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Source: European Banking Authority

See ESMA, EBA, and EIOPA reports

The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) today published their final Reports on Greenwashing in the financial sector.

ESAs coordinated approach on greenwashing risks

In their respective reports the ESAs reiterate their common high-level understanding of greenwashing as a practice whereby sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may be misleading to consumers, investors, or other market participants. The ESAs stress again that financial market players have a responsibility to provide sustainability information that is fair, clear, and not misleading.

Each ESA provides a stocktake of the current supervisory response to greenwashing risks under its remit and notes that competent authorities (CAs) are already taking steps in the area of supervision of sustainability-related claims. In addition, the ESAs provide a forward-looking view of how sustainability-related supervision can be gradually enhanced in coming years.

While the ESAs’ reports focus on the EU’s financial sector, they acknowledge that addressing greenwashing requires a global response, involving close cooperation among financial supervisors and the development of interoperable standards for sustainability disclosures.

Highlights from the EBA Final Report

The EBA final Report provides an overview of greenwashing risk in the banking sector and its impact on banks, investment firms and payment service providers, with a focus on the changes during the last year. It also provides recommendations to institutions, supervisors, and policymakers.

The outcome of the quantitative analysis of greenwashing shows a clear increase in this trend across all sectors, including by EU banks. The total number of alleged cases continued to increase in 2023 (+21.1% in all regions and +26.1% in the EU compared to 2022).

The final Report investigates the actual and potential alleged greenwashing occurrences as reported by the competent authorities and provides updates on the adverse impact that greenwashing can have on institutions and consumers. Reputational and operational risks continue to be considered most impacted by greenwashing. This is in line with the observation that litigation risk resulting from greenwashing has been in a rising trend in the last years.

As institutions are expanding their offering of sustainable finance products and adapting their business models to meet challenges in relation to the transition towards a more sustainable economy, addressing greenwashing is key to provide confidence in the market and to maintain the trust of investors and consumers.

At a legislative and regulatory level, the EBA considers that the existing framework already provides key foundations to address greenwashing in the banking sector. Therefore, in the short-term, priority should be given to finalising the existing and planned initiatives, and to supporting a robust implementation of the full set of new regulations. Efforts to address challenges related to data, usability, consistency, and international interoperability should be further pursued.

The EBA recommends that institutions take a series of measures at both the entity level and the product level to ensure that sustainability claims are accurate, substantiated, up to date, that they fairly represent the institution’s overall profile or the profile of the product, and are presented in an understandable manner.

The EBA recommends that competent authorities pursue their planned and on-going efforts and activities to identify and monitor greenwashing risk within the remit of their respective prudential supervision and/or conduct supervision mandate.

Note to the editors

Source: European Banking Authority

The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) published today a discussion paper on the potential review of the investment firms’ prudential framework. The discussion paper aims at gathering early stakeholder feedback to inform the response to the European Commission’s call for advice (CfA). The consultation runs until 3 September 2024. To assess the impact of the possible changes discussed in the paper, the EBA also launched a data collection exercise on a voluntary basis.

The discussion paper touches upon a broad range of topics, including:

• the adequacy of the current prudential requirements,
• an analysis of the existing methodology,
• risks not covered by the current framework.

It also discusses the implications of the adoption of the new EU Banking package (CRD VI and CRR 3) concerning the trading book, the fundamental review of the trading book (FRTB) and credit valuation adjustments (CVA).

Furthermore, prudential consolidation and a possible extension to crowdfunding and crypto-assets service providers are also considered. In this respect, the discussion paper provides an overview of the interaction of IFD/IFR with requirements applicable to undertakings for collective investment in transferable securities (UCITS) management companies and alternative investment funds managers (AIFMs) providing  MiFID services on an ancillary basis, or investment firms providing services related to crypto-assets.

The discussion paper also covers aspects related to remuneration in relation to investment firms, AIFMs and UCITS management companies, including the scope of application, remuneration policies, the requirements on variable remuneration, their oversight, disclosure and transparency. Finally, the discussion paper includes a short section on the treatment of firms currently non-prudentially regulated and active in commodity markets.

