ESG Regulation
ESG regulation is evolving rapidly and its requirements affect banks and other financial institutions across areas such as risk management, investment services, product management, reporting, disclosure and the prevention of greenwashing.
On this website you will find an overview of the key regulations related to ESG and sustainable finance.
ESG refers to environmental, social and governance criteria, i.e. criteria relating to environmental impact, social aspects and corporate governance. These criteria can be used to assess a company’s responsibility towards the environment, employees, clients, business partners, suppliers and other stakeholders.
In 2019, the European Union presented the European Green Deal, aiming to steer the EU towards climate neutrality by 2050. Following this strategy, a number of regulatory measures have been adopted in the areas of sustainable finance, sustainability reporting, taxonomy, ESG risk management and transparency of financial products.
SFDR: The Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector sets out obligations for financial market participants and financial advisers. It primarily governs the disclosure of information on the integration of sustainability risks, the consideration of principal adverse impacts on sustainability factors, and sustainability‐related information concerning financial products.
Taxonomy: Regulation (EU) 2020/852 establishes a classification system that defines a framework for companies to determine whether an economic activity can be classified as 'environmentally sustainable'.
MiFID II ESG framework: ESG requirements have been incorporated into the MiFID II framework primarily through Commission Delegated Regulation (EU) 2021/1253 and Commission Delegated Directive (EU) 2021/1269. These provisions integrate sustainability factors, risks and preferences into organisational requirements, investment advice and product governance. In Czech law, the related rules are reflected in particular in Act No. 256/2004 Coll., on Capital Market Undertakings, and Decree No. 308/2017 Coll.
Banking prudential framework & EBA Pillar 3: For banks, requirements on the management and disclosure of ESG risks within prudential regulation are particularly relevant. Key provisions include CRR III, i.e. Regulation (EU) 2024/1623, CRD VI, i.e. Directive (EU) 2024/1619, and Commission Implementing Regulation (EU) 2024/3172 on Pillar 3 disclosures. These regulations build on the EBA’s previous work in the area of sustainable finance and expand the requirements for integrating ESG risks into the banking framework.
CSRD & ESRS: Directive (EU) 2022/2464 on corporate sustainability reporting has expanded sustainability reporting requirements and replaced the previous non-financial reporting framework. In the Czech Republic, sustainability reporting is governed in particular by Act No. 563/1991 Coll., on Accounting, and the related assurance of sustainability reports by Act No. 93/2009 Coll., on Auditors.
CSDDD: Directive (EU) 2024/1760 on corporate sustainability due diligence lays down rules for the identification, prevention, mitigation, and remediation of actual and potential adverse impacts on human rights and the environment arising from the activities of companies, their subsidiaries, and their value chains.
European Green Bonds: Regulation (EU) 2023/2631 establishes the European Green Bond standard (EuGB). It sets out requirements regarding the use of proceeds, disclosure obligations, external reviews, and the supervision of external reviewers.
ESG Ratings: Regulation (EU) 2024/3005 governs the transparency and integrity of the activities of ESG rating providers. Its objective is to enhance the credibility of ESG ratings, mitigate conflicts of interest, and strengthen the transparency of the methodologies and data sources used by ESG rating providers.
In compliance with Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector (SFDR), Komerční banka discloses specific information on its approach to integrating sustainability risks and to considering adverse impacts on sustainability.
Through the publication of the following statements, we do not only enhance the transparency of our policy but also provide information on the manner in which we consider impacts on sustainability factors.
Société Générale Group (SG Group), including KB, has adopted a commitment to respect and promote human rights. Since these are one of the foundations of its Environmental and Social (E&S) Risk Management System and also constitute a sustainability factor, KB has issued a statement on human rights. KB supports respect for human rights and also addresses specific issues concerning the financial sector.
Also aware of the accelerating biodiversity loss worldwide, KB is committed to respecting and preserving biodiversity and has issued a statement on biodiversity protection. SG Group strives to comply with the laws and regulations on the protection of species, habitats and ecosystems in the countries in which it operates, and expects similar compliance from its suppliers and clients.
Since climate issues are a key area for SG Group in terms of its governance and strategy, it has committed to align its activities with the goals of the Paris Climate Agreement; KB has therefore issued a statement on climate change.
The following documents related to SFDR describe Komerční banka’s approach to the integration of sustainability risks and adverse sustainability impacts: