Key contents of the plans
Institutions should document their plans including their methodologies, assumptions, cri-teria, targets and actions planned to reach targets, along with performed and scheduled revi-sions. Institutions should specify the scope of risks captured by each part of the plan, e.g. whether it applies to environmental, social or governance risks, and should ensure that all aspects of the plan address at least environmental risks.
Large institutions should ensure that their plans include at least the following aspects:
Strategic objectives and roadmap of the plans:
high-level overarching strategic objective to address ESG risks in the short, medium and long term, in line with overall business strategy and risk appetite;
comprehensive set of long-term goals with intermediate milestones to ensure resilience of the business model towards ESG risks, including consistency of business structure and revenues with such milestones;
key assumptions, inputs and background information relevant to the understanding of institutions’ objectives and targets, including selection of central or reference scenario(s) and institutions’ conclusions stemming from the outcomes of materiality assessments of ESG risks, portfolio alignment assessments and other scenario analyses;
Targets and metrics:
quantitative targets set to address ESG risks, including those stemming from the process of adjustment towards the legal and regulatory sustainability objectives of the jurisdictions where the institution operates and broader transition trends towards a sustainable economy, and metrics used to monitor ESG risks and the progress in achieving the targets;
portfolios, sectors, asset classes, business lines and, where applicable, economic activities (i.e. individual technologies) covered by targets and monitoring metrics, ensuring that the scope of targets and metrics sufficiently reflects the nature, size and complexity of institution’s activity and its materiality assessment of ESG risks;
time horizons over which targets and metrics apply;
Governance:
governance structure for the plans including roles and responsibilities for the formulation, validation, implementation, monitoring and updating of the plan, including escalation steps in case of deviation from targets;
capacity and resource-related actions to ensure appropriate knowledge, skills and expertise for effective implementation of the plan, including ESG risk-related trainings and internal culture;
remuneration policies and practices to promote sound management of ESG risks in line with the institution’s objectives and risk appetite;
data and systems used for the transition planning process;
Implementation strategy:
overview of short-, medium-, and long-term actions taken or planned in core banking activities and processes to achieve the plan’s targets, including how the institution embeds the plan’s objectives into its decision-making process and its regular risk management framework, complemented by information on the observed effectiveness or estimated contribution of each action to the relevant target(s);
adaptations to policies and procedures on financial risk categories and to lending and investment policies and conditions on key economic activities, sectors and locations;
changes introduced to the mix and pricing of services and products to support the implementation of the plan;
investments and strategic portfolio allocation supporting the institution’s business strategy and risk appetite in relation to ESG risks, including information on sustainability-related and transition-related products and services, and how any changes in strategic financing choices are accompanied by commensurate risk management procedures;
Engagement strategy:
policies for engaging with counterparties, including information on the frequency, scope and objectives of engagement, types of potential actions and escalation processes or criteria;
processes, methodologies and metrics used for collecting and assessing information related to counterparties’ exposure to ESG risks and alignment towards the institution’s objectives and risk appetite;
outcomes of engagement practices, including an overview of counterparties’ adaptability and resilience to the transition towards a more sustainable economy.
SNCIs and other non-large institutions should include in their plans at least the aspects covered in points a(i)-(ii), b(i)-(ii), c(i), d(i)-(ii) and e(i)-(ii) of paragraph 109.
Institutions should consider using the Annex as a supporting tool to develop and formalise their plans.