how does the taxonomy fit into the existing efforts of of the banks to support um sustainability transition thank you so the report already underlines well that we also participating bank we are committed to accelerating this transition to a net zero carbon economy by 2050 and uh and indeed for society general we are definitely becoming energy transition bank and this is what has driven uh partially our engagement with the inner part and ebf initiative we are actually convinced that the transition will be done with and by our clients and our focus is mainly on long-term engagement with the clients rather than on an immediate divestment and we are notably doing so by aligning our portfolio of great portfolio with the objective of the of the paris agreement i'm not going to detail the very vast multi-dimensional ambitious offerings of society general in terms of investment financing advisory solutions to serve our client transition it's just important to mention that we we are the world top financer part of the world of financer in your renewable energies and we've been for a decade very active uh to support our client shift to renewable energies production and consumption but there are plenty other initiatives and i'm not going to detect them all to respond to your specific questions on on the transition activities within the taxonomy actually since 2018 it was quite early we have been associated with our peers questioning how the eu taxonomy could provide a greater consideration to those companies that are engaged into a transition towards the goal of the paris agreement because what's proposed today is is a very good start and it's scientifically based so we are not putting that into questions but it's also very contained um we have uh transition activities but with very strict and ambitious uh starting thresholds and also we notice that only those companies that are engaged into a maximum five years decarbonization trajectory or alignment trajectory are considered in transition um so in fact um this has already been identified by the commission i think but with the current approach taxonomy could indeed de facto exclude those companies that are engaged into a decarbonization trajectories i mean they are treating them equally as companies that are not at all engaged into a transition pathway the taxonomy does not either capture those companies with activities that are outside of this of their list and those companies may also invest in alternative let's say alternative energy but with not necessarily a starting threshold that is the same as what the taxonomy is proposing so those issues i think have been identified but now if you're talking to me about how we are going to use the taxonomy for transition the answer i i will give is at this stage as it stands today we need a complementary tool to the taxonomy it cannot be the unique tool we need complement and this is actually what we're doing in our strategy of a corporate credit portfolio alignment with the goal of the paris agreement because measuring alignments of our credit portfolio actually need a reliance on climate scenarios and also points to a scientifically defined transition pathway from client initial activities to transition to green and this is what is missing in the taxonomy well i do not resist obviously i don't think that since the katowice commitment we made with our friends at the bbva letter b but also bnp paribas ing sonar chartered so we made this commitment 2019 to align our portfolios we have already started an alignment exercise and we are doing so using a steering tool that we are applying on the stock of our credits for certain sectors to measure the extent to which the stock of credits is aligned or misaligned with trajectory sector specific climate scenarios that are consistent with the objective of a net zero emission by 2050. of course i don't want to i don't want to interrupt you too much but i'm aware of the time we have remaining five minutes and i still have many questions but at least i would like to take the opportunity to ask a question to slaughter i think what you mentioned is absolutely relevant it's something the platform will be um addressing in the coming months that we know um mentioning actually the platform slaughter my question was uh to you once they developed the taxonomy uh i have been talking about the use of taxonomy and of course uh we talked for the time being about the climate climate change adaptation and mitigation once it's developed um like further and and probably also incorporating the negative impact and the social taxonomy um so how do you see the the youth um after after that those developments you know thank you elisa for this question of course uh there is a lot to be discussed about this but i would i would share with you let's say my uh my remarks which are more personal professional so it's not an official eba position or what is what is going to happen because it will very much differ on specific mandates given to us so it's more kind of sharing my thoughts on the point so uh the current taxonomy already includes uh four four sub-categories inside it so we have the green mitigation we have transitional activities we have enabling activities then we have green adaptation and then we have those which which are already excluding us harmful and we will have harmful activities defined by by let's say brown taxonomy being developed by the platform so let's see it is already a very useful categorization tool and it has been designed as primary categorization too but within those categories each type of assets will have to go through a different path to transition so let's say transitional activities are meeting the 2030 targets but they are not meeting 2050 targets so we know that that group of activities has will have different transitional risk compared to those which are already 20 50 green fully fully aligned with 2050 targets so what one idea is that we can build actually other risk management approach around this categorization and and and but the risk-based indicators within those categories because eventually what is behind it or why so if we recognize that the current taxonomy is science based and is aligned with the eu 2030 and 2050 targets i think we can reasonably assume that public policies in energy transport and all the sectoral policies will catch up and will sort of be aligned through regulation with those targets so in that perspective we can use this categorization to try to think about those type of assets as having different level of transition