The Austrian Financial Market Authority (FMA) today published its fundamentally revised cross-sector Guide for Managing Sustainability Risks (“Leitfaden zum Umgang mit Nachhaltigkeitsrisiken”). The Guide, which was initially published in 2020 is intended to serve as guidance for the supervised entities when considering sustainability risks within the scope of their business activities and should prepare them in terms of regulatory developments and supervisory expectations. Its objective is to create a common understanding of this complex thematic area, and to assist supervised entities in addressing sustainability risks. Sustainability risks address environmental, social, and governance risks, commonly referred to by the abbreviation ESG.
The extreme weather events in 2024 have also left a visible mark in Austria. 2024 was the warmest year on record, with the Earth’s average temperature being 1.6°C higher than in the years 1850 to 1900, thereby exceeding the 1.5°C objective set in the Paris Climate Agreement. In addition, the biodiversity crisis, another challenge intrinsically linked to climate change, is also becoming increasingly acute. “The impact of climate change and the biodiversity crisis harbour existential risks for the economy and society, from which all financial sectors, including those of the entities supervised by the FMA, are not able to escape,” remarked the FMA’s Executive Directors Helmut Ettl and Eduard Müller. “Financial market participants must consider such risks in their daily activities in relation to credit, market and operation risks.”
Due to the significance of the sustainability risks and the relatively limited experiences to date in the management of such risks, common learning and further development of approaches is essential in this area. The FMA’s Executive Board used this opportunity to thank various stakeholders, who had made a considerable contribution towards expanding the Guide in terms of its extended content and design by way of the work they put in and the points they raised.
In addition to generally updating the Guide, two current issues were also addressed for the first time: natural or biodiversity risks on the one hand, and the issue of transition planning and transition plans on the other. In addition, other issues like adaptation to climate change and litigation risks, or greenwashing risks were also addressed in greater depth. As one aspect of a particular practical relevance, the Annex has also been updated and extended, which provides an overview about the tools and methodologies used for handling sustainability risks. The FMA wishes to thank the Environment Agency Austria (Umweltbundesamt) for their support in relation to the Annex.
“Addressing sustainability risks on a continuous and adequate basis within the scope of sound risk management is urgently necessary,” Ettl and Müller remarked in conclusion. “Risks don’t simply go away, just because the public debate and the regulatory framework is developing dynamically.” In this light, the FMA hopes that the Guide will be able to contribute towards assisting supervised entities in managing sustainability risks.
The updated Guide for Managing Sustainability Risks (“Leitfaden zum Umgang mit Nachhaltigkeitsrisiken”) can be downloaded here (currently only in German). Further information about sustainable finance can be found on the FMA website.
Journalists may address further enquiries to
Boris Gröndahl (FMA Media Spokesperson)
Telephone: +43/(1)249/59-6010
Mobile: +43 676 8824 9995
E-Mail: [email protected]