At the conference, Raimund Röseler, Chief Executive Director of Banking Supervision, Dr Frank Grund, Chief Executive Director of Insurance Supervision and Dr Thorsten Pötzsch, Chief Executive Director of Securities Supervision, discussed their demands and objectives in the area of ESG (Environmental, Social, Governance). Beforehand, they summarised their views on this topic.

Raimund Röseler, Chief Executive Director of Banking Supervision: it takes time to make changes, but they cannot be delayed

Are banks sufficiently prepared for ESG risks? In my opinion, no! Particularly smaller institutions have still not sufficiently integrated climate risks into their risk management, for example. In other words: many do not have a robust strategy for dealing with climate risks. This has to change. For sure: it takes time to make changes, but they cannot be delayed. Our task is therefore to ensure that the banks deal in depth with sustainability risks, integrate them into their strategies and, where reasonable and possible, into their risk management and risk controlling processes – and that they also document this.

Dr Frank Grund, Chief Executive Director of Insurance Supervision: insurers must deal systematically with sustainability risks

Insurers can have sustainability risks on both sides of the balance sheet – that is because they are investors and risk carriers. What is important to me is that insurers deal systematically with sustainability risks not only in their investment practice but also in their underwriting practice. Particularly the severe floods of summer 2021 have once again highlighted the consequences of climate change for the insurance business.

As major investors with a long-term horizon, insurers can play a vital role in the transformation of the economy. They are therefore obliged under the EU Disclosure Regulation and the EU Taxonomy Regulation to make company and product-related disclosures. In this context, it is important for us that insurers fulfil their promise – especially in the field of product distribution. A product that uses the sustainability label must deliver on its promise of sustainability.

Dr Thorsten Pötzsch, Chief Executive Director of Securities Supervision: integrating ESG risks into the risk management process is of vital importance for all financial undertakings

Integrating ESG risks into the risk management process – this is of vital importance for all financial undertakings. As supervisors, we expect financial institutions to concern themselves with sustainability risks at management board level. Society also shares this expectation. Many companies have already made significant progress here. In the securities sector, clear rules apply. Since 1 August 2022, asset management companies have been obliged to integrate sustainability risks into their internal risk management processes. Up until now there have not been any clear-cut legal specifications regarding how this is to be done. We therefore accept a wide range of methods. In addition, our Guidance Notice of January 2020 provides orientation. Integrating sustainability risks into a risk management process involves a great deal of work, especially in the securities sector. Nonetheless: this work is absolutely necessary, for all financial undertakings