How to shape the future of the financial industry – sustainably and forward-looking

Sustainable Finance

Forest from above

Your expert for questions

Christoph Schellhas
Financial Services Sustainability Lead, PwC Germany
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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.

Our experts support companies in the financial industry not only in implementing regulatory requirements, but also in developing transition strategies and adapting internal processes to collect, process, and manage sustainability data.

Our service portfolio at a glance

We support you with all reporting requirements.

We help you achieve sound sustainability risk management.

Together, we will develop climate strategies and transition plans.

We offer strategic consulting services to help you achieve your sustainability goals.

We support you in developing new products and services.

We support you in environmental protection and nature conservation with analyses and strategies.

We integrate sustainable technologies into your processes.

We offer comprehensive audit services for the implementation of your sustainability goals.

We support you in managing the growing risks of climate change.

We support you in the sustainable transformation of your building and infrastructure portfolios.

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An overview of the most important regulations

This directive includes extensive reporting requirements on risks and opportunities as well as impacts and dependencies in connection with various sustainability issues (including climate, biodiversity, social issues, governance) for financial institutions and provides for an audit requirement. To this end, the European Financial Reporting Advisory Group (EFRAG) is developing European sustainability reporting standards, known as the European Sustainability Reporting Standards (ESRS). These are highly detailed and apply the principle of double materiality.

Do you have efficient internal processes for collecting sustainability data and performing double materiality analysis? Do you use sustainability data for strategic management?

With the Taxonomy Regulation, the European Commission has developed a uniform EU classification system for sustainable economic activities. The aim is to create transparency for investors. Taxonomy-compliant investments must meet three criteria: they must make a significant contribution to one of the EU's six environmental objectives, they must not cause significant harm to any of these objectives, and they must comply with minimum social standards.

Are you already using your taxonomy data for strategic control in portfolio management?

The CRR is the central regulation for strengthening the stability and transparency of the European banking sector. CRR III finalizes the Basel III regulations in the EU and expands the European supervisory framework to include, among other things, binding ESG requirements and guidelines from the European Banking Authority (EBA) on the management of ESG risks.

While ESG disclosure requirements previously only applied to large, capital market-oriented institutions, all CRR institutions are now required to disclose ESG risks.

In addition, the EBA guidelines (EBA/GL/2025/01) specify the requirements for dealing with ESG in risk management, including governance, strategy, and risk control. ESG risks must be integrated into risk management across all time horizons – this is reflected above all in materiality and scenario analyses, CRD-based transition plans, and integration into the Internal Capital Adequacy Assessment Process (ICAAP) and the Internal Liquidity Adequacy Assessment Process (ILAAP).

Are you prepared to fully disclose ESG risks in the future, report them as part of your regulatory reporting, and integrate them into your overall risk management?

The Sustainable Finance Disclosure Regulation (SFDR) is intended to create transparency for investors regarding the ESG criteria of financial products, promote sustainable investments, and prevent greenwashing. The addition of sustainability to the Markets in Financial Instruments Directive II (MiFID II) makes it mandatory for companies in the financial industry to ask clients about their sustainability preferences when providing investment advice.

Do you already have a sustainable product portfolio?

The Corporate Sustainability Due Diligence Directive (CSDDD), also known as the EU Supply Chain Directive, requires companies to implement due diligence obligations along their supply chains and value chains. To this end, they must establish processes and standards to identify, assess, and mitigate actual or potential risks and harm to human rights and the environment.

Are you prepared to analyze your upstream value chain?

The revised Directive (EU) 2024/1275 on the energy performance of buildings came into force in May 2024 and must be transposed into national law by May 2026 at the latest. The aim is to gradually decarbonize the European building stock and improve transparency on energy efficiency and emissions.

Key changes include minimum energy performance standards (MEPS) for existing buildings, the introduction of the EU building passport, and zero-emission building requirements for all new buildings from 2030 (public buildings from 2028). In addition, the EPBD provides for national building renovation plans, renovation rates for the most energy-inefficient buildings, and the integration of renewable energies, charging infrastructure, and building automation. Member States may provide for exemptions for listed buildings or buildings that cannot be renovated for technical reasons.

Are you prepared for the implementation of the EPBD requirements – especially with regard to energy efficiency, renovation strategy, and portfolio assessment of your buildings?

Our industry expertise at a glance

ESG in Banking, Insurance, Asset & Wealth Management and Real Assets

The requirements in sustainability and resilience are complex and vary from industry to industry – depending on whether you are active in banking, insurance, asset & wealth management, or real assets. In banking, for example, you are faced with questions about integrating ESG criteria into lending, while in asset & wealth management, the focus is on managing sustainability risks in the investment portfolio. Even though insurance companies are among the largest investors, there are special features in underwriting and claims settlement with the possibility of setting sustainability incentives in the product portfolio. In the real asset sector, investments in real estate play a special role from a sustainability perspective, as the real estate sector is heavily dependent on nature and ecosystems and at the same time has a negative impact on biodiversity.

Our experts from the respective industries are available at any time to provide you with the best possible support in implementing the extensive regulations and achieving your climate goals.

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“Take advantage of the economic opportunities in the area of sustainability and set your own priorities for strategic management.”

Christoph Schellhas,Partner, Financial Services Sustainability Lead at PwC Germany

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Christoph Schellhas

Christoph Schellhas

Partner, Financial Services Sustainability Lead, Global and EMEA Insurance Sustainability Lead, PwC Germany

Martin Weirich

Martin Weirich

Partner, Financial Services Sustainability Consulting Lead, Banking and Asset Management Sustainability Co-Lead, PwC Germany

Tel: +49 175 2636956

Daniel Wildhirt

Daniel Wildhirt

Partner, Banking Leader Advisory, PwC Germany

Tel: +49 171 7640502

Nicolle Pietsch

Nicolle Pietsch

Partner, Co-Lead Sustainability Assurance Services, PwC Germany

Tel: +49 160 99559429

Kristina Stiefel

Kristina Stiefel

Partner, Co-Lead Sustainability Assurance Services, PwC Germany

Tel: +49 171 7640010

Sebastian Kreutel

Sebastian Kreutel

Partner, Real Assets Financial Services & Sustainability Consulting, PwC Germany

Tel: +49 160 7181284

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