9NOVEMBER 2023Sustainability reporting is increasingly considered an effective tool for monitoring, reporting, and communicating the process undertaken by banks in terms of responsible management, whose aim is to make environmental, social, and economic performance visible. Moreover, in addition to contributing to the positive reputation of the company, sustainability reporting represents a planning and control tool that analyses the activities and services performed by the bank by evaluating them according to economic efficiency and environmental and social protection logic.Supervisory authorities are also paying more attention to sustainability issues. For example, ESMA has emphasized that it is essential to strengthening the quality of disclosure, particularly about the relevance, completeness, balance, and accessibility of information, both qualitative (policies adopted) and quantitative (KPIs and targets). Also, the European Central Bank and individual national central banks have recently conducted deep dives into supervised institutions' specific discussions and thematic reviews. They are conducting inquiries and investigations into supervised institutions, observing if current practices meet the supervisory expectations on climate-related and environmental risks. Consequently, supervisors request these governing bodies to approve specific initiatives aimed at defining a path of progressive alignment with expectations, setting out a timeframe for the review of key corporate policies and organizational and management systems.The role of the Chief Financial Officer becomes essential, given the complexity of the activities and services performed by banks. The ESG data will have to be integrated into the reporting system and the related system of internal controls, which is currently in place for the preparation of the financial information. This is because stakeholders are increasingly demanding sustainability data and information to be reliable in its quality and, above all, to be comparable. The issue of comparability and quality of the information produced is also an issue that is currently receiving much attention from standard-setters. Today, there are various regulatory frameworks applied by supervised entities (including, among others, the GRI Standards and the reporting standards prepared by the IFRS Foundation through the International Sustainability Standards Board ­`ISSB') with the risk of inconsistent and not homogeneous application of standards by different intermediaries.Thus, on November 10, 2022, the European Parliament approved the `Corporate Sustainability Reporting Directive' (or `CSRD'), which aims to amend the reporting requirements outlined in the current `Non-Financial Reporting Directive' (or `NFRD'). The directive requires Member States to implement the laws, regulations, and administrative provisions necessary to comply with the directive by July 6, 2024. Enforcement is mandatory and has different timeframes depending on the entities involved: companies subject to the NFRD must implement the directive by 2024itself, and large companies not currently subject to the NFRD under Article 3 of Directive 2013/34/EU must implement the directive by 2025, and listed SMEs, small and non-complex credit institutions, and captive insurance companies by 2026, with an option to postpone the implementation of the new regulation for two years.Under this directive, it is explicitly stated that the sustainability information required by CSRD will have to be reported using the `European Sustainability Reporting Standards (or `ESRS')' developed by EFRAG. On November 15, 2022, EFRAG's Sustainability Reporting Board approved the first 12 Sustainability Reporting Standards (ESRS) after an exercise of a substantial revision of the exposure drafts published in April 2022, and whose public consultation closed on August 8, 2022.It is also noteworthy to remember that a process of convergence to other reference frameworks including the Task Force on Climate-related Financial Disclosures (TCFD), and the reporting standards prepared by the IFRS Foundation, through the International Sustainability Standards Board (ISSB), has been undertaken by the EU, particularly in the reporting areas.The role of the CFO is also further highlighted when, under the aforementioned legislation, the mandatory statement on the compliance of the information, reported in the Annual Report on operations, with the EFRAG Reporting Standards and the EU Taxonomy will be produced by the Financial Reporting Manager.Finally, there will also be an obligation to receive an attestation with a level of `limited assurance' (with the possibility, at a later stage, to switch to a "reasonable assurance'') from an independent entity on the preparation of the disclosures, on the compliance of the information with the regulatory framework, and the verification of the process followed to identify relevant information.The CFO must, therefore, increasingly adapt his role to ensure the production of a piece of integrated information, something that banks increasingly have considered in the definition of strategic business decisions and in managing the overall risks to which they are subject. The role of the Chief Financial Officer becomes essential, given the complexity of the activities and services performed by banks
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