From fulfilling regulatory obligations to sustainable competitive advantages
Regulatory requirements and supervisory expectations for sustainability reporting and risk management pose challenges for financial institutions, but they also offer opportunities. Sustainability reporting is much more than a mere compliance exercise.
Sustainability data can deliver strategic added value and increase the profitability and resilience of your financial institution. Only those who integrate sustainability factors into their strategy, governance, products, risk management, reporting, and control systems can position their company for the future and make it resilient.
The European Union is also pursuing this transformation concept: it has set itself the goal of achieving net zero by 2050 and reducing net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels. To achieve this goal, CO2 emissions must be reduced in all sectors – from industry and energy to transport and agriculture.
One of the three priorities of the EU Competitiveness Compass published in January 2025 is the integration of decarbonization into trade and economic policy.
Investments are to come from both the public sector and the financial sector. The global financial industry plays a major role in making the economy more sustainable as a risk manager, lender, insurer, and investor. The EU has recognized this and implemented far-reaching regulations with the aim of redirecting financial flows toward sustainable economic activities through greater transparency, standardization, and improved risk management. These include the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy Regulation, the Sustainable Finance Disclosure Regulation (SFDR), and the Capital Requirements Regulation (CRR).
In addition, European financial regulators have recognized sustainability risks as systemic and have imposed extensive requirements on ESG risk management.