The Supervisor of Banks at the Bank of Israel today (Sunday) issued regulations that require banks to be more transparent on environmental issues, in accordance with the norms practiced in many countries around the world. The Bank of Israel will oblige the banks to publish an ESG (Corporate Environment and Government) report and disclose their level of exposure to environmental risks in general and to climate risks in particular.
According to the Bank of Israel, in recent years there has been a growing global recognition of the importance of the active contribution of banking systems to improving aspects of the environment, society and government (ESG), and there is worldwide recognition that environmental and climate risks can affect banking systems. This recognition is reflected in the actions of many countries and supervisory authorities around the world, designed to increase the involvement of public corporations and banking systems in environmental, social and governmental aspects, and to promote active activities of the world economies and integrated banking systems to substantially reduce emerging risks.
The regulations published today, as part of amendments to the Public Reporting Directives of the Supervisor of Banks, are intended to enhance the disclosure given to the public by banking corporations on these aspects. The amendments will apply to reports to the public of banking corporations that head a banking group for 2021 and beyond. As part of the amendments to the public reporting provisions:
- Banking corporations are required to indicate in the annual report to the public material aspects of the environment, society and government that are integrated in their objectives, and to indicate a summary of the main indices set by the banking corporation to promote these issues.
- Banking corporations are required to expand public disclosure about their exposure to environmental risks, including climate risks.
- Banking corporations are required to publish a separate environment, company and government (ESG) report on an annual basis, instead of the corporate responsibility report, which has so far been required to be published once every two years.
“The amendments to the directives we published today improve the public’s disclosure by the banking system on environmental, social and governmental aspects, in accordance with optimal standards implemented by leading banks in the world, and integrate well with our steps to strengthen the banking system’s contribution to the environment and society.” , Said the Supervisor of Banks, Yair Avidan. “Given the great importance we attach to the issue, and in light of the significant developments that have taken place in the world in recent years, we intend to continue to work to improve the management of the environmental and social aspects of the banking system.”