Corporate Sustainability Reporting Directive: a constraint or an opportunity? Focus on the banking sector - the case of BNP PARIBAS Fortis

Details

Supervisors

Olieslagers, Ruben

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

The European Commission officialised the Corporate Sustainability Reporting Directive (CSRD), as part of their sustainable finance framework. The directive aims to fill in the sustainability information gap and to harmonise the sustainability reporting framework and standards across European countries. Therefore, an initial set of entities need to produce their first CSRD report in 2025 on their 2024's data. From a long-term perspective, sustainability reporting under CSRD should provide consumers and investors with the right information allowing a smoother transition to sustainable finance and a more transparent economy. The following paper focuses on the banking sector, as banks are at the heart of the current economy and can play a crucial role in redirecting funds toward more sustainability. However, ESG data are currently very limited, and banks are not yet adapted to report on such transversal topics. The directive itself is complex, hard to digest and the timing until the first report is short.   This paper will expose the situation surrounding the implementation of the directive within banks. The aim is to identify the challenges and to assess banks readiness to report such information, with a special focus on the opportunities and constraints arising from the implementation of such a directive. The insight of this paper is built on an 4 months internship experience at BNP Paribas Fortis and several interviews.   Rome was not built in one day, as quality sustainability reporting under CSRD won't be in a year. The constraints and challenges can be discussed at length: limited resources, data collection complexity, managing governance, value chain definition, unstable regulatory environment, double materiality assessment methodology, etc. On the other hand, future opportunities are hard to project, but with time valuable opportunities should arise such as the ultimate goal of moving towards more sustainable finance. Transparent, comparable sustainability reports with extensive qualitative data will be constructed step by step through time. Not much can be expected from the first years of reporting, but CSRD from now on will contribute to prepare companies and build awareness. This paper provides inputs on a subject that many people have heard of but are not familiar with. It helps to understand the transversality of such a subject, and the author wishes to emphasise the benefits it can bring to the banking sector.