An ad-hoc data collection addressed to competent authorities, investment firms, and UCITS management companies and AIFMs is launched in parallel to the publication of the discussion paper.

Submission of responses

Comments to this consultation can be sent to the EBA by clicking on the “send your comments” button on the consultation page. Please note that the deadline for the submission of comments is 3 September 2024. All contributions received will be published following the close of the consultation, unless requested otherwise.

A public hearing will take place via conference call on 20 June 2024 starting at 14:00 CEST. The EBA invites interested stakeholders to register using this link by 17 June 2024 at 16:00 CET.

Next steps

EBA and ESMA will prepare the joint EBA-ESMA Report in response to the CfA, which will include a broad assessment of the provisions of the IFR and IFD and their interaction with other regulations.

Background and legal basis

The IFD and IFR entered into force in 2019 introducing key innovations to the prudential framework for MiFID investment firms. Both legislations include review clauses requiring the Commission to submit a report and, if needed, a legislative proposal to the Council and to the Parliament on the functioning of the new framework. The Commission’s report should be submitted five years after the entry into force of the new framework.

Article 60 of Regulation (EU) 2019/2033 (IFR) and Article 66 of Directive (EU) 2019/2034 (IFD) mandate the Commission to submit a report to the Council and to the Parliament regarding multiple aspects of the IFD and IFR. In its report, the Commission may include a legislative proposal to amend the prudential framework applicable to investment firms.

On that basis, the Commission submitted a call for advice on 1 February 2023 to the EBA and ESMA (link) seeking advice on the investment firms prudential framework as well as other related topics.

Source: European Banking Authority

The European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) today published templates, technical documents and tools for the dry run exercise on the reporting of registers of information in the context of Digital Operation Resilience Act (DORA) announced in April 2024.

The materials published today include:

• templates for the registers of information with example (in Excel);
• draft technical package for reporting, including data point model (DPM),annotated table layout and validation rules;
• optional tool (VBA macro) to assist with the conversion of Excel templates into .csv files and .zip files for their submission;
• frequently asked questions regarding the exercise.

All these materials are available on the dry run exercise webpage.

Financial entities can use these materials and tools to prepare and report their registers of information of contractual arrangements on the use of ICT third-party service providers in the context of the dry run exercise, and to understand supervisory expectations for the reporting of such registers from 2025 onwards.

Next steps

The participating financial entities are expected to submit their registers of information to the ESAs through their competent authorities between 1 July and 30 August.

Workshop

The ESAs invite financial entities to take part in a dedicated workshop on 10 June 2024 from 10:00 to 12:00 with the aim to support their participation in the dry run exercise and introduce the materials and tools published today.

The workshop will be held virtually, and interested parties are invited to register by 5 June using the following link.

Background

The ESAs note that following the specification of the dry run exercise as announced in April, materials and tools published today are meant solely for the purposes of the dry run exercise as they are (1) based on the Final report on the Draft Implementing Technical Standards (ITS) on registers of information published and submitted in January 2024 by the ESAs to the EU Commission for adoption and, therefore, do not reflect the final legal act adopted by the EU Commission, (2) presented in a draft form (DPM and validation rules). The final technical package for the steady-state reporting, which will start in 2025, will be published later in the year. 

Source: Government of the Netherlands

News item | 30-05-2024 | 12:45

With less than a year to go until the opening of the World Expo in Osaka, the Dutch participation is taking shape. With the signing of the contract with Van Der Linde, an important operational partner has been selected. Van Der Linde will provide the facility and hospitality management in the pavilion. The facility management includes security, cleaning, waste management and maintenance. The hospitality management includes managing the public café during the pavilion’s opening hours, catering the events in the business lounge and operating the gift shop. Van Der Linde will be working with several Dutch and Japanese partners and suppliers. For example, Randstad Japan will take on the recruitment and selection of staff, whileJEFF Co., the Japanese partner, is responsible for the contract management of all Japanese suppliers.

