FIA EPTA welcomes the opportunity to respond to the European Banking Authority (EBA) Discussion Paper on the role of Environmental Risks in the Prudential Framework. In 2019 FIA EPTA established a Sustainable Finance Committee for its member firms to explore how liquidity providers can contribute to the green transition. It is FIA EPTA’s view that sustainable finance offers a great promise in unlocking investment capital that is essential for fighting climate change and mitigating its impact for citizens. To be widely accepted by investors, sustainable finance products need to be embedded in a healthy secondary market environment which ensures liquidity and enables investors to risk-manage their exposures.
FIA EPTA members believe that the improvement and availability of meaningful and comparable data are of vital importance for the transparency that is needed for the incorporation of environmental risks in the prudential framework and agrees with the assessment of the EBA in this DP. FIA EPTA members express the hope, therefore, that the EU will continue to be an ambitious standard-setter; also co-operate with other jurisdictions on regulatory approaches to create an effective framework in a global context.
FIA EPTA members believe that all financial market participants need to contribute to the green transition in the amount which is appropriate to their role in the market. For that to function well, FIA EPTA members believe there should be a well-balanced approach in which firms have time to adjust their operations. The underlying data to assess the environmental risks are of pivotal importance and before they can be incorporated, there needs to be a transparent and harmonised approach so that all financial market participants use the same methodologies and objectives to assess the environmental risks in the Prudential Framework.
