Dear Chair Letter – 3rd November

On 3 November 2021, the Central Bank of Ireland (“CBI”) issued a letter to Chairs and CEOs of Regulated Financial Service Providers (“RFSPs”) on climate and ESG issues.

The letter highlights the statutory obligations of RFSPs and related supervisory expectations relating to climate and sustainability issues.

The letter notes that climate change should be seen as a strategic priority, emphasising the need for RFSPs to lead and drive ESG agendas within their organisations.

Firms should be able to establish demonstrable plans within the following five key areas:

1. Governance: Boards need to take ownership of climate risks affecting the firm and promote a culture that places emphasis on ESG issues.
2. Risk Management Framework: Firms need to enhance their existing risk management frameworks to ensure robust climate risk identification, measurement, monitoring and mitigation.
3. Scenario Analysis: Firms need to perform scenario analysis and stress testing to assess the impact of potential future climate outcomes.
4. Strategy and business model risk: Firms are expected to undertake business model analysis to determine the impacts of climate risks and opportunities on the firm’s overall risk profile, business strategy, and to inform strategic planning.
5. Disclosures: Firms should adopt practices which ensure transparent disclosure of ESG issues to consumers and investors, without engaging in the practice of ‘greenwashing’.

These expectations can be applied by RFSPs in a proportionate manner, aligned to the nature, scale and complexity of the organisation. While the letter recognises that the expectations are not prescriptive or binding, the CBI will keep a keen focus on the development of sustainable finance and individual organisations’ roles in achieving this.

How EisnerAmper Ireland can help

Our initial feedback from talking to our clients is that this letter has been well received. Notwithstanding that for many sectors, exact ESG requirements are still to be determined, this letter provides a helpful roadmap summarising the key areas where demonstrable plans should be in place. These expectations also help affirm and shape the roadmap for climate change and sustainability plans that we are assisting our clients with.

Our multidisciplinary team is on hand to help you chart your ESG journey. We help organisations navigate the ESG landscape and understand the applicable legislation and frameworks.

Contact Us

Learn more about our ESG Services here.

Link to the Dear CEO Letter here.

Authors