The theme of the Netherlands Pavilion at Expo Osaka 2025 is ‘Common Ground’, with the aimto show visitors innovative solutions in areas such as energy transition. The Netherlands alsowants to offer companies, knowledge institutions and (cultural) organisations a meeting place during Expo 2025. Events will be organized in the pavilion by various Dutch sectors with the aim of stimulating international cooperation and exchanging knowledge, expertise and ideas. Sustainability and innovation are important features in the participation. Van der Linde’s operating concept fits well with this. The company works as much as possible with 100% organic, sustainably produced and fair trade products.

Van Der Linde was also the hospitality partner during the previous Expo 2020 in Dubai. Robin Van Der Schuyt, Managing Director at Van Der Linde says:

“Our experiences of the previous Expo in Dubai were very positive, which made us see Expo 2025 in Osaka as a new challenge. The theme ‘Common Ground’ appeals to us, as we work from the vision of ‘Create together’, where collaboration leads to impact and sustainable solutions. With several local partners, we created a creative proposal. We are therefore proud that these collaborations led to the awarding of this contract. We will use our years of knowledge and experience of operations to support a successful participation by the Netherlands in Japan.”

The selection was made through a contract award procedure.

Source: European Banking Authority

• Deposits protected by EU deposit guarantee schemes (DGS) increased by 1.7% to 8.5 trillion Euros between 2022 and 2023, whereas funds available to protect those deposits in case of bank failures rose by 14.9% to 73 billion Euros.
• The high increase in the amount of funds held by DGSs to protect deposits reflects the need for all the DGSs to reach the minimum target level of 0.8% of covered deposits by July 2024.
• As of 31 December 2023, 21 of the 36 DGSs in the European Economic Area (EEA) had already reached the minimum target level ahead of the deadline.

The European Banking Authority (EBA) today published end-2023 data related to two key concepts and indicators in the Deposit Guarantee Schemes Directive (DGSD), namely available financial means (AFMs) and covered deposits. The EBA publishes these data for the deposit guarantee scheme (DGS) in each Member State on a yearly basis to enhance the transparency and public accountability of DGSs across the EEA to the benefit of depositors, markets, policymakers, DGSs and Members States.

Under the DGSD, covered deposits are guaranteed up to 100,000 Euro or the equivalent in other currencies per depositor at each bank. The data as of 31 December 2023 shows that, compared to 2022, the amount of covered deposits across the EEA increased by 1.7%, which is lower than the increases of 2.6% in 2022, 5.4% in 2021, and 8.2% in 2020.

In parallel, EEA DGSs are obliged to raise funds from credit institution for the main purpose of reimbursing depositors in case of bank failures. The end-2023 data shows that most of the EEA DGSs continued raising contributions from the banks to reach the minimum target level applicable to all national DGSs imposed by the Deposit Guarantee Schemes Directive (DGSD). DGSs have until July 2024 to reach the minimum target level which in most cases is 0.8% of covered deposits. As of end-2023, 21 of the 36 EEA DGSs had already reached the target level ahead of the deadline, with further six DGSs within 0.05 percentage points of reaching the minimum target level.

Legal basis and background

The EBA is collecting DGS data in accordance with Article 10(10) of the DGSD. With its Decision EBA/DC/2018/243 from 23 July 2018, the EBA explained that it will make these data publicly available on its website.

In support of the DGSD, the EBA published in December 2021 the Guidelines EBA/GL/2021/17 on the delineation and reporting of AFMs of the DGSs and, thus, expanded the reporting requirements from DGSs to the EBA.

Source: European Banking Authority

The European Banking Authority (EBA) published today the final Guidelines on the criteria related to simplicity, standardisation and transparency and additional specific criteria for on-balance-sheet securitisations (so-called STS criteria). These Guidelines will ensure a harmonised interpretation of these STS criteria, in alignment with the EBA Guidelines for asset-backed commercial paper (ABCP) and non-asset-backed commercial paper (non-ABCP) securitisation.

The Guidelines on the STS criteria for on-balance-sheet securitisations (OBS) provide a harmonised interpretation of the STS criteria and focus on clarifying those criteria with potential aspects of ambiguity. The Guidelines will ensure a common understanding as well as a harmonised implementation of the criteria throughout the Union.

