FIA EPTA response to the EBA Discussion Paper on management and supervision of ESG risks for credit institutions and investment firms

3 February 2021

FIA EPTA is committed to supporting policymakers in ensuring the success of the sustainable finance project at all levels of the capital market ecosystem. The consultation that the EBA has published mainly focuses on ESG risks stemming from clients and counterparties. FIA EPTA members deal with regulated parties as counterparties, perform additional screenings that may already include the necessary ESG elements, and do not have clients or manage funds, but trade on their own account and at their own risk. That said, any additional regulatory ESG risk management frameworks would be an unnecessary burden and not proportionate to the business model of FIA EPTA members and similar investment firms.

FIA EPTA members believe that it is key that a proportional approach is adopted to achieve the desired aim of requiring investment firms to manage and minimise risk due to the impact of ESG factors on their counterparties. Dependent on the level of exposure to a counterparty, it should be open to firms to adopt a measured risk-based approach rather than an overly prescribed approach that results in a level of administrative burden which is unwarranted given the risk exposure to that particular counterparty.

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