risk eventually because the regulation will move also certain direction and then a link to this we could also think okay so is this a good tool to start applying some more scenarios for risk analysis stress testing sensitivity analysis on this type of portfolios and maybe that could be the way how we could further elaborate the use of taxonomy in addition to those points already mentioned in the in the previous intervention so i see a big potential for the use of taxonomy but i think it still needs a lot of work discussions and understanding of exactly what the taxonomy includes what are those subcategories and how to work with them in combination with type of products and business banking sector is using thank you so a lot of food for thinking um daniela i would like to have one last question for you maybe very quickly because um to invest you the eib group is likely to be an implementation partner for 75 of you guarantees the commission also plans to launch a climate tracking methodology and sustainable proofing that will make use of the taxonomy also for sme financing the eib group made have simplified criteria referencing the taxonomy so how do you expect these developments to impact further adoption and promotion of the eu taxonomy including probably beyond the eu borders if i i'm sorry for that but if i may ask you to be um to be quick because we still have a closing remarks of martin that i don't want to cut on um thank you so much thank you i i will i promise i will be quick so there are several elements uh in this question let me just start very briefly with the last point you made about the taxonomy also reaching out beyond the eu i mean it's certainly the intention of the taxonomy to be applied consistency consistently at least to what eu funding outside of the eu borders is concerned we just have to see that we are only in the very beginning of this process but then as wim said in in the kicking off of this event it's fast evolving and for the eab i can say that our degree of ambition uh in terms of climate certainly holds equally outside of the eu so in broad terms the eab will apply the taxonomy criteria to all its operation globally and of course we have cases where the principles are defined in reference to eu legislation and it's very clear that it's necessary there to interpret and and adopt these principles uh locally the the advisory uh tool and the online tools that i mentioned earlier we are also replicating these across all regions meaning that the same support will be accessible to banks operating outside of the eu and it will be aligned with the eu taxonomy then you mentioned the the invest eu this will certainly have a significant outreach uh the sustainability proofing and climate and environmental sustainability tracking that you mentioned it will be applied by all the invest eu implementing partners it will be the reference point for private investors and for financial intermediaries participating in the program and taking this into consideration of course we can expect that there will be a significant spillover also beyond the investor eu program in general we also anticipate that uh looking at our the eabs establish commercial relationships with quite a large number of banks and our early adoption of the eu taxonomy requirements this will also help encourage these banks to accelerate the adoption of the eu taxonomy framework and this will be in the same inside and outside of the eu now to emphasize uh what was already said several times by the panelists and and also to conclude uh again what will be crucial for for such acceleration specifically across the different banking products it will be a common definition of workable and and pragmatic and as you said in your question simplified green tracking approaches for vital target sectors such as um smes and and then again i just want to mention it again what's important is the support needed in the form of capacity building in the form of developments and making available tools and solutions and it comes out extremely strongly in the recommendation of the report and it also comes out extremely uh strongly from the discussion that that we have with our banking clients and something that we are very much interested in um in terms of a continuous cooperation with the working group going forward thank you thank you very much actually thank you very much to all of you i would still have a lot of questions but unfortunately we are running out of time so it's good that we are also concluding the positive note and the call for collaboration well tomorrow we will be holding two interactive sessions of 90 minutes one on corporate loans and data data challenges and one on smes and retail lending there will be also opportunities to ask questions so please follow tomorrow on the same link and now it's time for me to conclude one thing that became clear not only in this panel throughout the project and also beyond that we all agree and support the sustainability objectives the commission on his efforts to deliver on the action plan and also that on a taxonomy is an important tool in delivering on these objectives the how to get there is always more complex it requires a lot of effort from everyone changing the business as usual approach and a good dialogue and understanding between all stakeholders the report is indeed a constructive contribution to the debate it's aimed at facilitating the taxonomy implementation and we are looking forward to continue working with the commission with slauca and her team and others to support the process i am therefore very happy to introduce our next speakers speaker as well martin spots martin is the head of unit on sustainable finance in the european commission and i'm very happy to welcome martin and hand over for concluding remarks thank you very much and thanks all for this fantastic panel good morning my name is martin schpolz and i head the department of sustainable finance in the european commission i am very honored to speak at this distinguished conference on sustainable finance i have been asked to tell you a little bit about what is coming next after we have implemented a number of ambitious actions on the existing action plan but before i do that let me just sum up where we have got so far and only then i will move to the next chapter since 2018 when the commission adopted the first action plan on sustainable finance a lot has been achieved three legislative proposals have been adopted the taxonomy regulation the disclosure regulation and the climate benchmarks