The Guidelines also include a limited set of targeted amendments to the Guidelines for non-ABCP securitisation and ABCP securitisation to ensure that the interpretation provided by the EBA is, where appropriate, the same and consistent across all three sets of guidelines.

Similar to the Guidelines on STS criteria for ABCP securitisation and non-ABCP securitisation, these Guidelines aim to provide a single point of consistent interpretation of the STS criteria to the relevant stakeholders throughout the Union.

These Guidelines will be applied on a cross-sectoral basis throughout the Union with the aim of facilitating the adoption of the STS criteria for OBS securitisation, which is one of the prerequisites for the preferential risk weight treatment under the CRR, supporting further lending to the real economy and thus contributing further to the objectives of the Capital Markets Union.

Legal basis and next steps

The Guidelines have been developed according to Article 26e(2) of the Regulation (EU) 2017/2402 (Securitisation Regulation) as amended by Regulation (EU) 2021/557, as part of the Capital Markets Recovery Package. The mandate entitles the EBA, in close cooperation with ESMA and EIOPA, to produce guidelines and recommendations on the harmonised interpretation and application of the criteria related to simplicity, transparency, standardisation and additional specific criteria for on-balance-sheet securitisation.

Source: Government of the Netherlands

News item | 24-05-2024 | 15:00

NATO Secretary General Jens Stoltenberg: “I am pleased to announce that the 2025 NATO Summit will be held at the World Forum in The Hague from 24 to 26 June 2025. We are grateful to the Netherlands for agreeing to host this meeting for the first time. The Netherlands is a founding member of NATO and makes critical contributions to the deterrence and defence of the Alliance. At our Summit, leaders will make decisions to continue to adapt and strengthen our Alliance for a rapidly changing security environment. Together, we are stronger and safer in NATO.”

NATO has been keeping the Netherlands safe for 75 years. As a NATO ally, the Netherlands is better protected against major and complex threats such as war, terrorism, or cyberattacks. Being a reliable NATO ally is therefore a vital investment in our security.

Minister of Foreign Affairs Hanke Bruins Slot: “Peace and security cannot be taken for granted. In these turbulent times, with Russia waging a large-scale war on the European continent, NATO is essential for our security, freedom and values. By organising the NATO Summit, the Netherlands can further strengthen its position as a reliable ally.”

Summit attendees

The Netherlands was asked at the NATO Summit in Vilnius, Lithuania, to host the 2025 summit. Approximately 45 heads of state and government, 45 foreign ministers, 45 defence ministers and about 6,000 delegates will come to the Netherlands for the summit meeting. About 2,000 journalists are also expected to travel to the country. A total of about 8,500 people are expected to attend.

Minister of Defence Kajsa Ollongren: “NATO is more important than ever. The current world situation demonstrates the need for NATO countries to stand shoulder to shoulder and show solidarity. This summit underlines the importance of this cooperation.”

Public Forum

At the same time as the summit, the NATO Public Forum will also be held at the summit location (by invitation only). The forum will provide scope for interactive sessions and debates involving young people, politicians, journalists, opinion makers, academics and experts. Attendees of the forum – around 500 people – will discuss the topics being addressed during the summit.

Mayor of The Hague Jan van Zanen: “The Hague is a host city to the world. We are pleased to welcome the NATO Summit to The Hague. This is a great responsibility and an enormous honour, which the city and its residents should be proud of. As the international city of peace and justice, The Hague will be an excellent host city for the summit.”

Major logistical operation

The organisation of the NATO Summit is one of the largest logistical operations in the Netherlands in decades. A large number of governmental and other organisations will be involved. For the NATO Summit to proceed smoothly, extra effort and flexibility will be required from all these organisations and their staff.

Source: European Banking Authority

The European Banking Authority (EBA) today published a Report on the issuance of what is commonly referred to as ‘virtual IBANs’ (vIBANs). In the absence of a common definition, the Report observes that the industry issues vIBANs in different ways and for different purposes and national authorities diverge in interpreting and applying regulatory requirements. The Report also identifies resulting issues in terms of money laundering and terrorist financing, consumer and depositor protection, authorisation and passporting, and regulatory arbitrage, and provides recommendations on how to address them.

