The majority of Austrian financial service providers have either already integrated sustainability risks into their business strategy or is at least currently doing so. While the drawing up of strategies, concepts and guidance is already at an advanced stage, their implementation in operative risk management still leaves much to be desired: only seven out of ten entities have already adequately implemented corresponding processes for identifying, measuring, evaluating and managing sustainability risks. Among the methodologies used for the identification and measurement of sustainability risks “scenario analyses and stress tests”, “carbon footprint”, “the proportion of CO2-exposed assets” as well as “climate risk heat maps” dominate, while “criteria for exclusion and limits”, ESG integration”, “divestment” as well as the “best in class approch” dominate the methodologies for managing and limiting such risks. Almost all financial service providers (94%) make use of third-party provider know-how and data in assessing sustainability risks, with particular frequent use of sustainability ratings (72%), “sustainability- and climate-related data” (65%) advisory services (58%) and sustainability analyses (45%). By and large, the focus is currently still on a relatively short-term examination and assessment of sustainability risks. The determining of risk indicators is restricted to a few aspects among the individual financial service providers, and still does not occur in a comprehensive form.
These are the findings of the FMA Analysis on the Consideration of Sustainability Risks in the Austrian Financial Market (FMA-Analyse zur Berücksichtigung von Nachhaltigkeitsrisiken auf dem österreichischen Finanzmarkt), in which a representative sample of banks, insurance companies, pension funds (Pensionskassen), investment firms, asset managers as well as occupational severance and retirement funds were surveyed. It is notable that among sustainability risks, climate and other environmental risks are considered across the board to be very important (96% to 100%), while social risks and corporate governance risks are considered significantly less important (63% to 80%); the latter in particular by banks, insurance companies, pension funds and asset managers.
A survey on the status quo: a basis for priorities for supervision and inspections
“Financial markets are considered to be particularly significant in the transition to a climate-neutral economy. They are expected to channel financial resources into sustainable, climate-friendly investments. Consequently, financial service providers will face particular challenges in the coming years in effectively managing sustainability risks,” remarked the FMA’s Executive Directors, Helmut Ettl and Eduard Müller: “The FMA is therefore setting this as one of its priorities for supervision and inspections.”
The FMA’s current analysis provides an overview about the current status of how Austria’s financial service providers are currently addressing environmental, social and governance risks (“ESG factors”). Since material regulations and standards have only been issued or started to apply in recent months, the FMA has used the market study of its “Guide for Managing Sustainability Risks” that was published in 2020 as a benchmark.
The full “FMA Analysis on the Consideration of Sustainability Risks in the Austrian Financial Market (FMA-Analyse zur Berücksichtigung von Nachhaltigkeitsrisiken auf dem österreichischen Finanzmarkt)” (in German only) can be found on the FMA website at: https://www.fma.gv.at/en/cross-sectoral-topics/sustainable-finance/.
Journalists may address further enquiries to:
Klaus Grubelnik
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