regulation and now they are entering into force gradually and progressively the commission has also worked very intensively with the private sector because we believe in a very strong partnership between the public and private sector and we have developed a number of concrete tools and frameworks that would help financial sector mobilize their money capital towards sustainable investment just to name a few taxonomy the technical expert group on sustainable finance that we established in 2018 developed the first blueprint of climate taxonomy the technical expert group also developed the first blueprint of the european green bond standard climate benchmarks and also climate relevant disclosures for corporates now we are moving to the next stage and we are thinking what next we need to do in order to keep the ambition high it is very clear that the action plan on which we have been working over the last two and a half years is a very good basis but it is not sufficient in the current context there are two major developments that have really changed the landscape of sustainable finance the first development is the european green deal the european green deal is the first top priority policy priority of the european commission we have made it very clear that the european commission and the european union would like to achieve climate neutrality by 2050 and we have also recently increased the target for 2030 for climate and energy targets it is clear that the ambition with which we have pursued sustainable finance until now must be increased the second context which is changing the landscape tremendously as well is the recovery context when the crisis started in spring this year there have been some voices that we should put the sustainability agenda aside and we should wait first for the recovery to happen so that the sustainability agenda can come back again well we believe that these two agendas a recovery context and the speeder recovery and the green transition can reinforce each other and ultimately there is no trade-off we do strongly believe that the recovery package that the european commission put forward and now is being negotiated can accelerate greed transition and all the progress we are trying to do on sustainable finance and vice versa sustainable finance can help a lot to accelerate the recovery we just need to make sure that the recovery is done in a way that is supporting the european greenville objectives and not undermine it in this context it is clear that we really need to shift the gear to a much higher ambition and we need to also think very very hard together with the private stakeholders on what needs to be done next we launched a comprehensive public consultation on the renewed sustainable finance strategy in april we received more than 650 responses to our public consultation we have structured the public consultation into three clusters first we thought that it's needed to establish a first common basis a kind of ecosystem for sustainable finance and there we are still having some gaps for instance disclosure requirements for corporates or how sustainability ratings or credit ratings are working so this is the first cluster making sure that the foundations for sustainable finance work as they should the second cluster is about maximizing the impact and maximizing the opportunities that the private sector and not only the financial sector but also businesses have with this agenda so here we are looking how to mobilize retail investors how we better align the private and public capital and many other aspects that we have explored in the consultation finally the third cluster that we are looking at is how to manage risks and how to manage risks better not only of individual institutions but how to manage risks of the system overall how to increase the resilience of the financial sector and businesses overall much now let me be a little bit more specific and highlight six areas where we believe we need to do better in the next strategy the next strategy is going to be presented by the commission in coming month and we are now elaborating on the on the way forward i cannot tell you today how this action plan will look like but let me share with you maybe six uh themes of our deliberations of our thinking first we need to make sure that we are shifting the mindset from [Music] greening finance to financing green we need to make sure that the financial sector is part of the solution and is supporting the businesses and companies on their transition pathways of course we need to make sure that we are still greening the financial sector but the focus now needs to be more shifted towards making sure that the financial sector again supports the businesses on their transition pathways and here we are not talking only about businesses that are green today already but in particle about businesses that are not yet green that are not yet sustainable and where the financial sector needs to support those businesses under transition pathways so here we need to think harder how to accelerate this transition not only towards sustainable investments the dark green space but also how we can accelerate the transition from activities that are currently significantly harming environment to activities that are providing less harm how to reduce the harm the second theme and the second topic i would like to share with you is in the context of the recovery we need to think harder how we can make the private frameworks for sustainable finance better aligned with the frameworks and tools that the public sector is using this is very relevant especially now in the recovery context where a lot of public money has been pureed into the system and we need to make sure that this money incentivizes the private sector to steer the action in the right direction we have launched several initiatives in this in this respect uh we are now exploring to the insider commission how for instance the eu taxonomy and the european union green bond standard can be used also by the public sector the third topic is about making sure that we are comprehensive enough that we go beyond climate our action plan from 2019 has focused and prioritized climate objectives but we need to make sure that now is the new plan with the new action plan we are going beyond climate and we are also extending our attention to environmental broader environmental objectives and issues social objectives and governance issues this crisis has made it very clear that we need to pay attention to the social issues and as part of the