On October 27, SME Banking Club, together with CRIF Poland, organized a webinar on the topic of a carbon footprint as the first step towards ESG.
At the very beginning of the webinar, Olena Gryniuk (SME Banking Club) mentioned that due to the new regulations from 2023 issues related to sustainable development will have to be compulsorily reported by all large companies, and from 2026 – also the small and medium-sized companies that are listed on the stock exchange. On top of that European Taxonomy imposes on banks not only the reporting obligation but also the application of ESG criteria in financial practice.
Additionally, such a new requirement can create for the banks an opportunity to play a vital role in fighting climate change and changing the customers’ behavior related to the spending of carbon impact.
After that, Olena Gryniuk gave two examples of banks that recently launched carbon footprint calculators in the CEE region. It`s about BNP Paribas Poland – Carbon footprint calculator for households, and United Bulgarian Bank – Carbon footprint calculator for agricultural customers.
In the next part of the webinar, Kamil Gosławski (CRIF Poland) explained the key drivers of this topic. Among them are the EU regulations for ESG reporting, the pressure from investors and partners, the consumer choices directed into sustainable products or services, the non-financial risk management and the mitigation in the supply chain, and the limited access to financing.
How the carbon footprint is calculated?
It’s calculated according to radiative forcing and residence time in the atmosphere. Moreover, in the financial reporting perspective provided by the EU Taxonomy and measured by the GHG Protocol, the emissions are classified as environmental pollutants according to three categories:
1. Scope 1 emissions are “direct” emissions that are directly related to the company’s activities.
2. Scope 2 emissions are “indirect” emissions as any energy consumption that is a part of the production of any product or service.
3. Scope 3 emissions are also “indirect” emissions and cover the activities of the entire downstream product life cycle.
What are the biggest challenges for the banks related to the requirements to include risk factors in the risk framework?
1. No final, transparent regulations.
2. No or limited availability of data on ESG counterparties.
3. Low quality of disclosures and counterparties’ awareness of ESG factors.
4. Lack of knowledge and competencies in the institution.
5. No system or process adjustment.
Then Kamil Gosławski shared CRIF Poland’s experience in case of providing their solutions and demonstrated this by the example. He also explained the GHG Calculator methodology according to the established criteria.
What are the five tips for starting and managing ESG with SMEs?
Kamil noted that it’s very important to base on international standards, trust professionals, try to evaluate objectively, cooperate with partners and start to act now.
To learn more details, watch the full webinar below:
