The National Bank of Georgia amends the Corporate Governance Code for Commercial Banks to better address ESG issues
The National Bank of Georgia (NBG) continues working on developing the sustainable finance framework and gradually implementing the action plan set out in the Sustainable Finance Roadmap and Supervisory Strategy. Currently, the NBG, in cooperation with local and international stakeholders, is working on the development of a Sustainable Finance Taxonomy and the ESG Scorecard. The Taxonomy aims to provide the market with a homogeneous definition of green, social and sustainable economic activities. Meanwhile, the ESG Scorecard will serve as a progress measurement tool to monitor and evaluate the steps taken by financial institutions towards sustainable finance.
Proper governance of ESG issues is particularly important for the successful and effective development of sustainable finance. With this aim, the ESG considerations have been incorporated in the Corporate Governance (CG) Code for Commercial Banks in 2018. However, in the wake of the sustainable finance development and the steps taken by the NBG in that direction, it became necessary to integrate ESG issues in the CG Code in a more comprehensive and detailed way.
The amendments to the CG Code for Commercial Banks specified and clarified the ESG considerations and related requirements. In particular, the amendments defined the responsibility of the Supervisory Board for integrating ESG issues into the Bank's strategy and risk management framework and for their effective implementation. The changes also specify the ESG reporting form and refer to the ESG Reporting and Disclosure Principles developed by the NBG for guidance. Furthermore, the ESG reporting form has been added to the Pillar 3 Annual Reporting, and ESG considerations will be disclosed under Pillar 3. Accordingly, the "Regulation on Disclosure Requirements for Commercial Banks within Pillar 3" was also revised.
These amendments aim to facilitate
the proper integration of ESG considerations into the commercial banks'
activities, effectively manage ESG risks and improve disclosure of ESG-related
information. These, in turn, are important for ensuring financial stability and
developing a sustainable financing framework in Georgia.
Corporate Governance Code for Commercial Banks (available only in Georgian)
Regulation on Disclosure requirements for Commercial Banks within Pillar 3 (available only in Georgian)