DE - German regulator publishes guidance notice on sustainability


On 20 December 2019, the German Federal Financial Supervisory Authority (BaFin) has issued a guidance notice on dealing with sustainability risks (ESG Guidance Notice).

This version was later editorially modified on 13 January 2020. 

The ESG Guidance Notice is a cross-sector publication and applies to all German entities supervised by BaFin including credit institutions, investment firms, insurance undertakings, fund management companies and pension funds. BaFin no longer mentions that credit institutions directly supervised by the ECB or German branches of EEA institutions operating under the European passport regime may also take into account its recommendations.

The objective of the ESG Guidance Notice is to provide entities supervised by BaFin with guidance on dealing with environmental, social and governance risks (ESG) with a specific focus on risk management. Although the final version covers the same topics as the consultation version, BaFin now further emphasizes the non-binding nature of its guidance. BaFin expects supervised entities to ensure that sustainability risks are also considered and that this process is documented. However, supervised entities are free to choose their approaches and methods.

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