The Report sets out the characteristics of virtual IBANs, explains various use cases the EBA has observed in the market, summarises potential benefits as perceived by market actors, and identifies challenges and issues associated with this practice. The latter includes divergences between national authorities in interpreting and applying existing EU financial services law to vIBANs, in particular the Anti Money Laundering Directive, the Payment Services Directive, the Capital Requirements Directive, and the SEPA Regulation. These divergences undermine the EU Single Market and give rise to regulatory arbitrage.

The EBA’s findings also suggest that vIBANs are not always recognised as such by the industry and national authorities, due to the lack of a definition that would be commonly applicable and that would take into account the different use cases that exist. As a result, the full extent of the issuance of vIBANs across EU Member States is currently not known, which might prevent national authorities from effectively supervising and assessing the adequacy of firms’ internal controls framework to manage the risks arising from vIBANs, in particular from an AML/CFT perspective.

The Report, therefore, includes recommendations on how EU law could be clarified and what actions national competent authorities could take to address these issues.

Legal basis and background

Articles 8, 9, and 9a of the Regulation (EU) 1093/2010 (‘EBA Founding Regulation’), mandates the EBA, inter alia, to monitor and assess market developments, to monitor new and existing financial activities, and to contribute to protecting the EU’s financial system against money laundering and terrorist financing.

The EBA drew on a number of sources to inform this Report, including the EBA Opinion on ML/TF risks in the EU financial sector (EBA/Op/2023/08), information gathered from national competent authorities, and interviews with selected payment service providers that issue vIBANs. 

Source: Government of the Netherlands

News item | 23-05-2024 | 17:30

EU ministers will discuss the TSCs’ issue for the first time during the EU Competitiveness Council in Brussels on Friday, May 24. The 8 Member States involved published a joint position paper which is an agenda item for this Council. The recently published report on the future of the EU Single Market, by former Italian Prime Minister Letta on behalf of the European Council and European Commission, also explicitly mentions that action should be taken If these price differences are attributable to TSCs.

Minister Micky Adriaansens (Economic Affairs and Climate Policy) of the Netherlands: “Together with seven other EU Member States we have been able to develop an aimed approach following the recent research of my Ministry into tackling TSCs. Removing trade barriers should be a key priority for the Single Market. This helps in keeping consumer retail prices for food and non-food products fair. Something which is especially important in times of high consumer prices.”

The minister continues: “The 8 Member States proposing a concrete way forward towards an EU ban on TSCs by amending existing or new common EU rules or instruments. Discussions with other fellow ministers show that even more EU Member States recognize the issue. So I am confident that the upcoming, new European Commission will be able to follow up swiftly to solve this urgent internal market issue.”

Address TSCs by adjusting or expanding EU law

Already TSCs are prohibited through EU competition law, provided that there’s evidence ex-post that there has been abuse of a dominant position. However, this requires a long and extensive investigation per specific case (research per product market and company). The burden of proof rests primarily with the customer, such as a retailer.

This legislation must be maintained. Through adjusting or new common EU rules or instruments it is possible to prohibit unfair practices in B2B relations which discriminate a retailer on the basis of its place of establishment. In that case the issue of TSCs can be regulated ex-ante as well and the burden of proof shifts from the customer, such as a retailer, to the producer or wholesaler.

Examination of opportunities of digital labelling

Even if TCSs are banned, the EU requirement that a label must be available in a European (national) language will prevent selling a product from one member state in another. Relabeling is possible, but is time-consuming and expensive. Research shows that digital labelling such as a QR code is preferred by both manufacturers and supermarkets. The disadvantage is that not every consumer has a smartphone yet.

Which information should be on a label is regulated globally (FAO-WHO). This year technological developments in the field of labeling such as providing information through QR codes are also on the agenda. This also offers an opportunity to use the opportunities offered by digital labelling.

