EBA · 2022_6601 Final Q&A

ITS ESG P3 - EU Taxonomy Consolidation scope

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
449a
Topic
Transparency and Pillar 3
Submitted by
Credit institution
Submitted
2022-10-05
Answered
2023-02-17
Answer provided by
ESAs (EBA, ESMA, EIOPA)
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Question

Which consolidation scope is appropriate for the EU taxonomy disclosures in P3 ESG, given the conflicting regulatory guidance from the EU taxonomy and the NFRD and given that the EU taxonomy is disclosed in the annual report and therefore, the consolidation scope we would prefer to apply is the IFRS consolidation scope rather than the prudential scope?

Background

The EU taxonomy is performed at consolidated level, however there are 2 definitions of consolidation scope: IFRS Consolidation IFRS 10 outlines the requirements for the preparation and presentation of consolidated financial statements and requires to consolidate all entities where control is present. The AAB Consolidated Annual Report is prepared in accordance with IFRS 10. Prudential Scope of Consolidation While the Prudential scope is built upon the IFRS consolidation concept, it has a number of adjustments that take a more conservative view of liquidity and solvency risks, which results in differences in the IFRS and prudential Scope The EU taxonomy requires the prudential scope to be applied, however we note that in the Non-Financial Reporting Directive, notes that; "The non-financial statement referred to in the first subparagraph shall also, where appropriate, include references to, and additional explanations of, amounts reported in the annual financial statements" The Pillar 3 ESG disclosures also apply at prudential scope of consolidations.

Answer

As specified in the instructions of Annex 2 to Implementing Regulation (EU) 2022/2453, with regards to Template 6 , “ Institutions shall provide in template 6 an overview of the KPIs calculated on the basis of templates 7 and 8 of Annex XXXIX, including the green asset ratio (GAR) as referred to in Commission Delegated Regulation (EU) 2021/2178 ”. As a result, the consolidation scope applicable to the GAR computed in accordance with Commission Delegated Regulation (EU) 2021/2178 is the one that applies to the Pillar 3 ESG. Annex V of the above mentioned Commission Delegated Regulation (EU) 2021/2178 states in section 1.1.1. (Consolidation): “C redit institutions shall disclose relevant KPIs on the basis of the scope of their prudential consolidation determined in accordance with Regulation (EU) No 575/2013, Title II, Chapter 2, Section 2 .” As a result, the prudential scope of consolidation applies.

Original source: European Banking Authority, Q&A ID 2022_6601

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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