Supervisory Review and Evaluation Process and Sustainability: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Classify page.)
 
imported>Doug Williamson
(Add link.)
 
Line 1: Line 1:
''Bank supervision - European Union (EU)''
Sustainability considers the long term environmental and other effects of an organisation's activities, seeking to ensure that they do not degrade the physical environment or other necessary conditions for well being.


(SREP).
Sustainability has a number of important dimensions in treasury and finance, including environmental sustainability, financial sustainability and social sustainability.


The Supervisory Review and Evaluation Process is a set of bank supervisory guidelines issued by the European Banking Authority (EBA).


'''''Environmental''''' sustainability involves making decisions and taking actions which expressly take responsibility for the impact on the environment, and avoid depleting or degrading natural resources such as soil, water, forests, and biological diversity.


The SREP is designed to provide a consistent framework within which national supervisors review and evaluate banks.


The SREP covers:
'''''Financial''''' sustainability is achieved when an organisation is able to earn reliable financial surpluses and generate cash in the medium and longer-term.
*Business model analysis;
*Internal governance and controls;
*Assessment of risks to capital and adequacy of capital; and
*Assessment of liquidity risk and adequacy of liquidity resources.


Financial sustainability includes the ability to pay back borrowings over time, with interest, while maintaining necessary levels of internal investment.


==See also==
* [[Bank supervision]]
* [[Business model]]
* [[Capital adequacy]]
* [[European Banking Authority]]
* [[European Union]]
* [[Governance]]
* [[ILAAP]]
* [[Internal Capital Adequacy Assessment Process]]  (ICAAP)
* [[Liquidity risk]]
* [[L-SREP]]
* [[Pillar 2]]
* [[TSCR]]


[[Category:Accounting,_tax_and_regulation]]
'''''Social''''' sustainability seeks to identify and manage the impact of business and other activities on people. For example, employees, customers, suppliers, others employed by customers and suppliers, and host communities.
 
 
Historically, it was often considered that there was a conflict between environmental sustainability and financial sustainability.
 
More recently, an increasingly mainstream view is that it is only environmentally sustainable businesses which are fully financially sustainable.
 
This view suggests that there need be no conflict between an organisation’s environmental and financial objectives, when a sufficiently long-term view is taken.
 
 
Sustainability is increasingly being used as a component in borrowings and credit evaluation.
 
Credit rating agencies are also taking sustainability principles into account.
 
 
<span style="color:#4B0082">'''''Credit ratings and ESG'''''</span>
 
:"The European Commission’s Sustainable Finance High-Level Expert Group (HLEG) says that credit rating agencies should “systematically integrate” relevant environmental, social and governance (ESG) criteria into their credit-rating analyses, along with factors related to longer-term sustainability..."
 
:''The Treasurer, web exclusive, June 2019.''
 
 
== See also ==
* [[Accounting for Sustainability]] (A4S)
* [[B Corporation]]
* [[Bottom line]]
* [[Business & Sustainable Development Commission]]
* [[Carbon footprint]]
* [[Climate benchmark]]
* [[Corporate social responsibility]]
* [[Credit]]
* [[Credit rating agency]]
* [[Environmental profit and loss]]
* [[ESG investment]]
* [[Fiduciary duty]]
* [[Forum for the Future]]
* [[Global Sustainable Investment Alliance]]
* [[HLEG]]
* [[International Sustainability Standards Board]]
* [[Metaeconomics]]
* [[Moratorium]]
* [[Natural capital]]
* [[Organic]]
* [[Reputational risk]]
* [[Return on Sustainability Investment]]
* [[SRA]]
* [[SRI]]
* [[Stakeholder]]
* [[Stewardship]]
* [[Sustainability reporting]]
* [[Sustainability Accounting Standards Board]]
* [[Sustainability bond]]
* [[Sustainability Linked Loan Principles]]
* [[Sustainable Development Goals]]
* [[Sustainable finance]]
* [[Sustainable Finance Disclosure Regulation]] (SFDR)
* [[Technical Expert Group]]
* [[Triple bottom line]]
* [[UK Sustainable Investment and Finance Association]]
 
[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Identify_and_assess_risks]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Ethics]]
[[Category:Manage_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Risk_reporting]]

Revision as of 21:10, 4 October 2021

Sustainability considers the long term environmental and other effects of an organisation's activities, seeking to ensure that they do not degrade the physical environment or other necessary conditions for well being.

Sustainability has a number of important dimensions in treasury and finance, including environmental sustainability, financial sustainability and social sustainability.


Environmental sustainability involves making decisions and taking actions which expressly take responsibility for the impact on the environment, and avoid depleting or degrading natural resources such as soil, water, forests, and biological diversity.


Financial sustainability is achieved when an organisation is able to earn reliable financial surpluses and generate cash in the medium and longer-term.

Financial sustainability includes the ability to pay back borrowings over time, with interest, while maintaining necessary levels of internal investment.


Social sustainability seeks to identify and manage the impact of business and other activities on people. For example, employees, customers, suppliers, others employed by customers and suppliers, and host communities.


Historically, it was often considered that there was a conflict between environmental sustainability and financial sustainability.

More recently, an increasingly mainstream view is that it is only environmentally sustainable businesses which are fully financially sustainable.

This view suggests that there need be no conflict between an organisation’s environmental and financial objectives, when a sufficiently long-term view is taken.


Sustainability is increasingly being used as a component in borrowings and credit evaluation.

Credit rating agencies are also taking sustainability principles into account.


Credit ratings and ESG

"The European Commission’s Sustainable Finance High-Level Expert Group (HLEG) says that credit rating agencies should “systematically integrate” relevant environmental, social and governance (ESG) criteria into their credit-rating analyses, along with factors related to longer-term sustainability..."
The Treasurer, web exclusive, June 2019.


See also