platform on sustainable finance we are now exploring whether the taxonomy could be and should be extended to social objectives when it comes to governance the european commission already announced an important initiative on this next year and you will certainly hear more about the commission's proposal how to mainstream sustainability considerations in the way of how corporate governance works the fourth issue is about promoting long-termism promoting long termism was one of the key recommendations of the high level expert group from 2019 and we have followed up on that yet we have not yet had many actions so with our new action plan we would like to articulate better how we can translate the big targets how to achieve climate neutrality by 2050 how to increase the climate and energy ambition before 2030 what it means for the companies what it means for the financial sector and what needs to happen on the transition pathways in between [Music] the fifth issue is about resilience i have already talked about the need to make sure that we don't only look at the risks that individual institutions are facing but about the risks that the whole systems are facing and the resilience that the system needs to have this crisis has made it very clear that our systems the financial sector and the corporate system need to work harder on making sure that the resilience is much better finally we need to look beyond europe we are very confident that we will reach all these ambitious targets i talked about but we need to be aware that even if we are successful and we will we will address when it comes to climate only 10 of global emissions so we need to look beyond the european union and we need to find ways how we can accelerate this positive development not only in the european union but in other countries and there are positively already some some countries who are working very hard on promoting sustainable finance in their jurisdictions nevertheless currently there is not a forum where the jurisdictions would speak with each other and exchange notes who is doing what so for that reason a year ago the european commission initiated a new action to launch a so-called international platform on sustainable finance which is gathering all key jurisdictions that are very serious in promoting sustainable finance this international platform celebrated the first anniversary ten days ago and we are very happy uh to see the progress not only in terms of mapping who has done what but on the ambition to converge on some of these frameworks taxonomy green bond standard and disclosure going forward now i would like to say that for the european commission for the success of the new strategy it's very important that we continue this very strong partnership between the public and private sector we started this project with the high-level expert group on sustainable finance back in 2017 and the recommendations that we received from these experts were really outstanding for that reason we have established this technical expert group on sustainable finance that supported the european commission over the last two and a half years and this partnership was a big success big success now we have to make sure that this success is also translated in the way going forward we have established a new platform on sustainable finance that will now support the european commission in developing taxonomy going forward those of you who are familiar with the work of the european commission on taxonomy know that before the end of this year the european commission will adopt a delegated act on the climate change adaptation and climate change mitigation objectives yet there are still four environmental objectives on which the delegated act has to be completed and we will do so next year but we need to work with experts we need to work with the private sector and not only the financial sector but with corporates and experts academia ngos who understand the different sectors and the and the scientific expertise that that we need to have so this platform that we established two weeks ago will work over the next two years at the very minimum to help the commission to make sure that the taxonomy is expanded is developed beyond the two climate objectives but also make sure that taxonomy is workable and usable on the ground we are very encouraged by the progress achieved on the ground but we need to make sure that taxonomy is really being seen by stakeholders as a positive tool that is making a positive contribution and is useful rather than a regulatory burden now what you can expect from the commission in the beginning of next year there will be a big legislative proposal that will also be another game changer on sustainable finance and that is the review of the non-financial reporting directive so far we had a gap between the disclosure and transparency by the financial sector on which we had already legislated and the disclosure and transparency provided by the corporates we already have a legal framework in the european union the so-called non-financial reporting directive we also have the guidelines supporting this directive but it's clear that this directive is not fit for purpose in the current context so the european commission announced that we will table a legislative proposal that will not only integrate the work of the tcfd that has been already agreed at a global level at least at the fsp and g20 but we will go even step further and we will not consider only the impact of climate change risks on the companies but also the impact of companies activities on climate and on other environmental objectives so we have a very ambitious agenda ahead i would like to thank all of you who have contributed to the public consultation on the renewed sustainable finance strategy on top of the strategy under on on sustainable finance we are of course working also on the european union green bond standard you have seen that there was another dedicated consultation and you have also seen that president of the european commission announced in her speech in september that the european commission itself will issue green bonds in order to support and accelerate green transition so if you as you see there is a lot of good momentum we are very grateful for all the great initiatives that you are taking you are making and of course luxembourg is one of the key stakeholders and frontrunners in this field thank you very much for giving me the opportunity to speak to you today and we will be very happy to stay in touch thank you have a very nice conference you