2 AUGUST 2023

Bafin audits compliance with ESG guidelines in the banking industry

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Just under a year ago, a new regulation was introduced that requires investment advisors at banks to survey the sustainability preferences of their clients. This regulation was introduced as a supplement to the EU Financial Markets Directive Mifid II and has been in force since 2 August 2022. Bafin now wants to know how the financial institutions implement these ESG (Environmental, Social, Governance) regulations and has launched a survey for this purpose.

The review of ESG implementation

 

Bafin has decided to review the extent to which the industry complies with the new sustainability requirements in investment advice on the basis of selected banks. According to the industry service "Finanz-Szene.de", about 20 institutions will receive a four-page questionnaire from Bafin in the coming days. This questionnaire contains about 30 questions aimed at getting an overview of the implementation of the ESG regulations.

 

The questionnaire that the selected banks receive includes various questions on ESG implementation such as product offering, investment volume in sustainable financial instruments, customer information on sustainability, inquiries about sustainability preferences and product governance practices.

Institutes concerned

 

Bafin's survey not only concerns private banks, but also savings banks and cooperative institutions. The financial supervisory authority wants to get a comprehensive overview of how the new regulation has influenced customer demand for sustainable products. It is also interested in how the banks have implemented the regulation in practice and how this affects the sale of sustainable products.

 

Impact on the financial sector


Bafin's review of ESG implementation has implications for the entire industry. Banks have to adapt and ensure their processes and offerings are aligned to the new sustainability requirements, and that they properly survey and consider client preferences. This may require investment in new technologies and training for staff to ensure they have the expertise to advise clients appropriately.

The path to greater sustainability

 

The review of ESG implementation at banks is part of a larger trend towards greater sustainability in the financial industry. More and more customers value sustainable investments and want to ensure that their money is invested in companies that take social and environmental responsibility. ESG regulations are designed to ensure that banks take their clients' sustainability preferences seriously and offer them appropriate investment options.

Do you already have answers to the following questions?

  • Investor preferences: What questions should you ask your investors to understand their sustainability preferences? Which criteria are relevant?
  • Monitoring: How do you monitor and report compliance with investor preferences?
  •  Product Governance: Do you have an efficient way to register changes in sustainability information?

Still not sure about the right answers? Don't worry! We can help you. Contact us now!

Conclusion

 

AAs a leading provider of solutions for the financial industry, Infront offers comprehensive support in complying with the new sustainability regulations. We have excellent data coverage, extensive expertise and powerful technical tools to meet all reporting and ESG reporting requirements. The current developments in the ESG area present banks with challenges that we can successfully meet with our many years of experience and expertise. Our tailor-made solutions enable you to implement the new sustainability requirements efficiently and transparently.
 

We would be happy to support you in the complex task of complying with the new sustainability guidelines and offer you solutions tailored to your specific needs.

 

Source : https://finanz-szene.de/banking/bafin-macht-ernst-bei-esg-und-schickt-banken-einen-

dicken-fragebogen/
 

https://www.bafin.de/DE/DieBaFin/Sustainable_Finance_Strategie/SF_Strategie_node.html