Research: TSCs occur for up to 1 in 25 products and increase purchasing prices

Last autumn, the Ministry of Economic Affairs and Climate of the Netherlands published an independent research showing that entrepreneurs such as retailers experienced TSCs for up to 1 in 25 products they purchase (2-4%). For this group of products, this can lead to a purchasing price that is on average 10% higher including some significantly higher peaks. TSCs occur in different product markets such as Hardware Stores, Home Improvement Stores, supermarkets and online platforms, according to their professional buyers.

The European Commission presented a study on TSCs in the EU retail sector in 2020. This showed that if retailers were able to purchase their products without constraints, consumers in the sixteen EU Member States studied would potentially save € 14.1 billion annually.

Source: Government of the Netherlands

News item | 23-05-2024 | 16:19

Leiden University and the Royal Netherlands Academy of Arts and Sciences (KNAW), the Royal Netherlands Institute for Southeast Asian and Caribbean Studies (KITLV), in cooperation with the University of Amsterdam (UvA), are selected as residency for the professor chairs. Leiden University will hold the professor chair political sciences/public administration and the University of Amsterdam the professor chair anthropology/sociology.

Professor chair holders

The Executive Boards of the UvA and Leiden University have approved the proposal for appointment of their candidate. Social and cultural anthropologist Dr. Francio Guadeloupe will hold the professor chair Public Anthropology of Kingdom Relations for the KNAW/KITLV/UvA. Dr. Wouter Veenendaal, Associate Professor Comparative Politics at the Institute of Political Science of Leiden University, will hold the professor chair Democratic Representation in the Kingdom for Leiden University. He will be working from the KITLV in Leiden.

Broad knowledge development

The 2 professor chairs by special appointment are an initiative of the Directorate-General Kingdom Relations (DGKR) of the Ministry of BZK in the context of a broad knowledge development. The professorships contribute to the strengthening of both the knowledge function within DGKR. There is a need for more in-depth and broader attention in the scientific niche of Kingdom relations which generates more research, collaboration, synergy and a greater spin-off in this area.

Caribbean universities

The intention is to closely involve the universities in the 3 Caribbean countries of the Kingdom in the professor chairs. The aim is to work together with the Caribbean universities whereby, for example, lecturers and researchers can be exchanged. The assignment will be further worked out in consultation and close collaboration with the Caribbean universities.

Priceless value

State Secretary Alexandra van Huffelen of Kingdom Relations: “I am elated that we were able to accomplish this collaboration with the universities. Dependable scientific knowledge is of priceless value and can contribute to the further improvement of the cooperation in the Kingdom. A great milestone, especially in the year that we celebrate being connected in the Kingdom for already 70 years through the Charter”.

Professor chair holder Francio Guadeloupe: “Almost half of the people with a Caribbean background reside in the Netherlands. Meanwhile, thousands of Dutch citizens whose great-grandparents were born and raised in the Netherlands. This reality is bigger than the tensions between the politicians in The Hague and the politicians on the islands. We need to recognize that Kingdom relations in practice work out on a lower frequency than many policy makers are attuned to. I want to focus on what is being done in the community and in the political realm to make the Kingdom of the Netherlands more equitable, fair and inclusive for all. That is what I plan to study, in cooperation with knowledge institutions on all six islands and in the Netherlands”.

Professor chair holder Wouter Veenendaal: “The Kingdom of the Netherlands has a unique structure. It consists of 4 autonomous and equivalent countries, but 1 of those countries – the European Netherlands – is politically and institutionally superior to the others. This raises questions about democratic representation within the Kingdom, which I want to investigate in the context of this chair. Together with institutions and experts on the six islands and in the Netherlands, I hope to give an impetus to the development of knowledge and education in the field of politics and democracy in our Kingdom. I very much look forward to collaborating with researchers and institutions on both sides of the ocean.”  

Open process

The professor chairs came about through an innovative, open process. Universities were asked to submit a proposal with their own explanation and research focus. The proposals of Leiden University and KITLV/KNAW/UvA were assessed as being the best ones.

DGKR already works together with The Hague University of Applied Sciences (Haagse Hogeschool) in regard to the Minor Kingdom Relations.