SME Supporting Factor and Double materiality assessment: Difference between pages

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(Create page - source - The Treasurer - 2023 - Issue 4 - p14.)
 
(Mend link.)
 
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''Bank supervision - capital adequacy - Risk Weighted Assets (RWAs) - credit risk''.
''Financial reporting - risk management - ESG - sustainability reporting - European Sustainability Reporting Standards (ESRS).''


The SME Supporting Factor is a capital adequacy provision that reduces the regulatory risk weighting applied to lending to small and medium sized enterprises.
In the context of sustainability reporting, a double materiality assessment is one that covers material information about both:


This reduces the amount of regulatory capital required to be held by the lender, and - in turn - helps to reduce the cost of lending.
:(1) A reporting entity's impact on people or the environment ("impact materiality") and


:(2) Financial risks or opportunities relating to a sustainability matter ("financial materiality").


"The SME Supporting Factor continues to be the biggest issue for banks.


They’ve always maintained that if the supporting factor is withdrawn at some point it will need to feed through into the cost of credit and credit appetite itself."
For reporting purposes, a matter is material if it falls into either of these categories.


(Nala Worsfold, head of financial and risk policy at UK Finance, quoted in The Treasurer, Issue 4, December 2023, p14)


:<span style="color:#4B0082">'''''The European Sustainability Reporting Standards (ESRS) approach to materiality'''''</span>


==See also==
:"The ESRS require that the sustainability statement include sustainability information related to material IROs identified through a materiality assessment process that applies the principles of double materiality...
*[[Bank supervision]]
 
*[[Basel 3.1]]
:The terms ‘material’ and ‘materiality’ are used throughout the ESRS to refer to double materiality unless otherwise specified."
*[[Capital]]
 
*[[Capital adequacy]]
:''EFRAG Implementation Guidance - Materiality Assessment - p9.''
*[[CET1 ratio]]
 
*[[Credit]]
 
*[[Credit Conversion Factor]] (CCF)
== See also ==
*[[Infrastructure Supporting Factor]] (ISF)
* [[Double materiality]]
* [[Internal Models Approach]] (IMA)
* [[Environmental, social and governance]] (ESG)
*[[Off balance sheet risk]]
* [[European Financial Reporting Advisory Group]] (EFRAG)
*[[Operational risk]]
* [[European Sustainability Reporting Standards]] (ESRS)
*[[Output floor]]
* [[Financial materiality]]
*[[Pillar 1]]
* [[Financial reporting]]
* [[Risk Weighted Assets]] (RWAs)
* [[Guidance]]
*[[Small and Medium-sized Enterprises]] (SMEs)
* [[Immaterial]]
* [[Standardised Approach]] (SA)
* [[Impact]]
*[[Total capital ratio]]
* [[Impact materiality]]
*[[UK Finance]]
* [[Material by nature]]
* [[Materiality]]
* [[Materiality assessment]] (MA)
* [[Risk]]
* [[Risk management]]
* [[Sustainability]]
* [[Sustainability reporting]]
* [[Sustainability statement]]
 
 
==Other resource==
*[https://www.efrag.org/Assets/Download?assetUrl=/sites/webpublishing/SiteAssets/IG+1+Materiality+Assessment_final.pdf EFRAG Implementation Guidance - Materiality Assessment]


[[Category:Accounting,_tax_and_regulation]]
[[Category:Accounting,_tax_and_regulation]]
[[Category:Financial_products_and_markets]]
[[Category:Financial_risk_management]]

Latest revision as of 14:10, 3 August 2024

Financial reporting - risk management - ESG - sustainability reporting - European Sustainability Reporting Standards (ESRS).

In the context of sustainability reporting, a double materiality assessment is one that covers material information about both:

(1) A reporting entity's impact on people or the environment ("impact materiality") and
(2) Financial risks or opportunities relating to a sustainability matter ("financial materiality").


For reporting purposes, a matter is material if it falls into either of these categories.


The European Sustainability Reporting Standards (ESRS) approach to materiality
"The ESRS require that the sustainability statement include sustainability information related to material IROs identified through a materiality assessment process that applies the principles of double materiality...
The terms ‘material’ and ‘materiality’ are used throughout the ESRS to refer to double materiality unless otherwise specified."
EFRAG Implementation Guidance - Materiality Assessment - p9.


See also


Other resource

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